02/15/2007 03:00 PM House HEALTH, EDUCATION & SOCIAL SERVICES
| Audio | Topic |
|---|---|
| Start | |
| Overview: Bring the Kids Home | |
| HB97 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | HB 97 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE
February 15, 2007
3:00 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Bob Roses, Vice Chair
Representative Mark Neuman
Representative Paul Seaton
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
Representative Anna Fairclough
COMMITTEE CALENDAR
PRESENTATION: BRING/KEEP THE KIDS HOME
- HEARD
HOUSE BILL NO. 97
"An Act making appropriations for state aid to public schools,
centralized correspondence study, and transportation of pupils;
and providing for an effective date."
- MOVED CSHB 97(HES) OUT OF COMMITTEE.
PREVIOUS COMMITTEE ACTION
BILL: HB 97
SHORT TITLE: APPROP: K-12 EDU; PERS/TRS LIABILITY
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/22/07 (H) READ THE FIRST TIME - REFERRALS
01/22/07 (H) HES, FIN
02/13/07 (H) HES AT 3:00 PM CAPITOL 106
02/13/07 (H) Heard & Held
02/13/07 (H) MINUTE(HES)
02/15/07 (H) HES AT 3:00 PM CAPITOL 106
WITNESS REGISTER
MARGARET LOWE, Trustee
Alaska Mental Health Trust Authority (AMHTA)
Anchorage, Alaska
POSITION STATEMENT: Presented an overview of the "Bring the
Kids Home" (BTKH) Initiative.
DEBBI KEITH, Member
Alaska Youth and Family Network (AYFN)
Board Member
Alaska Mental Health Board (AMHB)
Anchorage, Alaska
POSITION STATEMENT: Described her experiences as the parent of
a special needs child.
ALEX NOON, Member
Alaska Youth and Family Network
(No address provided)
POSITION STATEMENT: Explained the peer navigation program.
MICHELLE PURDY, Member
Alaska Youth and Family Network
(No address provided)
POSITION STATEMENT: Described her experiences as a recipient of
special needs care in Anchorage, Alaska and expressed support
for the BTKH initiative's work.
CINDY ANDERSON, Director
Secondary Special Education
Anchorage School District
Anchorage, Alaska
POSITION STATEMENT: Described the services provided to special
needs students who return after receiving services and education
out of state.
JEFFREY JESSEE, Chief Executive Officer, Trustee
Alaska Mental Health Trust Authority (AMHTA)
(No address provided)
POSITION STATEMENT: Described issues related to availability
and costs of services for youth in state custody and for youth
not in state custody.
BILL HOGAN, Deputy Commissioner
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Explained his department's efforts to help
children receive the services and treatment they need.
MARY HAKALA, Coordinator
Great Alaska Schools
Juneau, Alaska
POSITION STATEMENT: Presented concerns with the funding levels
of HB 97.
CARL ROSE, Executive Director
Association of Alaska School Boards (AASB)
(No address provided)
POSITION STATEMENT: Testified on HB 97 and on AASB budget
concerns for school districts.
MARY FRANCIS, Ph.D., Executive Director
Alaska Counsel of School Administrators (ACSA)
Juneau, Alaska
POSITION STATEMENT: Presented the ACSA position on HB 97.
PEGGY COWAN, Superintend
Juneau School District
Juneau, Alaska
POSITION STATEMENT: Presented the Juneau Board of Education
legislative priorities for session and testified on the budget
affect of HB 97
REPRESENTATIVE LES GARA
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on HB 97 and expressed concerns
about portions of the bill.
JOHN BITNEY, Legislative Liaison
Office of the Governor
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 97.
EDDY JEANS, Director
School Finance and Facilities Section
Department of Education and Early Development (DOE)
Juneau, Alaska
POSITION STATEMENT: Answered questions about HB 97.
ACTION NARRATIVE
CHAIR PEGGY WILSON called the House Health, Education and Social
Services Standing Committee meeting to order at 3:00:27 PM.
Representatives Wilson and Seaton were present at the call to
order. Representatives Neuman, Gardner, and Cissna arrived as
the meeting was in progress.
^OVERVIEW: BRING THE KIDS HOME
3:01:13 PM
MARGARET LOWE, Trustee, Alaska Mental Health Trust Authority
(AMHTA), provided a brief history of the inception of the Bring
the Kids Home initiative (BTKH). Many years ago, most children
with special needs were served outside of the state. The AMHTA
helped to develop services and buildings within the state to
serve them. However, in the last 10 to 15 years, as many as 700
children a year have been sent outside the state to residential
facilities to receive treatment and education.
3:02:51 PM
DEBBI KEITH, Member, Alaska Youth and Family Network (AYFN);
Board Member, Alaska Mental Health Board (AMHB), described the
experiences of her son, whose special needs could not be met in
the public school. When her son was 11 years old, he went out
of state to receive treatment and education. He was often gone
for extended periods of time, and she was only able to visit him
once every three months. There were difficulties with
communication and visits, therefore, one year she was only able
to visit her son once. Due to distance and communication
difficulties, her family was not a part of her son's treatment,
she explained. Her son is currently 18, can read and write, but
has not finished school. She believes that had her son been
home, his treatment could have been more successful due to the
ability to integrate and support his treatment plan at home.
ALEX NOON, Member, Alaska Youth and Family Network, works as a
peer navigator. He explained that peer navigation is a safe and
effective way to provide outreach to youth to help them to
better understand the mental health and substance abuse system.
A key component of peer navigation is that is uses young guides
to help and encourage other youth to participate in their
community in a positive and healthy way. The peer navigation
curriculum guides and teaches those who want to be peer
navigators.
MICHELLE PURDY, Member, Alaska Youth and Family Network,
described herself as a success story of the in-state care
systems. She was raised in Anchorage, which allowed her to have
more services than other areas of the state, she opined. She
stated she believes that the state's special needs children
deserve to be raised and treated in the state, a goal which she
characterized as being a large part of the BTKH initiative. She
said she believes that peer navigation is a successful component
of the program, as is a good provider team.
3:08:40 PM
CINDY ANDERSON, Director, Secondary Special Education, Anchorage
School District, stated that education is critical in the life
of every child. She explained the many difficulties her
district faces when special needs children return to this state
after receiving care out of state. She said that oftentimes her
district is not ready to serve these returning children,
especially those who have very great needs. The district is not
always notified when children are returning. She opined that
there needs to be open, honest communication between state
agencies and school districts so the district can provide the
appropriate services. There are no transitional services for
returning children, so they often face academic and personal
challenges when re-entering the state system. Children in
foster homes face additional challenges due to inconsistent
living arrangements, which makes return to the public school
system even more difficult. She offered that many children are
behind academically when they return and require remedial
classes to get them up to state standards. She explained that
it can be expensive for her district to serve behaviorally
challenged students, who may "not always count for intensive
funding"; therefore the district must "scramble" to provide
services. She suggested that both her district and other
districts in Alaska require increased staffing to provide
services for children returning from residential treatment
services. The need for additional staff will increase as the
state's capacity to provide in-state residential treatment
grows. She emphasized that trained staff is very important for
children with special and behavioral needs to adequately counsel
and assist them. She said that this training must occur across
the state so as to avoid children falling back into the patterns
or behaviors that got them out of the state in the first place.
She reminded the committee that there must be the ability to
coordinate with home and school to achieve a higher level of
success. She suggested that full funding for education is
required to allow children to stay in the state, and to serve
those who return to the state after receiving services out of
state.
3:13:22 PM
REPRESENTATIVE GARDNER expressed her frustration at the fact
children are still being sent out of state after so many years
and asked how long it had originally taken for change to come
about.
3:14:08 PM
MS. LOWE responded by explaining that in around 1962, the state
built the Alaska Psychiatric Institute (API) in Anchorage, then
a facility in Valdez, which had to be rebuilt after the
earthquake. There were legal changes to allow some children
previously barred from public schools to attend, and by the
1970's "we were doing fairly well". However, as the state's
population has increased, it has become more difficult to keep
up with increasing problems, such as substance abuse. She said
"we just didn't keep up" and soon demand for services was higher
than available resources. She believes that data is more
available today than in the past to determine the needs of these
children.
3:17:21 PM
REPRESENTATIVE GARDENER asked whether the AMHTA had any specific
suggestions on how to bring Alaska children home for treatment
besides increased funding.
MS. LOWE stated that her group is engaged in a comprehensive
process of carefully reviewing the many needs of the state's
children. She reminded the committee that there are a variety
of needs out there, many of which do not require residential
facilities.
3:18:51 PM
REPRESENTATIVE ROSES referenced the dilemma of education funding
and asked what the effect would be on the issues being discussed
today if the funding stream for education stays at the same
level next year.
MS. ANDERSON explained that the Anchorage school district
provides the teachers for children in residential services,
which results in increased staffing costs. She said she
believes if the funding remains the same, the staffing level
could not be increased to meet the needs, which may make it
difficult to meet required adequate yearly benchmarks. She
reminded the committee that Anchorage receives special needs
students from rural areas as well as students returning from
treatment out of state, and it "absolutely has to have the
funding for staffing and curriculum".
3:20:37 PM
REPRESENTATIVE ROSES asked what effect flat funding will have on
the ability to return children to Alaska.
MS. ANDERSON replied that there is an obligation to bring
children back to Alaska, but she expressed concern that the
services the state will be able to provide will not be as
extensive as they should be due to the a high level of staff
training and support required for special needs services.
However, she said she cannot predict the actual impact.
3:21:19 PM
REPRESENTATIVE NEUMAN inquired as to the connection between
types of issues faced by youth and their families and enrollment
in alternative school programs, referring to the committee hand
out titled "Bring the Kids Home," February 2007, page 3.
MS. LOWE replied that an important area not yet discussed is
that of structuring programs and services to provide early
intervention to children who have mental health, or other
problems. She suggested that early counseling, treatment, and
family support could prevent problems at an early stage,
therefore lessening the chance that the problems will become
severe and require more costly interventions.
3:23:56 PM
JEFFREY JESSEE, Chief Executive Officer, Trustee, Alaska Mental
Health Trust Authority (AMHTA), referred the committee to page 2
of the handout which shows that between 1998 and 2004, the
average annual cost increase to send children to Residential
Psychiatric Treatment Centers was 59.2 percent, a cost
escalation he described as stable since fiscal year (FY) 2004.
He explained that in 2004, there were about 400 children in
treatment out of state at any one time, but currently there are
362 children out of state. He reminded the committee that this
decrease in use of out of state services occurred before the
opening of a new residential treatment center in Alaska. He
explained that almost 40 percent of children receiving treatment
out of state are Alaska natives; pointing out that it is
important to involve tribal partners for social and financial
reasons. He said that the tribal entities are able to recover
100 percent of treatment costs from the federal government. He
stated that residential treatment centers are very expensive and
that over-capacity in this area "will suck the financial life
blood" out of the ability to provide in-home and community based
services, which he opined are ultimately the only thing that
will contain the costs in this continuum of care. Many of the
children also have issues with drug/alcohol abuse, and are
eligible for Medicaid reimbursement of expenses after 30 days
out of the home.
MR. JESSEE explained that children categorized as "out of state
custody children" are either under the care of the Office of
Children's Services (OCS) or the Division of Juvenile Justice,
and the state is acting as that child's parent. The "out of
state non-custody children" are those who have been sent outside
by their families for services. He said that when a child is
sent out of state by their family to a residential treatment
center, after 30 days the child becomes Medicaid eligible,
retroactive to the date of their arrival at the facility, and
the state becomes responsible for payment even though the state
had no knowledge that the child was being sent out of state.
This is true in some cases even if the child's family has
insurance, he said.
REPRESENTATIVE SEATON asked about the flattening out of the 60
percent growth rate shown of page 2, and whether the cost
containment is related to an increase in state facilities, or to
program changes.
3:30:17 PM
BILL HOGAN, Deputy Commissioner, Department of Health and Social
Services (DHSS), explained that the state has done a much better
job of "gate keeping" by more actively managing the system and
diverting children who may have previously gone out of the state
to in-state options. Furthermore, there are some additional
residential facilities in both urban and rural areas.
3:31:12 PM
MR. JESSEE explained that future plans predicate a decrease in
out of state non-custody youth. He emphasized that "we are just
about done adding beds" even though that will not provide a bed
for every child currently in an OCS facility. This result is by
design, because many of those children do not need to be at that
level of service, nor should the state pay for that level, he
said. The recommendations of his work group recommend a focus
on family support, school support, and other community based
services. He said that by the time a child is in a treatment
center, it "is all about the kid", but that it is often really
"all about the families." In order to work effectively with
families, the service providers need to provide support and
education at an early stage.
MR. HOGAN explained that page 17 of the hand out shows the last
quarter of FY 06. Of the 73 children in the system, all of them
could have gone outside the state for treatment, but as a result
of intervention, 21 were diverted to in-state services. He
emphasized that many of the children sent out of state have very
serious problems and currently the state does not have the
capacity to serve them. He went on to say that the state is
currently developing the capacity to serve them.
3:35:18 PM
REPRESENTATIVE GARDNER asked for clarification as to who makes
treatment decisions for children, particularly when a child is
sent to a facility that may have some connection with the
child's in-state provider.
MR. HOGAN said that the decision of where a non-custodial child
goes for treatment is made by the provider, the family, and
other involved community members. In its new diversion process,
the state has inserted itself into the decision. For children
in state custody, the state is actively involved in any decision
about facilities. He noted that some of the facilities in the
lower 48 are run by the same parent companies as the facilities
in Anchorage; therefore transfers between these types of
facilities are looked at closely. He said that the state wants
the child to "go to the best place for the problem that he or
she has."
3:37:23 PM
REPRESENTATIVE GARDNER referenced the difficulty parents have in
making treatment decisions for their child; particularly if the
provider has an interest in the facility recommended.
MR. JESSEE explained that the AMHTA recommends an increase in
the funding for the peer navigator program because experienced
parents can help other parents understand the available
resources and options for treatment.
HB 97-APPROP: K-12 EDU; PERS/TRS LIABILITY
3:39:20 PM
CHAIR WILSON announced that the next order of business would be
HOUSE BILL NO. 97, "An Act making appropriations for state aid
to public schools, centralized correspondence study, and
transportation of pupils; and providing for an effective date."
3:40:47 PM
MARY HAKALA, Coordinator, Great Alaska Schools, testified that
the governor's proposed budget does not reflect the cost of
inflation, and other escalating costs, such as health insurance.
As a result, the proposed budget will cause a deficit in the
district's budget, she opined. For the Juneau school district,
this means a $2 million cut out of a budget of $52 million,
which she characterized as "no small matter". She reminded the
committee that Juneau has funded its education "at the cap",
therefore avoiding cuts that would have occurred had the city
not provided additional funding. She asked the committee to
consider the equity issues related to the foundation formula as
it now exists. Furthermore, she explained the Juneau school
district spends approximately $500,000 of its general fund on
pupil transportation; she opined that if the legislature
addressed the true costs of pupil transportation, it could allow
Juneau to spend this amount in the classroom. She said the
current funding proposal will require budget cuts in staff,
which will have a dramatic effect on the class sizes and morale.
3:48:07 PM
CARL ROSE, Executive Director, Association of Alaska School
Boards (AASB), stated that his organization supports HB 97 as a
place holder. He reminded the committee that school districts
will need to set their next year's budgets by March 15, 2007.
The budget process can be a stressful time, especially if the
districts need to send out layoff notices, he opined. He said
he would appreciate it if this committee would move the bill so
that additional concerns can be addressed in the House and
Senate Standing Finance committees. He directed attention to
the hand out titled "School Boards United", which lists the
issues that member school district agreed need to be addressed
by the legislature and testified that these issues are
[paraphrased from written testimony; original punctuation
provided]:
1. Base Student Allocation-Increasing the BSA from
the current $5,380 to $5,810, effective July 1, 2007
(SB 1)
2. District Cost Factor-Increasing the DCF to the
levels recommended by the 2005 ISER [Institute of
Social and Economic Research] Report (HB 72)
3. Retirement cost-Funding the $207 million in FY 08
PERS-TRS cost increases for districts outside the
foundation formula
4. Vocational Education-Recognizing the importance of
a dependable funding stream for voc-ed outside the 20
percent block grant for special education, bilingual
education and voc-ed
5. Intensive Needs Students-Addressing the problems
caused by inadequate formula funding, post-enrollment
transfers and conflicting state regulations defining
intensive needs
6. Early or Forward Funding-Appropriating foundation
funds & PERS-TRS costs by March 16th (the 60th day) or
setting aside sufficient funds in FY 08 to forward
fund FY 09 education budget.
MR. ROSE emphasized that school districts receive only partial
reimbursement for the costs of educating special needs students,
and that some conflicting regulations in this area make
administration of these services problematic at times. He
suggested that there could be changes to the funding formula to
allow districts to receive funds for students who enter the
district after the budget cut off date. He also expressed
concern over use of the $500 million currently in the public
education fund, and asked the committee to seriously consider
keeping that money in the public education fund and to make
further contributions to that fund so as to forward fund
education in the future.
3:52:58 PM
REPRESENTATIVE NEUMAN responded by noting that some of the
aforementioned issues have been addressed by the legislature,
such as SB 1, and the proposed appropriation of $207 million in
HB 97 for retirement accounts. Furthermore, other members are
working on issues of vocational education and are holding
hearings on issues of intensive needs students. Representative
Seaton has worked on legislation in the past on education
funding, he reminded the committee.
3:54:12 PM
REPRESENTATIVE SEATON asked whether districts lose money when a
student transfers out of that district after the beginning of
the year.
MR. ROSE explained that it is difficult to have dollars follow
children from school to school. He said that this is an issue
that is currently being addressed by HB 124. He pointed out
that having a second count of students may not be useful,
because even if a student has moved, the district may have
contracted for services and that contract must still be
fulfilled. He observed that he did not think his organization
members are interested in losing money if students move away, as
the districts still have needs to fulfill.
REPRESENTATIVE SEATON expressed concern over pupil
transportation equities because there is a "huge disparity
between similar districts," in the funds they receive and asked
whether the AASB has taken any position on whether the pupil
transportation funding formula is equitable.
3:56:42 PM
MR. ROSE replied that the AASB has a resolution that supports
the review of the pupil transportation grant. He said that the
original formula was established at 2003 costs, which does not
reflect the higher fuel costs since that time. He explained
that the member school districts have many important issues to
address, but the six described earlier today are the most
important. He further explained that his organization has a
formal resolution calling for 100 percent implementation of the
ISER report recommendations relating to district cost factor
adjustments.
3:59:17 PM
MARY FRANCIS, Ph.D., Executive Director, Alaska Counsel of
School Administrators (ACSA), expressed appreciation for the
attention to the district cost factor adjustment and to the
partial funding of the Public Employees' Retirement System
(PERS) and the Teachers' Retirement System (TRS) liabilities.
However, she said the ACSA supports full funding of the area
cost differentials, based on the recommendations in the ISER
report. She said that her organization is concerned that any
area cost differentials be accompanied by an increase to the
base student allocation (BSA), and that the BSA in HB 97 is not
sufficient. She also said that ACSA believes that special
education, vocational education, and bi-lingual programs need to
be funded based on a need-based funding formula, noting that
these services can be costly.
4:01:29 PM
PEGGY COWAN, Superintendent, Juneau School District, provided
the committee with a hand out which set forth the Juneau Board
of Education's legislative priorities for the 2007 session. She
stated that currently suggested funding levels for the area cost
differential is inadequate and that it should be fully funded.
She opined that the current cost factor adjustments are
inadequate for Juneau and for many Southeast school districts.
She expressed support for the funding of the PERS/TRS
liabilities. She stated the foundation formula funding in HB 97
is flat, and opined that the public wants increases in
educational funding and programs, not decreases. For example,
in Juneau there is no cycle for replacement of textbooks or
technology due to lack of funding, she said. She said that
under the current funding levels of HB 97, her district would
have to cut millions of dollars out of its budget, which will
likely result in an increase in class sizes. She emphasized
that intensive needs funding is inadequate, and explained that
her districts receives $26, 000 for each special needs student,
while educating special needs students can cost $60,000 to
$80,000. Currently, 20 percent of the Juneau school district
transportation budget comes out of general funds; if there was
adequate transportation funding, these funds could go to the to
classroom, she stated. She recommended that there be direct
funding outside of the formula for special education
transportation costs, as this service is mandated by the federal
government
4:06:34 PM
MS. COWAN explained that costs to educate a child with intensive
needs are high because these children require services of para-
educators, specially trained teachers, speech and physical
therapists, and psychologists. She explained that for smaller
communities it can be hard to fill some of these needs with
local providers, and mentioned that her district has had to use
some out of town specialists for psychological services that
could not be filled locally.
4:09:11 PM
REPRESENTATIVE ROSES agreed that is very easy for a student with
intensive needs to cost even more than $80,000 a year to care
for because some students have such intensive physical needs
that a nurse may need to attend the student throughout the day.
4:12:42 PM
REPRESENTATIVE LES GARA, Alaska State Legislature, stated that
in the past the legislature has spent a great deal of effort on
the funding level for education, and opined that despite efforts
to increase funding, schools have not been able to hire more
teachers because they have to spend so much of their budgets on
transportation and retirement costs, among other factors. He
said he would like to see school funding at a level that would
allow schools to make progress. The individual districts would
decide whether to hire new teachers, whether to increase course
offerings, or whatever would cause them to make progress. He
mentioned that one proposal set forth by Senator Wilken was to
increase the BSA by about 8.5 percent; an amount which he opined
may let the schools take a substantial step forward this year.
He indicated that funding of PERS/TRS outside the formula is
helpful. He said that he believes that the legislature made a
mistake in 2003 when it re-wrote the pupil transportation
formula. He reminded the committee that the pupil
transportation formula was amended at a time when the state
faced a budget deficit, and was designed to compensate school
districts for their transportation costs, and to also encourage
efficiencies in transportation programs. This goal has not been
reached, and school districts statewide are being under-funded
for transportation costs by somewhere in the amount of $17 to
$45 million per year, he opined. He recommended that the
legislature reverse its 2003 actions regarding pupil
transportation, and that school districts be compensated for
their actual costs of transportation. He said that there should
be truth in budgeting in schools, so that any increase in the
foundation formula funding goes to the schools, not just to
transportation costs and out of teachers' salaries.
REPRESENTATIVE GARA went on to say that there should be some way
to set the education budget earlier in the year to avoid the
stressful situation of school districts not knowing their
budgets for the next school year. He suggested that one way to
do this is to withhold legislators' per diem if the education
budget is not passed by March 15th. As an alternative, the
legislature could require that the BSA increase annually by at
least the rate of inflation.
4:20:25 PM
REPRESENTATIVE NEUMAN referred to possible funding limitations
caused by Alaska's constitutional provision against the
dedication of funds to any special purpose. Furthermore, he
indicated there is some resistance to statutorily mandated
inflation cost increases because the state may not have the
funds available to fund those increases.
REPRESENTATIVE GARA agreed that the legislature cannot dictate a
future legislature's funding decisions. However he said that
the BSA does not violate the dedicated funds prohibition because
it requires an appropriation. School districts can use prior
year's BSA amounts to calculate what they may receive the next
year, he indicated.
4:22:10 PM
JOHN BITNEY, Legislative Liaison, Office of the Governor, said
that the governor today reiterated her desire to achieve an
early funding bill for education and encouraged the committee to
move the bill forward.
4:23:37 PM
REPRESENTATIVE CISSNA expressed concern over the effects of high
fuel costs and health care issues. The latter issue pertains in
part to physical and behavioral challenges that schools must
deal with, she indicated. She stressed her commitment to
funding education, even if it requires sacrifices to other
areas.
4:25:13 PM
REPRESENTATIVE NEUMAN said that he approves of HB 97 as written.
He noted it provides $24 million more in cost differential
funding, $11 million for special needs, and $207 million for
PERS\TRS. He went on to state that the BSA is still being
considered, and that education funding is increasing in
positive, steady steps.
4:26:59 PM
REPRESENTATIVE GARDNER stated she would like to see the BSA
raised. She said that although she would like to see the ISER
study recommendations implemented, she recognizes that not all
funding needs can be met at one time. She referenced that there
were some good decisions made about funding the pension
liabilities outside of education funding formula. She stated
she supports early forward funding of educational needs, which
she noted could be supported by raising the BSA and by focusing
on forward funding of education needs.
4:28:30 PM
REPRESENTATIVE SEATON indicated that he is not fully satisfied
with the funding levels of the bill, and reminded the committee
that the BSA being incorporated in a senate bill basically
eliminates the ISER funds. He noted he would like to see
another quarter of ISER added on in this budget cycle.
Furthermore, he said he believes the legislature needs to
further examine the school districts' transportation costs. He
noted that the issue of whether to fund PERS\TRS outside the
foundation formula is still being debated. However, despite his
concerns, he is willing to pass the bill on to the next
committee.
4:30:56 PM
REPRESENTATIVE ROSES voiced that funding PERS\TRS outside of the
education funding formula is "highly recommended" because
funding through the formula would result in the possible denial
of grants to schools and the university because their salary and
benefits packages would be too high to meet most grant
qualification standards. He went on to say that if the bill is
passed without increasing the BSA, then the funding increase
will not be adequate to cover inflation and fuel cost increases.
He referenced that other committees are considering legislation
which would allow the state to issue general obligation bonds to
cover all or part of PERS\TRS liabilities. If this effort is
successful, the school districts could end up with funds that
they would have been paying to satisfy their unfunded pension
liabilities. This could result in the districts receiving a
substantial funding increase without having to raise the BSA, he
opined. He reminded the committee that general expenses could
not be bonded, but retirement obligations could be. Despite
some concerns, he stated that he would support moving this bill.
REPRESENTATIVE ROSES opined that inflation proofing the formula
would be a disaster. He said he could support inflation
proofing an adequate number, but he has serious concerns with
adding inflation-proofing protection to a fund deemed by most to
be inadequate. He stated support for the ISER recommendations
and for increasing transportation costs. He opined that a
supplemental budget for education to cover unpredictable costs
is currently not provided, but it might be time to consider one.
He further expressed concern about appropriating funds for
PERS\TRS from the public education fund as he would like to see
that fund used as intended - to build up enough money to forward
fund education. He supports efforts to continue to build the
education fund so that education funding does not have to come
from the state's general fund.
4:36:26 PM
CHAIR WILSON stated that her understanding that the committee is
in agreement that the funding is inadequate, mainly due to cost
increases that schools have no control over. She said she will
write a letter of intent to the House Finance Committee
incorporating this committee's comments. She referred the
committee to Section 4, subsection (c), page 4, line 21 and
indicated that the $170,450,921 million appropriated by that
subsection would leave the school districts' contribution rate
at 26 percent. She indicated she would like to see that rate
lowered back to 12.56 percent, noting that such a change would
free up some funds for the classroom. To accomplish this, she
recommended increasing the amount in Section 4, subsection (c)
by $77,536,700 million.
4:39:46 PM
REPRESENTATIVE ROSES clarified that he believes Chair Wilson's
comment relates to the amounts in page 2, line 27 for the PERS
and page 4, line 21 for the TRS and that the suggested
additional amounts apply to both those systems.
4:40:08 PM
CHAIR WILSON agreed with the aforementioned clarification. She
characterized this as a policy decision within the purview of
the committee.
4:40:37 PM
REPRESENTATIVE NEUMAN observed that the $207 million is outside
the funding formula. He went on to say there were other plans
being considered to fund PERS\TRS, but that not all members are
aware of the details of these plans.
4:41:52 PM
EDDY JEANS, Director, School Finance and Facilities Section,
Department of Education and Early Development (DOE), referred to
page 4, line 21, and said that the bill calls for appropriation
from general funds of $170,450,921 to be paid directly to the
Department of Administration (DOA) for TRS retirement costs.
This amount will keep the school district contribution level at
26 percent. He offered his understanding that Chair Wilson
would like to see the employer contribution rate for schools
drop to 12 percent, which was the norm rate for TRS. To do
that, he said, the number would have to increase to
$247,987,581. He stated this figure was provided to him by the
Division of Retirement and Benefits.
4:43:34 PM
REPRESENTATIVE GARDNER stated she supported making a policy
statement and offered that the committee should also increase
the BSA to show support for increased education funding.
4:44:09 PM
CHAIR WILSON stated that her proposal would essentially increase
the BSA as it would free up money to spend in the classroom.
4:44:20 PM
REPRESENTATIVE SEATON offered his understanding that the school
districts' contribution rate is set by the Alaska Retirement
Management Board (ARMB), so even if additional money is put in
this bill, additional action would need to be taken to lower the
districts' employer contribution rate. Furthermore, he went on
to say that the 5 percent employer contribution cost rate
increases had been put in the education funding formula to pay
for retirement fund costs. He queried how it would affect the
BSA if the amount paid into the retirement funds was increased
by $77 million, to be paid outside the formula.
MR. JEANS said the effect of the aforementioned scenario would
approximate a $400 increase to the BSA, but would not actually
increase the BSA as that is covered by different legislation.
He agreed that the ARMB must act to reduce an employer's
contribution rate. However, the ARMB has been informed of the
possibility that a payment will be made to the TRS unfunded
liabilities outside the formula. He said he understands that
the ARMB may consider lowering the rate if such a deposit is
made. He clarified that the making the additional appropriation
suggested by Chair Wilson would not raise the BSA, but it could
free up some funds to spend on education.
4:49:02 PM
REPRESENTATIVE ROSES asked what the effect of an additional
appropriation would be on the PERS section of the bill, page 2,
line 27.
MR. JEANS said he was not able to provide a figure for the
effect on PERS rate, noting that PERS employers have different
rates, therefore he is not sure there is a "normed rate" under
PERS.
4:49:34 PM
REPRESENTATIVE NEUMAN clarified that the suggested additional
allocation would not increase the BSA, which will remain as
currently established absent further legislation.
4:49:59 PM
MR. JEANS agreed that the Chair's suggested additional funding
would not increase the BSA, but it would free up approximately
$78 million in district liabilities, assuming the ARMB took
action to decrease the school districts' TRS contribution rates
to 12.65 percent. This appropriation would need to occur on an
annual basis, until the unfunded pension liabilities are paid
down, he opined.
4:50:49 PM
REPRESENTATIVE ROSES reminded the committee that unfunded
pension liabilities need to be paid and that various options for
payment are being considered.
4:52:01 PM
REPRESENTATIVE ROSES offered Conceptual Amendment 1 at page 4,
line 21:
to reflect increased amounts necessary to bring the
current sum up to approximately $247,987,581 million
approximately to bring the TRS contribution rate down
to 12.56 percent.
4:52:42 PM
REPRESENTATIVE NEUMAN objected to Conceptual Amendment 1.
4:52:49 PM
REPRESENTATIVE SEATON clarified that the former restrictions
which limited an employers' contribution rate increase to no
more than 5 percent annually has been repealed. He noted it is
hard to fully analyze the effect of the proposed increase on the
employer contribution rate or other possible areas affected, but
he would not object at this point, although he may find issues
with the bill in subsequent committees.
4:54:09 PM
REPRESENTATIVE NEUMAN stated he objects to Conceptual Amendment
1 because in his opinion, the committee has not had adequate
information to make a decision of this magnitude. He said he
believes the issue would take additional time for a full
discussion of the affect on PERS/TRS.
4:55:13 PM
REPRESENTATIVE GARDNER said that she supports the policy
statement being made by the inclusion of additional amounts in
the bill, and noted that the actual numbers contained in the
bill are likely not the final numbers.
4:55:41 PM
CHAIR WILSON reiterated her belief that the additional
appropriation is a policy statement that sends a message of
concern about the proposed levels of education funding.
4:56:13 PM
A roll call vote was taken. Representatives Seaton, Cissna,
Gardner, Roses, and Wilson voted in favor of Conceptual
Amendment 1. Representative Neuman voted against it.
Therefore, Conceptual Amendment 1 was adopted by a vote of 5-1.
4:56:49 PM
REPRESENTATIVE ROSES moved to report HB 97, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 97(HES) was
reported out of the House Health, Education and Social Services
Standing Committee with individual recommendations and the
accompanying fiscal notes.
ADJOURNMENT
There being no further business before the committee, the House
Health, Education and Social Services Standing Committee meeting
was adjourned at 4:57:19 PM.
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