Legislature(1997 - 1998)
02/12/1997 09:01 AM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE
February 12, 1997
9:01 a.m.
MEMBERS PRESENT
Senator Gary Wilken, Chairman
Senator Loren Leman, Vice Chairman
Senator Lyda Green
Senator Jerry Ward
Senator Johnny Ellis
MEMBERS ABSENT
All members present.
COMMITTEE CALENDAR
SENATE BILL NO. 36
"An Act relating to transportation of public school students;
relating to school construction grants; relating to the public
school foundation program and to local aid for education; and
providing for an effective date."
- HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
SB 36 - No previous Senate Committee action to record.
WITNESS REGISTER
Senator Randy Phillips
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Prime sponsor of SB 36.
Mayor Benjamin Nageak
North Slope Borough
PO Box 69
Barrow, Alaska 99723
POSITION STATEMENT: Suggested that in dealing with the formula,
the focus be on the future of all of Alaska.
Jerry Burnett, Staff
Senator Randy Phillips
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Reviewed the Alaska Public School Foundation
Program and answered questions.
Larry Wiget, Director
Government Relations
Anchorage School District
4600 DeBarr Road
Anchorage, Alaska 99519
POSITION STATEMENT: Supported rewriting the formula in a manner
more equitable to Anchorage School District
students.
Mary Frances
Alaska Association of Administrators
Petersburg Superintendent
PO Box 289
Petersburg, Alaska 99833
POSITION STATEMENT: Discussed hold harmless, single site schools,
and area cost differential.
Fred Reeder, President
Sitka School Board
107 Shelikof Drive
Sitka, Alaska 99835
POSITION STATEMENT: Reviewed concerns with SB 36.
Tom Nicolos
Barrow City Council
PO Box 629
Barrow, Alaska 99723
POSITION STATEMENT: Alarmed with the provisions of SB 36 which
leave the children of the North Slope Borough
without any state funding for education.
Mayor Jim Vorderstrasse
City of Barrow
PO Box 629
Barrow, Alaska 99723
POSITION STATEMENT: Indicated that SB 36 was unfair.
Scott Brandt-Erichsen
344 Front
Ketchikan, Alaska 99901
POSITION STATEMENT: Discussed bringing the area cost differential
in line with the actual cost of living.
Dick Swarner, Executive Business Manager
Kenai Peninsula School District
148 N. Binkley
Soldotna, Alaska 99669
POSITION STATEMENT: Suggested additional funding for the
foundation program and identified problems
with the formula.
Patrick Doyle
PO Box 108
GlennAllen, Alaska 99588
POSITION STATEMENT: Expressed concern with the redistribution of
funding that is far too small.
Chris Campbell, Member
Ketchikan Board of Education
601 Main
Ketchikan, Alaska 99901
POSITION STATEMENT: Identified negative and positive areas of
SB 36.
Eddy Jeans, Manager
School Finance Section
Department of Education
801 W 10th Street, Suite 200
Juneau, Alaska 99801-1894
POSITION STATEMENT: Discussed the fiscal notes for SB 36.
ACTION NARRATIVE
TAPE 97-10, SIDE A
SB 36 PUBLIC SCHOOL FUNDING
Number 001
CHAIRMAN WILKEN called the Senate Health, Education & Social
Services Committee (HES) to order at 9:01 a.m. and introduced SB 36
as the only order of business before the committee.
SENATOR RANDY PHILLIPS , Prime Sponsor, informed the committee that
the Anchorage School District has 38 percent of Alaska's
enrollment, but the funding is 30 percent. SB 36 would equalize
the playing field by bringing Anchorage's funding to 32 percent.
He reviewed the Department of Education's projected FY98 Foundation
Program showing the impact of the various districts. The four
school districts that would be adversely effected would be the
Lower Kuskokwim, the North Slope, Unalaska, and Valdez. SB 36
would provide more money for K-12 education. The school foundation
formula is broken and this bill attempts to revise the allocation.
SB 36 would provide more money in order to lower the pupil teacher
ratio (PTR). The local tax burden would also be more equitable.
Under the current formula, for example, a $100,000 house in
Anchorage contributes $400 in property tax towards education while
a similar valued house in Barrow would contribute $40.
Number 175
SB 36 includes the funding of single site schools in the foundation
formula. The bill also requires that a funding community have at
least 10 students in average daily membership (ADM). This
requirement will effect about 11 schools. Senator Randy Phillips
said that his main motivation for this bill was the conditions in
his district - 31 children per classroom in the elementary schools.
The PTR needs to be lowered. SB 36 does not add any money to the
formula.
In response to Senator Leman, SENATOR RANDY PHILLIPS said that
SB 36 was practically the same as the amended version of the bill
that came before the Senate last year. Senator Randy Phillips
reviewed the history of the bill last year.
SENATOR LEMAN noted that the reimbursement for pupil transportation
was added on the floor last year and was included in SB 36.
SENATOR RANDY PHILLIPS said yes, that was left in the bill.
SENATOR GREEN remembered that one of Senator Randy Phillips' bills
last year included a change in the calculation of the classroom
size or the divisor. Is that included in SB 36? SENATOR RANDY
PHILLIPS said that was not in SB 36. SENATOR GREEN commented that
she felt that was an effective tool. SENATOR RANDY PHILLIPS
pointed out that with that 35 schools were negatively effected.
Number 237
SENATOR ELLIS asked if there was a provision in the bill that would
fund the money if one of the negatively effected districts goes to
court. Would a special session be called? Would the instructional
unit value be reduced? SENATOR RANDY PHILLIPS did not know. That
is a decision the Legislature and the Governor and the school
districts would have to make. Similar challenges between richer
and poorer school districts have occurred in California, Texas and
Oregon. In all those cases, the courts made the playing field
level. Senator Randy Phillips believed SB 36 would withstand a
court challenge.
SENATOR ELLIS commented that the question is not if litigation
occurs, but when. That issue is worthy of discussion in this
committee. Why was a per capita distribution of funding not
utilized in SB 36? SENATOR RANDY PHILLIPS said that he would like
to have 38 percent funding for the Anchorage district, but from a
statewide perspective educating a student in other areas costs
more. SB 36 recognizes the cost differential. Senator Randy
Phillips reiterated that he was proposing this legislation because
of the intolerable PTR level in the Anchorage district and the
inequity in the allocation of funding.
SENATOR ELLIS inquired as to the basis for which 32 percent funding
for Anchorage was chosen. Why 32 percent instead of 33 percent?
SENATOR RANDY PHILLIPS stated that the rationale behind the 32
percent was that it was a fair allocation.
SENATOR LEMAN asked if Senator Ellis' 33 percent was calculated on
the basis of distribution per pupil with the adjustment for cost of
living in various communities. SENATOR ELLIS said that he just
picked a number in order to determine why 32 percent was chosen and
what was the basis of the fairness test. SENATOR RANDY PHILLIPS
said that the percentage was based on his sense of fairness.
Senator Randy Phillips reiterated that the Legislature must address
the school foundation formula.
Number 359
SENATOR LEMAN did not want to leave the impression that this
legislation is Anchorage versus the rest of Alaska. Most everyone
would agree that the existing foundation formula is inequitable,
however what is considered inequitable is probably determined by
the school district from which one comes and whether there would be
a gain or a loss. Senator Leman said that most would recognize
that some school boards take advantage of the formula by
manipulating certain areas which this bill attempts to address.
SB 36 attempts to distribute equitably.
SENATOR RANDY PHILLIPS reiterated that SB 36 is a proposal. He
said that he could only speak with authority and knowledge about
the Anchorage School District.
SENATOR ELLIS was interested in why the bill did not change other
categorical funding besides the gifted and talented program and the
bilingual program. Senator Ellis asked if SB 36 addressed the area
cost differential which many feel is the most inadequate piece of
the formula. If not, why was it not addressed? SENATOR RANDY
PHILLIPS did not believe the existing area cost differential was
adequate, however this portion is very controversial. SB 36 takes
one step at a time, dealing with one 'battle' at a time instead of
all at once. Senator Randy Phillips said that his staff would
address the question further. In response to Senator Ellis,
Senator Randy Phillips said that he did not give any thought to the
distribution of money in the formula being tied to student
achievement or implementation of higher standards or improvement in
the quality of the system. That can be considered later.
Number 417
SENATOR WARD asked if there had been any discussion regarding
phasing in the reductions of the four districts who would be
adversely effected. SENATOR RANDY PHILLIPS replied yes. This
committee and the Finance Committee will have to collectively
decide this.
CHAIRMAN WILKEN announced his intention to work as much as possible
on SB 36 in order to pass it on to Finance.
SENATOR RANDY PHILLIPS commented that he was willing to work on
this legislation with everyone and did not want to leave an
impression otherwise. He thanked the committee for its time.
CHAIRMAN WILKEN reviewed the plan for taking testimony.
MAYOR BENJAMIN NAGEAK , Mayor of the North Slope Borough, emphasized
that this is a direct discussion on the future of Alaska. There is
nothing more important than the children of Alaska. He said that
often Alaskans do not fully appreciate the complexities of life on
the North Slope. SB 36 does not represent a responsible approach
to educating Alaskan children; a broader and more equitable
commitment is called for. Mayor Nageak pointed out that the North
Slope Borough School District is one-third the size of California
which illustrates the obstacles resulting from the remote location.
A flight to Anchorage from Barrow is cheaper than visiting one of
the villages in the borough. Further, the flying conditions in
Barrow are no better than those in Juneau. Mayor Nageak emphasized
that it is more expensive to educate a child on the North Slope
Borough than anywhere else in Alaska. Studies show that it costs
$20,000 per student per year on the North Slope to deliver the same
basic education that is delivered in Anchorage for $7,000 per
student per year.
Mayor Nageak acknowledged the fortune of the North Slope by having
an oil field. In the past years, the North Slope has suffered
annual cuts resulting in the elimination of programs and staffing.
He expressed concern that even without SB 36 more cuts lay ahead.
Mayor Nageak emphasized that the question being addressed should
not be how to divide up funding that is not adequate, but rather
the question should be how all children can be cared for and
educated in Alaska. In conclusion, Mayor Nageak suggested the
focus be on the importance of education for all Alaskans and the
future of Alaska.
SENATOR LEMAN requested that Mayor Nageak fax the committee his
testimony.
Number 514
JERRY BURNETT , Staff to Senator Phillips, reviewed the current
foundation formula with overheads. (See Attachment A) He explained
that the deductible PL874 is federal impact aid which is received
by the school districts in lieu of property taxes. Mr. Burnett
noted that the required local effort is changed from the current 4
mills, 35 percent of basic need, to 4.5 mills property tax
equivalent, 100 percent of basic need, in SB 36. Mr. Burnett then
reviewed the components of the formula which include the funding
community, unit calculation, unit value, and area cost
differential. In SB 36 the minimum size of a funding community is
10 students, and where there is only one funding community in a
small school district that school district qualifies for single
site funding in the formula. With regard to the unit value, Mr.
Burnett indicated that inflation adjustment of the unit value was
a policy choice. Other governmental entities have not been
adjusted for inflation or population increases as school districts
have. Although bilingual and gifted and talented programs, SB 36
does not change the funding for special education programs. This
is also a policy choice for the Legislature. SB 36 does not
address area cost differential, although this could be addressed by
school district or for each funding community within a school
district. Mr. Burnett reviewed the unit calculation and reiterated
that in SB 36, if a funding community has less than 10 students the
basic unit is not received, but counted within the largest funding
community within the district.
Number 577
SENATOR LEMAN pointed out that the overhead's reference to very
small districts, "1-120 students = 5-12 students per unit"; should
that number actually be one? JERRY BURNETT was not positive. A
funding community would not be created with only one student.
JERRY BURNETT addressed Senator Green's question regarding the
elementary divisor which was included in a bill from a previous
year. Those divisors are a policy choice that the committee could
consider. Mr. Burnett continued with the overheads referring to
the bilingual units of the unit calculation.
TAPE 97-10, SIDE B
Mr. Burnett stated that SB 36 does change the categorization for
bilingual units. Under SB 36 the gifted and talented category
remains 40 students per unit, the change is that four and one-half
percent in each school district is considered gifted and talented.
Therefore, there is no identification required for the gifted and
talented program.
SENATOR GREEN asked if there was not a requirement that there be a
gifted and talented program in a district. JERRY BURNETT said that
was not addressed in the legislation, but the department could
review review the current requirements of gifted and talented
education.
JERRY BURNETT continued with the unit calculation and the
vocational students which are not addressed by SB 36. He noted
that other proposals group special education units as a whole, a
block of money. Again, that is a policy choice.
Mr. Burnett continued with the relationship between local valuation
and education funding under the current Foundation Program. He
reviewed an example to illustrate the relationship between local
value and state revenue which determines the basic need. The basic
need is then adjusted with the deductible PL874 and the required
local effort which results in the foundation funding. Mr. Burnett
mentioned that the deductible PL874 is included in the formula
under SB 36. This is important to consider due to the federal law
requiring that the disparity be no more than 25 percent between the
highest and lowest districts including local contribution if the
PL874 is included in the formula. That too is a policy choice.
With regards to the required local effort, all but three school
districts in Alaska use the 4 mill equivalent because enough
revenue is not generated to reach the 35 percent. Under SB 36, the
tax equivalent is changed to 4.5 mill which reduces the state's
contribution in every district that has a required local effort.
Without the 35 percent cap, some school districts will contribute
beyond the 35 percent and up to 100 percent of their basic need.
Mr. Burnett used a graph to illustrate the relationship between
local value and total revenue of a typical district. In current
law, the local excess contribution is limited to 23 percent of the
basic need in order to prevent the disparity from being beyond 25
percent.
Number 524
Mr. Burnett said that the main change in SB 36 is the required
local effort. SB 36 establishes supplemental equalization which
means that an additional contribution of state and local funds goes
to the school district. That contribution is based on the ADM in
the district and on 2.5 mills of the average assessed valuation in
Alaska. Therefore, every school district receives an excess
contribution whether there is a local tax base or not. School
districts with a local tax base are required to contribute based on
the local assessed valuation and how that relates to the state's
average. Mr. Burnett concluded his overhead presentation and
offered to answer any questions.
SENATOR ELLIS inquired as to why SB 36 changes some categorical
funding, but not all. JERRY BURNETT said that those changes were
made in Senate Finance last year with SB 70. SENATOR ELLIS said
that he would like the courtesy of an answer for the basis of those
choices.
CHAIRMAN WILKEN asked for testimony from Deborah Germano in Homer,
but the moderator informed the committee that Ms. Germano's
testimony had been faxed to the committee.
Number 485
LARRY WIGET , Director of Government Relations for the Anchorage
School District, supported the rewriting of the public school
foundation formula in a manner more equitable for Anchorage School
District students. He appreciated Senator Randy Phillips' efforts.
With a rewrite of the formula, the Anchorage district does not
expect to receive 38 percent of available funding, but greater
equity and distribution of funds is necessary. Most urban
districts in Alaska spend $6,000-$7,000 per student from their
general fund while Anchorage spends $5,800 and rural districts
$12,000-$15,000 per student. There may be valid reasons for these
differences; however, students have needs that are not being met in
urban areas which require additional state funding. Mr. Wiget
recognized benefits of an "economy of scale," but stressed that the
Anchorage School District faces its own unique circumstances. The
Anchorage community has indicated reluctance to support increased
taxes. Mr. Wiget informed the committee that if the Assembly
approves Anchorage's proposed budget, the taxpayers of Anchorage
will find their property taxes raised by $20 million in order to
cover increased educational costs which includes debt reimbursement
from 1996, 1997, 1998.
Mr. Wiget emphasized that Anchorage has taken extensive program
cuts for several years, the instructional program cannot continue
to be cut while expecting to accomplish its education mission. For
example, there are no resources to reduce class sizes; the average
PTR is 25 to 1 in grades 1-6, 28 to 1 in grades 7 and 8, and 30 to
1 in grades 9-12. Further the Anchorage district does not have the
resources to increase the much needed instructional technology.
Mr. Wiget noted that major cost containment efforts have been
undertaken, but informed the committee that there is no money in
the proposed budget for salary increases to the four employee
groups which must be bargained this year nor for exempt employees
which includes the teachers.
Mr. Wiget said that the Anchorage district has experienced moderate
growth, but increases within the student population is seen in
bilingual and special education students. This year alone the
bilingual population in Anchorage has increased by 25 percent. He
supported the following: providing the same level of reimbursement
for districts who own their own transportation equipment as well as
those under contract, recognizing students in relocatable
facilities as unhoused (currently, there are 148 relocatable units
in Anchorage), reducing the elementary divisor from 17 to 16 for
districts with an ADM of over 550, examining other ideas that
would provide greater equity to the foundation formula funding. He
pointed out that the instructional unit has not changed since 1992
when it was $61,000 which had been increased from $60,000 in 1987.
At the same time the CPI had risen over 31 percent. In conclusion,
Mr. Wiget supported rewriting the school foundation formula.
Number 421
SENATOR ELLIS asked if Mr. Wiget would support an increase in the
percentage from 32 percent to 34 percent. In response, LARRY WIGET
said yes. Mr. Wiget did not believe that the Anchorage district
would receive the 38 percent of the funding. Mr. Wiget reiterated
his commitment to work with the Legislature and the Governor on
this issue. Mr. Wiget clarified that there are 148 relocatables in
the Anchorage School District.
MARY FRANCES , Alaska Association of School Administrators, believed
that the committee had received a letter from Steve McPhetres
regarding the association's position and concerns about SB 36. Ms.
Frances highlighted the association's support of lowering the hold
harmless in districts losing enrollment from 10-5 percent as well
as resolving the single site issue. However, the association does
support a hold harmless clause in any funding formula that would
treat all districts equally without exception. The association
also supports an updated analysis of the area cost differential.
Ms. Frances, speaking as the Petersburg Superintendent, underscored
her previous comments on the area cost differential. Petersburg is
a single site with an area differential of one. Petersburg is on
an island, not unlike the communities on Prince of Wales who have
an area cost differential break, although Price of Wales is closer
to a major community. This is an example of when the area cost
differential is not appropriate and should be addressed.
Petersburg also contributes at the maximum local contribution for
education. Funding at the value of the instructional unit would
leave no room for additional money. Petersburg contributes at
about 35 percent with locally raised dollars.
Number 348
FRED REEDER , President of Sitka School Board, commented that Sitka
cannot afford a government relations position. Mr. Reeder
identified the following concerns with SB 36. The inflation index
is not addressed in the bill which is one of the main problems with
the current formula. Sitka, on an island like Petersburg, has an
area cost differential of one as does Anchorage; however, things
cost more in Sitka than Anchorage. The bill treats all districts
with enrollment of 900 over the same even though a district of
1,700 is very different than one of 40,000. The money to have one
expert gets diffused in a district of 1,700 versus one of 40,000;
there are some economies of scale to consider. Further, the Sitka
district is opposed to the cap. The Sitka community is already
contributing at an 8 mill equivalent and now the community is being
asked to contribute more. Mr. Reeder indicated that problem could
be attributed to the area cost differential and the lack of
inflation proofing.
TOM NICOLOS , Barrow City Council, was alarmed with the provisions
of SB 36 which leave the children of the North Slope Borough
without any state funding for education. Under SB 36, the North
Slope Borough will lose approximately $12 billion of the state
education funding currently received. Furthermore, the North Slope
Borough will lose $34 million in recaptured funds which equals a
total loss of $46 million. The North Slope Borough's total
operating budget is about $167 million of which much is dedicated
to retiring its debt service. The loss of $46 million is 25
percent of the borough's total operating budget. Any municipality
in Alaska would be devastated by such a loss. Mr. Nicolos pointed
out that the Alaska Constitution, Section 7.1 requires that the
Legislature establish and maintain a system of public schools.
Under SB 36, the children of the North Slope Borough will not
receive any funding for public schools for the State of Alaska
which seems to be in conflict with the Alaska Constitution. In
what position does this leave the State of Alaska? What happens
when the borough, locally, is not able to fund education due to
millions of its dollars supporting education for every student in
Alaska except its own?
With regards to Senator Randy Phillips' comments, Mr. Nicolos said
that tax revenue from a $100,000 home in Barrow $230 goes towards
education not $40 as the Senator stated. Further, a $100,000 home
in Anchorage would be appraised at $200,000 in Barrow. The North
Slope does pay its fair share for education.
Number 264
MAYOR JIM VORDERSTRASSE , City of Barrow, felt threatened by SB 36.
Alaska collects revenue from the North Slope while very little of
that returns to the North Slope. The people of the North Slope
have placed education over their personal comfort voting to fund
education at the local level rather than have running water. Now
that the infrastructure has been built, money is necessary to
maintain and operate the school. Mayor Vorderstrasse echoed Mr.
Nicolos' comments regarding the cost comparison of Anchorage and
Barrow. It is not fair to take the North Slope's money and leave
them with nothing.
SCOTT BRANDT-ERICHSEN informed the committee that he was the
Ketchikan Borough Attorney and Legal Counsel for the Ketchikan
School District, however Mr. Brandt-Erichsen was not testifying in
that capacity. Through his work for the school district, Mr.
Brandt-Erichsen reviewed the current foundation formula and its
legality. His discoveries motivated him to testify today. Mr.
Brandt-Erichsen discussed various approaches such as the
concentration of resources on low test score districts, the per
capita approach, and the notion that the state could collect 4 or
5 mills from all districts and distribute 100 percent of the funds.
There are policy reasons to support each approach.
Number 198
Under the current formula, Mr. Brandt-Erichsen identified the area
cost differential as an error. A June 1996 Department of Labor
report using 100 as a base value, stated that the cost of living in
Ketchikan was 119. The area cost differential for Ketchikan is
1.00. In comparison, St. Marys has the same cost of living
reported as Ketchikan, 119, but an area cost differential of 1.3.
He reviewed other Southeast Alaska cost of living numbers and their
area cost differentials. Mr. Brandt-Erichsen explained it is a
multiplier, not the actual cost of living. Therefore, Ketchikan
experiences a loss of $11,000 per instructional unit which results
in no school nurses in the elementary school, less librarians for
the entire district, half-time Physical Education teachers, and no
counselors this year. If the area cost differential reflected the
true cost of living, Ketchikan could have these positions. In
conclusion, Mr. Brandt-Erichsen stated that SB 36 is a good effort,
but emphasized without a correction of the area cost differential
it will fall short.
DICK SWARNER , Executive Director for Business Management for the
Kenai Peninsula School District, acknowledged that SB 36 gives the
Kenai Peninsula more money and noted that the Governor's bill would
be introduced this week. Without additional money to the formula,
Mr. Swarner said that adjustments to the formula would result in
winners and losers. Therefore, gathering support for such a bill
is difficult. Mr. Swarner suggested that additional funding be
placed in the rewrite of the foundation program. There are obvious
discrepancies in the formula that require adjustment. For example,
the area cost differential needs to be revised. The Kenai
Peninsula also has a 1.00 area cost differential, although the
district has some schools that can only be visited by plane as is
the case in some bush districts. There are no distinctions in area
cost differential for those schools in outlying areas of the Kenai
district. Mr. Swarner also recommended that the transportation
funding be kept a separate item instead of being included in the
foundation program.
Number 129
PATRICK DOYLE , testifying from GlennAllen, pointed out that the
declining facilities in the Copper River District and the entire
state was not addressed. Mr. Doyle reiterated the concern of
redistributing funding that is not enough. No new money has been
added to the unit value since 1987. With regard to the 10 student
ADM, two schools in the Copper River District have 8-10 students on
a regular basis. If those schools were eliminated, those children
would have to ride a bus two to two and one-half hours in 35-50
degrees below zero weather. Mr. Doyle wondered if any
consideration had been given to such a situation.
CHRIS CAMPBELL , Ketchikan Board of Education member, stated that if
the Legislature did not increase funding for the foundation formula
for COLA, the only alternative is to redistribute money from the
wealthier districts to the needier districts. The Ketchikan
Borough traditionally funds to the cap, but Ms. Campbell noted that
Ketchikan was also facing social and economic impacts from the
closure of the Ketchikan Pulp Company. She reiterated Mr. Brandt-
Erichsen's comments regarding the cuts that the Ketchikan School
District has faced. Further, the technology purchases are funded
almost entirely from contributions through parent-teacher
organizations.
Ms. Campbell supported the specified ADM of 10 students in SB 36.
If parents choose to live in remote areas in Alaska as did her
parents, correspondence courses could be used as she used. Ms.
Campbell believed that including the single site school districts
would reduce the politics in that situation. Also taking a student
count at the end of November would provide a more realistic basis
for determining the number of students receiving instruction
throughout the entire school year. Ms. Campbell also supported the
change in assessment of declining student enrollment from 10 to
five percent. The impacts resulting from the closure of the
Ketchikan Pulp Company may be offset by the aforementioned feature.
SENATOR ELLIS asked Ms. Campbell if she agreed with Mr. Brandt-
Erichsen that this bill should address the area cost differential.
CHRIS CAMPBELL replied, yes.
Number 030
SENATOR ELLIS pointed out that the Senator from Ketchikan was a Co-
Sponsor of SB 36.
CHAIRMAN WILKEN thanked Mr. Frank Hill for listening in from King
Salmon. Chairman Wilken thanked all the teleconference
participants.
EDDY JEANS , Manager of the School Finance Section of the Department
of Education (DOE), noted that DOE had prepared two fiscal notes
for SB 36, one for pupil transportation and one for the foundation
program.
TAPE 97-11, SIDE A
Mr. Jeans began discussing the fiscal note dealing with pupil
transportation. He said that the proposed amendment would cost an
additional $1.6 million in general fund in order to fully reimburse
Anchorage for their district operated transportation services.
That section also includes costs for administration of those
services which includes routing, crossing guards, and a
transportation coordinator. Currently, other school districts are
not reimbursed for those costs. Mr. Jeans pointed out that the two
fiscal notes combined would add approximately $38 million into
education provided these are fully funded.
Mr. Jeans turned to the fiscal note for the foundation program.
Section 4 increases the required local contribution by
municipalities from 4 mills to 4.5 mills across the state. That is
capped at the district's basic need which effects one district, the
North Slope Borough. Section 5 requires any excess generated by
the 4.5 mill tax levy to be returned to the State of Alaska.
Therefore, $34,500,000 in revenue would support the total increase
of approximately $36 million. DOE does not believe that this money
would be collected and available for distribution in the year of
implementation of this proposal. The North Slope Borough would
take the State of Alaska to court and tie the money up in
litigation. Therefore in order to fully fund these changes, an
additional appropriation of $34 million would be required from the
Legislature or the instructional unit value would need to be pro-
rated. The unit value is estimated to be approximately $58,300.
Number 070
Mr. Jeans explained that the increase in the required local effort
under Section 4 also effects the amount of impact aid the state can
deduct. Sections 6 and 7 establish a minimum funding community at
10. If a funding community fell below 10 ADM, then those children
would be counted at the largest funding community within the school
district. Section 8 adds a single site table. Section 11 changes
the bilingual units to a single weight. Currently, there are three
weight categories established in regulation. This would allow one
statutory weight, .021, to apply to all bilingual students. Where
there are increases in Section 11, one can assume that the number
of bilingual students in that district are on the lower end of the
scale regarding weighing factors. Where there are brackets, one
can assume that the district has a larger percentage of their
students at the higher end of the scale. Section 12 establishes
instructional units for gifted and talented. The gifted and
talented allocation is removed from the special education component
and establishes its own component. The gifted and talented
allocation is based on 4.5 percent of the population. Therefore,
4.5 percent of a district's ADM would be multiplied by the current
weight factor in statute, .025, in order to determine the gifted
and talented allocation. Based on the changes of bilingual
education and gifted and talented, there would be some adjustments
to the supplemental aid of REAA, but the specific statute is not
effected by SB 36. Section 13 adds supplemental equalization by
providing an allocation to districts which is shared between the
state and local municipalities based on their ability to pay.
Districts with an assessed value per student below the statewide
average would receive a larger share of state aid. Those districts
with wealth above the statewide average would be required to
contribute a higher share.
Number 137
SENATOR ELLIS asked if the 4.5 percent for the gifted and talented
program was based on a national figure. EDDY JEANS said that the
4.5 percent is at the statewide average. Also a Special Education
Task Force in 1993 made a recommendation that there be an
allocation based on 4.5 percent. In response to Senator Ellis, Mr.
Jeans acknowledged that perhaps there is a perception that some
districts do over identify gifted and talented. The change does
address that possibility by making it a single allocation. SB 36
does not require the identification of gifted and talented
children, it only makes an allocation based on 4.5 percent of the
population.
SENATOR ELLIS asked if there was a national number that specified
the correct percentage for gifted and talented students in a given
population. EDDY JEANS said that he could provide the national
average to Senator Ellis.
SENATOR ELLIS asked Mr. Jeans to review the PL874 figures. EDDY
JEANS explained that under the impact aid law, when a school
district has a required local contribution there is a proportional
calculation provision . A proportional calculation means that when
there is excess contributions over the requirement, a percentage is
calculated which is applied against the amount of impact aid to be
deducted. Since the required local effort has increased, more
impact aid can be deducted from those districts. This is a side
effect of the increase in the required local effort.
Number 184
In response to Chairman Wilken, EDDY JEANS understood that the
Administration's plan for the foundation program would be
introduced today.
CHAIRMAN WILKEN requested that the table showing the change in
bilingual and special education in comparison to the change in ADM
over the years. Chairman Wilken also asked Mr. Jeans to determine
the amount of money Delta Junction receives for special education.
EDDY JEANS said that he would get that information for the Chair.
SENATOR ELLIS extended his request to DOE regarding the basis for
the figures of categorical funding.
SENATOR WARD asked if it was the intention of the committee to
identify the differences between SB 36 and the Governor's
legislation. CHAIRMAN WILKEN expected to hear the Governor's bill
with SB 36. Further, a comparison of the two is forthcoming.
There being no further business before the committee, the meeting
was adjourned at 10:50 a.m.
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