Legislature(1997 - 1998)

03/14/1997 09:05 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         March 14, 1997                                        
                           9:05 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                                                             
 SENATE BILL NO. 85                                                            
 "An Act relating to the public school funding program; repealing              
 the public school foundation program; relating to the definition of           
 school district, to the transportation of students, to school                 
 district layoff plans, to the special education service agency, to            
 the child care grant program, and to compulsory attendance in                 
 public schools; and providing for an effective date."                         
  - HEARD AND HELD                                                             
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SB 36 - See Senate Health, Education & Social Services Committee              
         minutes dated 2/12/97.                                                
 SB 85 - See Senate Health, Education & Social Services Committee              
         minutes dated 2/19/97.                                                
  WITNESS REGISTER                                                             
 Ben Nageak, Mayor                                                             
 North Slope Borough                                                           
 PO Box 69                                                                     
 Barrow, Alaska 99723                                                          
  POSITION STATEMENT:   Stated that proposals to cut or eliminate              
                      state school aid for the North Slope Borough             
                      School District are unacceptable.                        
 Marie Adams-Carroll, Chief Administrator                                      
 North Slope Borough                                                           
 PO Box 69                                                                     
 Barrow, Alaska 99723                                                          
  POSITION STATEMENT:   Discussed the situation of the North Slope             
 Rex Rock, Sr., President                                                      
 Timber Corporation                                                            
 Local School Advisory Council in Tikiqaq                                      
 Point Hope, Alaska                                                            
  POSITION STATEMENT:   Urged the committee not to do this.                    
 Marieh Sahageak, Junior                                                       
 Barrow High School                                                            
 Point Hope, Alaska                                                            
  POSITION STATEMENT:   Urged the committee to maintain the current            
                      foundation formula.                                      
 Rex Rock, Jr.                                                                 
 Point Hope, Alaska                                                            
  POSITION STATEMENT:   Urged the committee to maintain the current            
                      foundation formula.                                      
 Rebecca Miller, Parent                                                        
 4870 Southampton Drive                                                        
 Anchorage, Alaska                                                             
  POSITION STATEMENT:   Expressed concerns with the program cuts               
                      facing Gifted & Talented.                                
 Richard Hebhardt, Superintendent                                              
 City of Skagway School District                                               
 PO Box 497                                                                    
 Skagway, Alaska                                                               
  POSITION STATEMENT:   Discussed the situation in Skagway.                    
 Greg Middag, Teacher                                                          
 Ketchikan Gateway Borough School District                                     
 643 Sunset Drive                                                              
 Ketchikan, Alaska                                                             
  POSITION STATEMENT:   Urged the committee to review the consequences         
                      to education and the children.                           
 Dennis McCarty                                                                
 Ketchikan Gateway Borough School District                                     
 670 Dock Street                                                               
 Ketchikan, Alaska 99901                                                       
  POSITION STATEMENT:   Urged the committee to review the area cost            
                      differential and the hold harmless for                   
 Ron Drathman, Member                                                          
 Kenai Peninsula Borough Assembly                                              
 PO Box 12                                                                     
 Homer, Alaska 99603                                                           
  POSITION STATEMENT:   Discussed how Kenai has fallen through the             
                      gap under the current formula.                           
 Gordon Castanza, Superintendent                                               
 Chatham School District                                                       
 PO Box 109                                                                    
 Angoon, Alaska                                                                
  POSITION STATEMENT:  Discussed the need to address the area cost             
                     differential, impact aid, and the REAA tax.               
 Bob Doyle                                                                     
 1900 Porcupine Trail                                                          
 Wasilla, Alaska 99654                                                         
  POSITION STATEMENT:   Discussed the needs of the Mat-Su School               
 Marysia Ochej, Business Manager                                               
 Southeast Island School District                                              
 PO Box 8340                                                                   
 Ketchikan, Alaska 99901                                                       
  POSITION STATEMENT:   Discussed the disparity in rural districts.            
  ACTION NARRATIVE                                                             
  TAPE 97-24, SIDE A                                                           
                  SB  36 PUBLIC SCHOOL FUNDING                                
         SB  85 PUBLIC SCHOOL FUNDING/CHILD CARE GRANTS                        
 Number 001                                                                    
  CHAIRMAN WILKEN  called the Senate Health, Education & Social                
 Services Committee (HES) to order at 9:05 a.m. and informed the               
 committee that the purpose of the meeting was to discuss the                  
 foundation plan proposed last Monday in the subcommittee.  Chairman           
 Wilken said that he would entertain a motion to place the CS before           
 the committee.                                                                
  SENATOR LEMAN  moved to adopt CSSB 36(HES) for discussion purposes.          
 Without objection, it was adopted.                                            
  CHAIRMAN WILKEN  stated that he has a plan that can be held up to            
 the light for as long as people want to review the plan in order to           
 progress towards a better plan.  Chairman Wilken welcomed the                 
 teleconference sites.  Chairman Wilken then began a sectional                 
 analysis.  He noted that on page 14, line 8 after "$4,165" the                
 language "for fiscal year beginning 2001" should be added.                    
 Chairman Wilken said that a written sectional analysis would be               
 provided before the end of the meeting.  Chairman Wilken began to             
 take testimony from those present only for the day.                           
 Number 195                                                                    
  BEN NAGEAK , Mayor of the North Slope Borough, informed the                  
 committee that he was also a parent of three of which his youngest,           
 10 years old, wanted to come testify before the committee.  That              
 shows the interest in this issue.  He noted that Marie Adams-                 
 Carroll, the Borough's Chief Administrative Officer, was present as           
 well.  The people of the North Slope have lived with the impacts of           
 oil development which have been offset by the mutual benefits to              
 the State of Alaska, the oil industry, and the people living on the           
 North Slope.  Mayor Nageak discussed the history of ANCSA and the             
 establishment of the North Slope Borough which he believed                    
 recognized that the Inupiat Eskimo people and other North Slope               
 residents deserved to derive some benefit from oil development.               
 That benefit has been through jobs, contracts for oil field                   
 services and access to a tax base.  Mayor Nageak emphasized that              
 the North Slope oil projects generate the royalty and tax revenue             
 to fund needed state programs which benefit all Alaskans.                     
 Mayor Nageak stated that prior to Prudhoe Bay, North Slope                    
 residents lived in very primitive conditions.  Over the past 25               
 years, many improvements have been made and education is one of the           
 most important improvements.  The residents of the North Slope are            
 committed to quality schools and quality education.  Mayor Nageak             
 stressed that "The proposals before the Legislature and this                  
 committee to cut, eliminate and zero out any state school aid for             
 the North Slope Borough School District are unacceptable."  The               
 Governor and the Legislature should be working towards the common             
 good for all Alaskans.  Alaska has the resources to treat all                 
 regions fairly and equitably.                                                 
 Number 291                                                                    
 The residents of the North Slope feel that they are under attack on           
 many fronts, one of which is the change to the foundation formula             
 that would take away state education aid for the North Slope.  The            
 proposals before the committee threaten the relationship between              
 the North Slope Borough, the state government and oil development.            
 Mayor Nageak believed that Alaska's best economic interests should            
 be reviewed.  Alaska's long-term economic interests would not be              
 served if the North Slope School District is denied a fair share of           
 the state education benefits.  In conclusion, Mayor Nageak stated             
 that the North Slope Borough and School District wanted to provide            
 quality public services and education not conflict or litigation.             
 Mayor Nageak noted that he would submit additional information to             
 the committee next week.  Mayor Nageak then introduced those                  
 present at the meeting from the North Slope.                                  
  SENATOR LEMAN  appreciated Mayor Nageak's statements and agreed with         
 much of his testimony.  With regard to Mayor Nageak's statement               
 that Alaska has the resources to treat all regions equitably and              
 fairly, Senator Leman believed that the definition of equitable               
 seems to be in the eye of the beholder.  Senator Leman said that              
 the committee is trying to determine what is equitable and how to             
 accomplish that equity.  One of the underlying themes of this is              
 the need for every region to participate in the cost of education.            
 Senator Leman acknowledged that the North Slope Borough has                   
 participated in the cost of education.  Senator Leman offered to              
 work with the North Slope Borough on this issue.                              
 Number 378                                                                    
  MAYOR NAGEAK  said that he was present in order to work on this              
 issue.  He noted that cuts have been made over the past years.                
 Mayor Nageak stressed that the North Slope should not be penalized            
 for having the resources to provide for its people.                           
  SENATOR WARD  referred to the guarantee of equal education, when             
 recognizing a problem would exist if a region was zeroed out of the           
 formula without a fair mechanism.  This bill says that it is fair             
 for the North Slope to pay additional money due to certain                    
 circumstances.  Senator Ward said that he wanted everyone to                  
 receive an equal education whether funded by the state or local               
  MAYOR NAGEAK  reiterated that the borough is trying to do the best           
 for its people.  Mayor Nageak believed Oliver Leavitt or Marie                
 Adams-Carroll could provide a better response.                                
  MARIE ADAMS-CARROLL , Chief Administrative Officer of the North              
 Slope Borough, stated that the students say that any further cuts             
 will severely jeopardize preparation for higher education or                  
 vocational training.  Not enough of the residents in the North                
 Slope are trained to work in jobs requiring technical training or             
 certification such as teaching.  Ms. Adams-Carroll stressed that              
 the schools are the centers of the communities in the North Slope             
 and provide more than just education.  The entire family will be              
 impacted by this.  Ms. Adams-Carroll informed the committee that              
 the North Slope Borough provides $3 for every $1 provided by the              
 state.  The North Slope Borough is contributing to education.                 
  MAYOR NAGEAK  interjected that the cost of living in the North Slope         
 Borough is high.  For example, a $100,000 house in Anchorage would            
 be twice that in the North Slope.  Such differences need to be                
 Number 445                                                                    
  CHAIRMAN WILKEN  noted that in May of 1996, Fairbanks was faced with         
 the third attempt at a school bond issue for $64 million to build             
 schools.  Those who objected to the bond issue pointed out the                
 inequity that exists; the North Slope Borough's assessed value is             
 worth $14 billion with 2,000 students versus Anchorage with an                
 assessed value of $14 billion with 46,000 students or Fairbanks               
 assessed at $3 billion with 16,000 students.  Chairman Wilken asked           
 how he could respond to the question that the North Slope Borough             
 does not pay as much as Fairbanks for education.                              
  MAYOR NAGEAK  said that the North Slope Borough does pay a lot.              
 Everything in the North Slope is expensive and most items that are            
 needed are available in Fairbanks and Anchorage which also require            
 shipping costs.  The money spent in the North Slope Borough on                
 education provides a basic education.                                         
  MARIE ADAMS-CARROLL  informed the committee that when the borough            
 was established a cap on the assessed value of the property on the            
 North Slope was also established.  Furthermore, there is a cap on             
 the amount that can be used of that property tax for operating                
  CHAIRMAN WILKEN  said that he did not want to face the same argument         
 when another bond issue for schools comes before Fairbanks.                   
 Chairman Wilken expressed the need to dismiss the question of                 
 equity during future bond issues for schools.                                 
 Number 491                                                                    
  REX ROCK, SR.  informed the committee that he was the President of           
 the Timber Corporation, President of the Local School Advisory                
 Council in Tikiqaq, high school basketball coach and parent of                
 four.  Mr. Rock, Sr. has been with the Local School Advisory                  
 Council for 10 years and this organization provides the most                  
 satisfaction for him.  Mr. Rock, Sr. stated that the North Slope              
 Borough does not misspend its money and programs have been cut due            
 to declining revenues.  Despite the increase in students, the                 
 budget has been decreased.  Athletics in the villages are not                 
 feasible due to the cost of air fare.  The bill before the                    
 committee will be devastating to the community.  Mr. Rock, Sr.                
 pointed out that 40 percent of the revenues generated from the                
 school district employees go to the local village store which is              
 owned by the corporation.  This bill will force the district to cut           
 almost all of the classified positions.  In a community of 1,000              
 with high utility costs, Mr. Rock, Sr. foresaw many becoming                  
 dependent upon the government for support.  Mr. Rock, Sr. believed            
 this bill to be a quick fix for the urban areas and he urged the              
 committee not to do this.                                                     
  MARIEH SAHAGEAK , a Junior at Barrow High School, said that any of           
 the proposed bills will have a devastating effect on the North                
 Slope Borough School District and the quality of education for the            
 students.  There will be impacts on community gatherings because              
 the schools are open to the villages.  Ms. Sahageak noted that                
 budget reductions cut programs that would make students a better              
 candidate for a college education.  There are already difficulties            
 in the North Slope Borough due to travel and medical expenses.  Ms.           
 Sahageak urged the committee to support her education and maintain            
 the existing foundation formula funding.                                      
 Number 546                                                                    
  SENATOR LEMAN  commented that most people recognize that the                 
 existing formula is not equitable, the disagreement is regarding              
 where to fix the formula.  How equity is defined poses a problem.             
 Senator Leman said that his objective was not to devastate the                
 North Slope Borough schools.                                                  
  REX ROCK, JR  . , student from Tikiqaq High School, explained that he        
 and Ms. Sahageak were chosen to represent students in the North               
 Slope on this potentially devastating issue.  Mr. Rock, Jr. assured           
 the committee that the North Slope Borough does not misspend money;           
 simple things that urban students do on a regular basis cost a lot            
 in the North Slope.  For example, a basketball game would require             
 flying several hundred miles.  Extra-curricular activities are so             
 costly, that such events are limited.  Mr. Rock, Jr. reiterated the           
 high cost of food on the North Slope, sometimes 100-300 percent               
 higher than in urban areas.  He also noted that a student's social            
 life is entirely dependent on the school.  Mr. Rock, Jr. pointed              
 out that school supplies must be flown into the North Slope and               
 often the transportation costs exceed the cost of the item.  The              
 utility costs for some schools exceed the amount of state dollars             
 that would be sent to those schools under the proposals.  Further,            
 water costs are high and most students shower at the school.  Most            
 villages do not have public water and sewage systems.  He asked if            
 the committee would feel any responsibility for forcing the North             
 Slope Borough to cut programs.                                                
  TAPE 97-24, SIDE B                                                           
 Research clearly shows that it is cheaper to educate an individual            
 rather than to incarcerate the individual.  Mr. Rock, Jr. believed            
 that any legislation that reduced the North Slope Borough School              
 District funding by large amounts would not allow those students              
 the opportunity to obtain an education providing for the ability to           
 make a decent living.  Those students would then look to the                  
 government for support.  Mr. Rock, Jr. said that he had high                  
 aspirations for himself and his fellow students, whom he believed             
 could have a positive impact on the world if afforded the                     
 opportunity to obtain a quality education in the North Slope.  Mr.            
 Rock, Jr. echoed Ms. Sahageak's comments regarding maintaining the            
 current school foundation funding formula which has stood the test            
 of time.  If the urban schools need more money, Mr. Rock, Jr. urged           
 the committee to provide additional money; do not attempt to fund             
 the success of some students by destroying the futures of others.             
 Number 567                                                                    
  SENATOR LEMAN  noted that of the eight communities in the North              
 Slope Borough, all have some measure of a public water supply                 
 system.  Perhaps, Mr. Rock, Jr. was referring to a fully pipe water           
 system.  Senator Leman also noted that there is a substantial                 
 improvement project underway currently.                                       
  MARIE ADAMS-CARROLL  clarified that the North Slope Borough does not         
 have piped water systems, except in the community of Barrow.  She             
 noted the environmental difficulties for the development of piped             
 water systems.  Currently, the villages have water treatment                  
 facilities and the water is trucked to homes.  Outside of Barrow,             
 the honey buckets are still in use.                                           
  MAYOR NAGEAK  reiterated that in many villages, students clean               
 themselves at the school because that is the only place with                  
 available water.                                                              
  REX ROCK, SR.  explained that the water sewer project utilized a             
 vacuum system that probably saved the North Slope Borough $30                 
 million.  Mr. Rock, Sr. hoped the same time would be taken on this            
 issue rather than shoving it down the borough's throat.                       
  CHAIRMAN WILKEN  hoped that Mr. Rock, Sr. would not leave Juneau             
 feeling as if anything was being shoved down anyone's throat, that            
 is not the purpose.                                                           
  SENATOR GREEN  acknowledged the North Slope Borough's fear of losing         
 programs and services.  Senator Green emphasized that those losses            
 have already happened in other districts; personnel, classified               
 employees, programs, and classrooms have already been lost.  This             
 is everyone's problem, not just the North Slope Borough.  The key             
 is to move towards a solution, using the legislation as a vehicle             
 to assure that education provides an equal opportunity for                    
  REX ROCK, SR.  pointed out that the school in his community was              
 built in 1979 and now discussions are being held about cutting                
 opportunities to children in the North Slope, whereas those                   
 opportunities have been had in the urban areas for years.                     
  SENATOR GREEN  assured Mr. Rock, Sr. that this is still a discussion         
 and problem solving should begin rather than rejection.                       
  CHAIRMAN WILKEN  emphasized that this is not an attempt to diminish          
 Mr. Rock, Jr. nor Ms. Sahageak's educational opportunities,                   
 experience, or results of their education.  There is a problem that           
 needs resolution.  Chairman Wilken thanked the students for being             
 present and involved.                                                         
 Number 498                                                                    
  REBECCA MILLER , parent, appreciated the complexity of the problem           
 before the committee.  Ms. Miller expressed concern with the                  
 possibility that Gifted & Talented programs may be cut under this             
 legislation.  These programs are very beneficial to the students,             
 Ms. Miller's daughter in particular.  These students are the future           
 leaders.  Ms. Miller suggested that if these programs must be cut,            
 the language could be specific so as to follow the students through           
 their education.  Ms. Miller was concerned that these programs                
 would become so narrow that only a few children could take                    
 advantage of them.  Ms. Miller stressed that if the funding is not            
 present from the Legislature, then the programs will not exist.               
 In response to Senator Ward, Ms. Miller informed the committee that           
 she was from Anchorage and discussed the programs with which her              
 daughter was involved.  If the teachers are not present, all the              
 children suffer and furthermore, without the programs for the                 
 children to reach towards a mediocre education system will result.            
  RICHARD HEBHARDT , Superintendent of the City of Skagway School              
 District, informed the committee that he would be representing the            
 district as well as the municipality.  The Legislature's drive to             
 close the fiscal gap is commendable.  He applauded the committee's            
 efforts to create a funding system that treats all school districts           
 equitably, but the quality of education should not be sacrificed in           
 an attempt to balance the budget.  The debate should turn towards             
 the remedy for the funding inadequacies and inequities that exist.            
 Mr. Hebhardt recommended that any formula should account for the              
 erosive effects of inflation.  The operational costs of Alaskan               
 school districts have increased nearly 30 percent since 1988, while           
 state support has been less than two percent.  Any formula should             
 recognize that several municipalities already make a significant              
 local contribution to public education, Skagway included.  Mr.                
 Hebhardt posed the question, how much is enough - how much more can           
 be given without diluting other necessary community services?  The            
 City of Skagway currently contributes about 39 percent to the                 
 school's operating budget.  Under the current foundation formula              
 plan, next year the City of Skagway would contribute 52 percent to            
 the school's operating budget.                                                
 Mr. Hebhardt believed that a more fair and equitable state funding            
 strategy be developed which fully acknowledges local effort and               
 capacity while enabling the provision of basic and fundamental                
 education for all.  If this is not achieved, the City of Skagway              
 will continue to be adversely effected and the installation of the            
 much needed vocational education program will face further                    
 postponement.  Mr. Hebhardt said that this proposal would only                
 exacerbate the financial distress currently experienced by the                
 Skagway School District.  As this proposal or others for funding              
 education are discussed, Mr. Hebhardt indicated the need for                  
 sensitivity to those communities like Skagway who are already doing           
 more than its fair share.  The establishment of an educational                
 endowment is meritorious due to its potential to fully fund                   
 education in a reasonable time.  Mr. Hebhardt stated support for              
 the establishment of an education facilities fund and an increase             
 in the tobacco tax.  In conclusion, Mr. Hebhardt stressed the need            
 to work together on this issue.                                               
  SENATOR LEMAN  understood that due to the transitional funding in            
 CSSB 36(HES) there would not be a change in local contributions for           
 two years.   RICHARD HEBHARDT  reiterated that using the current              
 foundation formula, the city would contribute a total of 52 percent           
 to the school's operating budget if the city continues to                     
 contribute to the 23 percent supplemental allowed.  Mr. Hebhardt              
 said that simply illustrates that the City of Skagway is doing its            
 fair share.  The community needs some relief, state support.                  
  SENATOR LEMAN  noted that other communities were in the same                 
 situation as Skagway.  He requested the calculations.   RICHARD               
 HEBHARDT  said that he could provide those for the committee.                 
 Number 373                                                                    
  GREG MIDDAG , resident and teacher in Ketchikan, informed the                
 committee that he came to Juneau with a group of parents, teachers            
 and school board members to lobby with the Ketchikan Liaison Group.           
   Mr. Middag said that the Ketchikan Gateway School District stresses         
 that in addressing school funding the Legislature must revise the             
 area cost differential to bring it in line with the changes in the            
 cost of living in various communities throughout the state.  The              
 current area cost of living differentials are based on a 1985                 
 study.  A 1996 economic trends publication issued by the Department           
 of Labor illustrates how significantly those area cost                        
 differentials have changed.  For example, a June 1996 Department of           
 Labor report said that the cost living in Ketchikan is                        
 approximately the same as that in St. Mary's or Bethel while                  
 exceeding the cost of living in Dillingham, Nome and Kodiak.                  
 However, the area cost differential for Ketchikan is one while the            
 area cost differentials for Bethel, Dillingham, and others is                 
 significantly and substantially higher.  Mr. Middag gave the                  
 committee a packet of materials with all this information.                    
 From 1986 through the present the total revenue per pupil before              
 adjusting for inflation, a combined level of resources from the               
 Ketchikan Borough and the state, has increased by $161 per student            
 or about 2.8 percent.  When adjusted for inflation during the 11              
 year period that this formula has been in place, the total per                
 pupil funding has decreased by $1,693 or 30 percent to $4,010 since           
 1986.  The situation becomes even more dire when realizing that the           
 amount of state aid for a student before adjusting for inflation              
 since 1986 has decreased by 13.2 percent from 39, $159 in 1986 to             
 $3,433 in 1997.  When adjusted for inflation, per pupil state aid             
 has decreased by $1,612; a loss of 40.7 percent in the amount of              
 money that can realistically be put towards children's educations.            
 Mr. Middag said that the Ketchikan and North Slope districts are              
 very nearly the same on a lot of issues.  Ketchikan has lost 53               
 positions over the past seven years and expects to lose somewhere             
 between 5 and 30 teachers next year.  Ketchikan cannot provide an             
 appropriate level of educational experience.  After contacting many           
 legislators, Mr. Middag believed that there is a majority agenda to           
 deal with the state's fiscal gap and certainly the state needs to             
 be able to spend its money carefully and wisely.  The permanent               
 fund has been inflation proofed and the per diem of legislators has           
 increased over 60 percent, a needed increase, but the children of             
 the State of Alaska have been lost in the equation.  No matter what           
 is done with this funding formula, the portion is too small.  The             
 children of Alaska and Ketchikan and Nome and Skagway are falling             
 further behind.  Mr. Middag agreed with an increase in standards              
 and testing for teachers and students and a curriculum based on               
 high expectations, but the future of our state with continued                 
 irresponsible cuts in education should be reviewed.  Alaska                   
 probably has more money than most countries in the world, as a                
 surplus.  Mr. Middag urged the committee to review what is being              
 done to education and the children.                                           
 Number 299                                                                    
  SENATOR LEMAN  said that he rather classify what Mr. Middag referred         
 to as an agenda as a plan, a long-range plan which he believed to             
 be good for Alaska.   GREG MIDDAG  informed the committee that a              
 Representative explained that the majority plan over the course of            
 the next five years will not increase the basic foundation formula            
 dollars to the children of Alaska.  Such action would result in 16            
 years with an increase of $161 in Ketchikan.  At the end of that              
 five years instead of being $1,700 short per student over time, in            
 terms of actual buying power that the district can put towards                
 education, the district will be significantly further behind.                 
 Frankly, the needs of the children in Alaska cannot be met without            
 significant help which was needed yesterday.                                  
  CHAIRMAN WILKEN  hoped that this was the start to the correction of          
 the problem.                                                                  
  DENNIS MCCARTY , testifying from Ketchikan, emphasized that                  
 Ketchikan needs a bill this year that addresses the area cost                 
 differential and the hold harmless.  Ketchikan is almost at a five            
 percent student loss which will reach 10 percent or greater by next           
 Fall.  Ketchikan fully funds the local contribution at 40 percent             
 of the budget which is one of the highest in the state.  Ketchikan            
 is the next to the lowest in per capita contributions from the                
 state.  Ketchikan is doing more than its fair share.  Mr. McCarty             
 pointed out that the Department of Labor statistics report that               
 Ketchikan has a 19 percent higher cost of living than Anchorage,              
 while Ketchikan is funded at the same level.  Mr. McCarty                     
 emphasized that Ketchikan has nothing left to cut, except teaching            
 positions and privatization of the custodial staff.                           
 Mr. McCarty informed the committee that Ketchikan faces cutting 30            
 teachers with the 10 percent loss in students due to the closure of           
 the mill.  Ketchikan cannot handle a delayed or partial                       
 implementation of funding reform; a solution is needed this Spring.           
 Mr. McCarty noted that the state helped Sitka with the hold                   
 harmless when it experienced drastic changes in its population.               
 Mr. McCarty hoped the Legislature would review the hold harmless              
 for Ketchikan.                                                                
 Number 198                                                                    
  RON DRATHMAN , Kenai Peninsula Borough Assembly member and parent,           
 emphasized that this legislation is important for Kenai and Mat-Su            
 Boroughs who traditionally fall through the gap.  Under the current           
 foundation formula, the Kenai Peninsula Borough is taxing at the              
 maximum level permitted.  Still, teachers and programs are being              
 lost.  Mr. Drathman informed the committee that he also chaired the           
 Alaska Municipal League Legislative Subcommittee on Education &               
 Local Power which has placed this issue number one.  The                      
 legislative committees are meeting in Juneau April 1-3.  Mr.                  
 Drathman invited the committee to participate in the meeting on               
 April 2 when this issue will be discussed.  Mr. Drathman requested            
 that a spreadsheet for the next five years under this proposal be             
  GORDON CASTANZA , Superintendent of Chatham School District, said            
 that he would like the committee to appoint a task force to work on           
 drafting new area cost differentials soon.  The longer it takes the           
 more adversely impacted the Chatham School District will be.  Mr.             
 Castanza encouraged the committee to increase the area cost                   
 differential by at least 30 percent which is what has been lost               
 since 1985.  With regard to REAA participation and the school tax,            
 how will the constitutional obstacle of a dedicated tax be                    
 overcome?  For the REAAs, this tax would be regressive in                     
 particular in Chatham School District which does not have resources           
 for extraction.  The funding equity issue and the ability of the              
 REAAs to raise revenues and taxation would create the need to                 
 revisit California's landmark case.  If the school tax raised $5              
 million that would be divided among the 21 REAAs at $238,000 per              
 REAA which would probably be fractionalized according to the size             
 of the REAA.                                                                  
 Number 090                                                                    
 With regard to the federal impact aid, Mr. Castanza stressed to the           
 committee that the amount of federal impact aid continues to                  
 dwindle.  For example, in the past the Chatham District received              
 over $1 million in federal impact aid while the current amount is             
 $400,000.  He noted that President Clinton's budget includes $100             
 million less in federal impact aid with no distributions for                  
 Section 8,002 monies.  Mr. Castanza pointed out that the Chatham              
 School District is surrounded by federal lands.  Even with                    
 diminishing federal impact aid, the district must provide first               
 class service in order that the Glacier Bay National Park                     
 Superintendent can attract quality employees.  The Glacier Bay                
 National Park nor the National Parks Service are helping offset the           
 impact of such demands.                                                       
 Mr. Castanza informed the committee that the Chatham School                   
 District has been assessed a $650,000 repayment to the federal                
 impact aid office for overpayment given in FY94 and FY95.  If there           
 is a linking between the federal impact aid and the state basic               
 need, where will the $650,000 come from to pay the government.                
 In response to Chairman Wilken, Mr. Castanza said that the                    
 California case regarding a dedicated tax was Serrano v Priest.               
 The $650,000 is not related to the Federal Forest Service                     
 Allocation.  The $650,000 came about because all of the REAAs were            
 required by the Federal Impact Aid Office a few years ago to                  
 recalculate and identify the land from which children of Native               
 extraction were living.                                                       
  TAPE 97-25, SIDE A                                                           
 Number 003                                                                    
  BOB DOYLE , testifying from Mat-Su, ensured the committee that the           
 Mat-Su district has done much to achieve local responsibility and             
 accountability.  Administrative overhead has been reduced in the              
 Mat-Su district.  There have been hard freezes in the salaries of             
 the classified employees and the salary increases for teachers have           
 been restricted.  Further health insurance has been frozen and                
 capped, new hires have been restricted, and the district has                  
 participated in the early retirement program.  Mr. Doyle said that            
 Mat-Su needs some help from the Legislature.  Shifting money from             
 one district to another could be a partial solution; however there            
 should be an increase in money for enrollment increases, an                   
 adjustment for inflation, and a fair and equitable area cost                  
 Mr. Doyle stated that he liked the simplification, the minimum                
 school size, the change in the count date, and some form of                   
 supplemental equalization in the proposal before the committee.               
 Mr. Doyle believed that there are areas in Alaska that have a more            
 difficult time raising money through assessed valuation.  In                  
 conclusion, Mr. Doyle informed the committee that when he graduated           
 from East High in Anchorage there was a good school system with               
 little oil revenue.  Now there is a tremendous amount of oil                  
 revenue in Alaska, while school systems have needs that are not               
 being met.                                                                    
 Number 070                                                                    
  MARYSIA OCHEJ , Business Manager for Southeast Island School                 
 District and parent, informed the committee that she has worked in            
 Southwest Alaska in rural schools for almost five years.  She has             
 worked for the Southeast Island School District for over six years.           
 The disparity between the two areas was apparent when she moved to            
 Southeast Alaska.  Ms. Ochej said that the area cost differential             
 was inadequate and the area cost differential in the proposal                 
 remains inadequate.  In the Southeast Island School District some             
 schools do not have access to roads, scheduled air service, or                
 regular fuel delivery.  Currently, there is difficulty in                     
 communicating with three of the schools in the district.                      
 Therefore, additional money is required to meet the basic need.               
 Ms. Ochej discussed the obstacles faced by rural schools such as              
 expensive in-service days and travel for centralized testing.                 
 Ms. Ochej stated that the Legislature is charged by the                       
 Constitution to provide an equitable education for all students in            
 Alaska.  The proposals before the committee appear to shift money             
 from rural districts to urban districts.  Is balancing the budget             
 more important than providing a quality education to the children             
 of Alaska?  Ms. Ochej asked the committee if it was prepared to pay           
 for the consequences - "Would you prefer to pay for jail in the               
 future or education in the present?"  Rural children have the same            
 needs as those in urban areas.  Ms. Ochej said that if the budget             
 cannot be balanced, then education should be funded in order to               
 provide a basic quality education for all Alaska's children.                  
  CHAIRMAN WILKEN  apologized for not being able to get to those               
 remaining on the teleconference list, but those people will be on             
 the top of the list for Monday's meeting.  Chairman Wilken informed           
 the committee that the Department of Labor is developing the                  
 numbers to isolate those in REAAs outside of first class home rule            
 cities.  There being no further business before the committee, the            
 meeting was adjourned at 10:55 a.m.                                           

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