Legislature(1993 - 1994)
01/28/1993 09:10 AM Senate HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT SENATE HEALTH EDUCATION AND SOCIAL SERVICES
COMMITTEE AND SENATE FINANCE COMMITTEE
January 28, 1993
9:10 A.M.
HESS MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Bert Sharp, Vice Chairman
Senator Loren Leman
Senator Johnny Ellis
HESS MEMBERS ABSENT
Senator Mike Miller
Senator Judith Salo
FINANCE MEMBERS PRESENT
Senator Drue Pearce, Co-Chairman
Senator Steve Frank, Co-Chairman
Senator Tim Kelly
Senator Steve Rieger
Senator Bert Sharp
Senator Jay Kerttula
FINANCE MEMBERS ABSENT
Senator George Jacko
OTHER MEMBERS PRESENT
Senator Suzanne Little
COMMITTEE CALENDAR
The Mechanics of the School Foundation Formula presented by
the Alaska Association of School Business Officials
WITNESS REGISTER
Barbara Martin, Assistant Superintendent for Business &
Finance
Fairbanks North Star Borough School District
P.O. Box 71267
Fairbanks, Alaska 99707
Richard Swarner, Executive Director of Business Management
Kenai Peninsula Borough School District
210 Fidalgo Avenue
Kenai, Alaska 99611
Laraine Derr, Director of Business
Juneau City Schools
155 S. Seward Street
Juneau, Alaska 99801
ACTION NARRATIVE
TAPE 93-2, SIDE A
Number 001
SENATOR PEARCE called the Joint Senate HESS Committee and
Senate Finance Committee meeting to order at 9:10 a.m. and
announced they would begin the presentation with Barbara
Martin, Assistant Superintendent for Business & Finance,
Fairbanks Public School District.
MS. MARTIN said the purpose of the presentation was to
create an understanding of the formula and answer questions,
not to take positions on issues. She said there are two
types of school districts in Alaska - the municipal school
district and the REAA. Municipal school districts are
governed by the School Board and receive funding primarily
from their local municipalities. An REAA is governed by the
Board of Education and gets most of its funding from the
State of Alaska.
She said that no matter what kind of school district you
are, 50% - 90% of your budget goes to salaries and benefits.
MS. MARTIN explained their budgeting process saying they
decide each October how many children would be in the school
district next year. By April 1 they have to give a budget
to the local government which must decide the bare minimum
they are going to give the schools by April 30. By the
middle of May they know how much money the legislature has
appropriated so that by May 31 they know how much they have
to work with and then they submit their budget to the
Department of Education where it may be further adjusted for
possible administrative cuts.
Number 89
The formula program is based on instructional units which in
theory is the cost of running a class room. Calculation of
units is done in a variety of ways depending mostly on the
size of the school district. They get extra units for
students with special needs, bilingual services, and
vocational education.
Number 178
RICHARD SWARNER, Executive Director of Business Management,
Kenai Peninsula, described different funding communities -
the differences being mostly in accessibility which in rural
Alaska can be by four wheeler, boat, or airplane. The
reason for separate funding communities is because of the
big difference in the cost related to accessibility.
Number 214
SENATOR PEARCE asked if there was a legal definition of a
funding community. MR. SWARNER answered that a 20 mile
radius constituted a funding community according to the old
formula. There is discussion of putting in a 45 mile radius
in the new formula.
MS. MARTIN, with the aid of an overhead projector, showed a
comparison of two districts with the same number of units
with drastically different enrollment and characteristics so
they could see the advantages to both kinds of funding.
Number 274
LARAINE DERR, Director of Business, Juneau City Schools,
interjected that the area cost differential was introduced
with approved school funding legislation back in the 1970s.
She explained the programs may be the same generated under
the units, but the costs differ depending on the location
and size of schools.
Number 353
MS. MARTIN said that after you establish basic need, the
next thing you calculate are the deductions. The first one
is PL874 which are funds received from the federal
government for the impact of federal and Indian lands that
can't be taxed. These are funds that are in lieu of taxes.
Students are either A students who receive a lot of money or
B students who aren't worth a lot of money as per the
formula.
She said the reason to deduct the PL874 is to equalize the
program in terms of funding.
SENATOR FRANK asked if the REAAs that don't have a local
match for funding have 90% of their PL874s deducted? MS.
MARTIN answered yes.
Number 388
SENATOR RIEGER asked if all the districts that contribute
more than the required minimum get their pro rata share of
that pot. MS. MARTIN explained it is not money they compete
for, because it's there based on the characteristics of land
use. For instance, if you don't have any federal land in
your district, you don't get a PL874.
Number 412
RICHARD SWARNER explained a district gets a lot of PL874
money because it has federal lands.
SENATOR RIEGER asked if as a district increases its
contribution, the deduction of the PL874 decreases which
means the state gives more money out of its foundation
formula to that district? MS. MARTIN answered that was
correct.
MS. MARTIN explained to get the level of your local
contribution you can take 35% of last year's basic need or
you can take the assessed valuation of the property times 4
mills - whichever is less.
Local governments can pay more than the minimum. There are
some instances where the government would like to give more,
but can't, because there is a cap in the formula so that
they can meet the disparity test for PL874 equalization.
Number 465
MR. SWARNER explained how fluctuation in land valuations
affects the calculations and why there is a cap.
Number 527
SENATOR RIEGER asked if the ceiling on local effort was just
a judgement call? MR. SWARNER answered that it was spelled
out in state law.
LARAINE DERR said the way a district didn't have to obey the
disparity test was if the state didn't take into account the
$61 million received for PL874 equalization.
TAPE 93-2, SIDE B
Number 556
MS. MARTIN explained that the assessed valuation going up or
down, impacts the ability of that district to pay.
Number 544
SENATOR ELLIS said that some school districts are asking for
a hold harmless provision now that their assessed values are
going up. He asked how much money they were talking about
if they were to implement such a provision. MS. MARTIN said
she didn't know what the number would be. She agreed it was
very difficult for a local government to react quickly to
the fluctuation in land values. SENATOR ELLIS commented
that it is usually easy to recover when property values go
up, but they can go down dramatically which causes problems.
Number 499
SENATOR ELLIS said he knew the school districts would ask
for a hold harmless provision while the legislature rewrites
the foundation formula. He wanted to see a good analysis of
that trend so he could see if it was justified.
SENATOR LEMAN said the October 15 projection date falls on a
cycle for the military when people are changing residences.
He asked if there was any way to make an adjustment for
people who have a lot of military population. MS. MARTIN
answered generally there is a supplemental if the enrollment
projections aren't adequate. She said that October 15 is an
awkward date for many schools, because they count their kids
for next year's funding purposes in the four weeks that end
the last week in October of the current year.
Number 462
SENATOR KELLY asked if they could use data from permanent
fund dividend applications to figure out enrollment. MS.
MARTIN answered that method might work in some districts.
She said they talk to state agencies which deal with
demographics and the University, the Army, and the Air Force
to make their projections. There are a number of different
ways to figure enrollment.
Number 449
SENATOR SHARP asked if there was any way to encourage more
local contributions. MS. MARTIN said a community might opt
to do that because they would want some local choices in
their schools.
SENATOR RIEGER asked about the single/dual site issue. MS.
MARTIN explained that when you deal with the very small
single sites, formula does not provide enough units. She
said you have to meet your rules for special education,
bilingual education, and a vocational plan.
SENATOR RIEGER said he found the statutory definition of
funding community which said the Department does it by
regulation and asked if there was a consensus. MR. SWARNER
said it hadn't been in dispute, but probably would be with
new legislation from the governor's office. He also noted
that the needs within the schools have changed over the
years. MS. MARTIN noted there was controversy over how many
students were needed in order for a school to be operated
and if they were on a road system, how far apart they had to
be.
SENATOR LITTLE said she wanted an opportunity to learn about
the proposed price index.
Number 400
SENATOR PEARCE thanked everyone for their participation and
adjourned the meeting at 10:20 a.m.
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