Legislature(1997 - 1998)
03/17/1997 09:03 AM Senate HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE March 17, 1997 9:03 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. OTHER MEMBERS PRESENT Senator John Torgerson Representative Allen Kemplen COMMITTEE CALENDAR SENATE JOINT RESOLUTION NO. 23 Urging the United States Congress to amend the Social Security Act so that the higher cost of living in Alaska is reflected when the per capita income of the state is used as a factor in determining the federal share of Medicaid costs. - MOVED SJR 23 OUT OF COMMITTEE 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 SJR 23 - No previous Senate action to record. SB 36 - See Senate Health, Education & Social Services Committee minutes dated 2/12/97 and 3/14/97. SB 85 - See Senate Health, Education & Social Services Committee minutes dated 2/19/97 and 3/14/97. WITNESS REGISTER Karen Perdue, Commissioner Department of Health & Social Services PO Box 110601 Juneau, Alaska 99801-0601 POSITION STATEMENT: Reviewed the need for SJR 23. Bob Labbe, Director Division of Medical Assistance Department of Health & Social Services PO Box 110660 Juneau, Alaska 99811-0660 POSITION STATEMENT: Discussed the FMAP. Dennis Wetherell, Parent PO Box 514 Palmer, Alaska 99645 POSITION STATEMENT: Suggested that supplemental funding be raised to 25 percent and maintain the separate funding categories. Susan Stone, Parent PO Box 5891 Ketchikan, Alaska 99901 POSITION STATEMENT: Stressed the need to plan for the needs of Alaskan children. Dan Beck, Acting Superintendent Delta/Greely School District PO Box 527 Delta Junction, Alaska 99737 POSITION STATEMENT: Suggested that the school tax be extended to the entire state and that special education transportation be included. Syd Wright, retired Principal PO Box 624 Petersburg, Alaska 99833 POSITION STATEMENT: Stated that the basic problem, the failure to inflation proof the formula, was not being addressed. Dr. Keith Tolzin, Superintendent Ketchikan Gateway Borough School District Pouch Z Ketchikan, Alaska 99901 POSITION STATEMENT: Discussed the situation in Ketchikan. Lisa Bezenek, Parent PO Box 6464 Ketchikan, Alaska 99901 POSITION STATEMENT: Urged the committee to take a common sense approach. Richard Swarner, Executive Director Kenai Peninsula Borough School District 148 N. Brinkley Soldotna, Alaska 99669 POSITION STATEMENT: Expressed concern with the funding community size, the cost factors, and the student count date. Karen Eakes, President Ketchikan Education Association 636 Main Street Ketchikan, Alaska 99901 POSITION STATEMENT: Suggested that Alaska should use its wealth to fund education. Mike Brown, Parent 734 Monroe Ketchikan, Alaska 99901 POSITION STATEMENT: Discussed the problems with the area cost differential. Karen Hanson-Pitcher PO Box 5642 Ketchikan, Alaska 99901 POSITION STATEMENT: Discussed the situation in Ketchikan. Forrest Olemaun, Board President North Slope Borough School District PO Box 169 Barrow, Alaska 99723 POSITION STATEMENT: Stated that the legislation before the committee would devastate the children of the North Slope. Tina Corwin, Member North Slope Borough School Board PO Box 169 Barrow, Alaska 99723 POSITION STATEMENT: Discussed the situation in the North Slope. LeLand Dishman, Superintendent North Slope Borough School District PO Box 169 Barrow, Alaska 99723 POSITION STATEMENT: Discussed the situation in the North Slope and suggested creating a committee to review education funding. Mike Aamodt, Vice President North Slope Borough Assembly PO Box 68 Barrow, Alaska 99723 POSITION STATEMENT: Discussed the situation in the North Slope and indicated the need to increase educational funding to all of Alaska. Carl Rose, Executive Director Alaska Association of School Boards Juneau, Alaska POSITION STATEMENT: Discussed the current foundation and problems with the proposal. Kevin Ritchie Alaska Municipal League Alaska Conference of Mayors 217 Seward Juneau, Alaska POSITION STATEMENT: Discussed the municipalities as the other partner in education funding. ACTION NARRATIVE TAPE 97-26, SIDE A SJR 23 REFLECT AK. COLA IN FED MEDICAID SHARE Number 001 CHAIRMAN WILKEN called the Senate Health, Education & Social Services Committee (HES) to order at 9:03 a.m. and introduced SJR 23 as the first order of business before the committee. COMMISSIONER KAREN PERDUE , Department of Health & Social Services, spoke in favor of SJR 23 which would support a change in the Federal Medical Assistance Percentage, the cost that the federal government will share in the state's Medicaid program. This has been historically identified as an inequity. Currently, for every $.50 the state spends, the federal government participates with $.50 in the Medicaid program. Commissioner Perdue explained that the calculation is according to a formula based on per capita income in an individual state in relation to the per capita income in the U.S. Alaska has had exceptions to these calculations such as the 125 percent poverty level of the federal level. The FMAP does not recognize the historic measures of change. Alaska receives the lowest FMAP that can be received, 50 percent, as does 11 other states. The highest FMAP is 77 percent. Commissioner Perdue said that the FMAP adjustment would result in a lot of money for Alaska, $37 million for a one time adjustment to $39 million. This inequity was identified during the federal Medicaid reform last year by Senator Murkowski in the Finance Committee. However, the one time savings to Alaska was not realized due to the context of the Medicaid cap, therefore the bill did not pass. Commissioner Perdue clarified that there are two issues: the one time adjustment for the current spending and the perspective savings as the state continues to invest money into Medicaid. SJR 23 is consistent with Senator Murkowski's bill and should assist in addressing this inequity. Number 119 SENATOR LEMAN pointed out that those percentages in the packet specify how much higher the cost of living is in Alaska. Senator Leman thought that more than four Alaskan cities should be in the 20 highest cost areas. Perhaps, that is because not many cities are identified or is there a size cut off. BOB LABBE , Director of the Division of Medical Assistance in DHSS, said that those were just representative. There is not an exhaustive list of all the cities and the comparisons. Mr. Labbe offered to provide the committee with a comparison of the price of a loaf of bread in various cities in Alaska and the lower 48. Mr. Labbe pointed out that the calculation does change on an annual basis. Alaska is one of the few states that is at the floor percentage, 50 percent. The actual dollars will not become apparent until the accountants do the calculations. In the future, some years will result in an increase and others a decrease. Mr. Labbe mentioned that this issue is a priority of the division who supports this. Number 175 COMMISSIONER PERDUE commented that this has been a priority for the Governor, for herself and for Mr. Labbe. She noted that many technical issues will come up. Commissioner Perdue informed the committee that several years ago the federal government said that the department owed them $100 million in the upper limit which is the difference between what the department pays rural hospitals and nursing homes and what the Medicare upper limit was. Currently, there is an opportunity to get this done. Commissioner Perdue expressed the need to achieve this before becoming involved in the continued Medicaid restructuring. CHAIRMAN WILKEN asked if it was important to know why there is a difference between the federal percentages and the federal medical assistance percentages in other states. BOB LABBE stated that the federal percentages apply to some other federal programs as a result of the restructuring of the welfare reforms block grant. Mr. Labbe said that the federal percentages column on the left is what is being reviewed. The importance of the federal medical assistance percentage is that it varies. Mr. Labbe was unsure that Alaska would earn 50 percent based on the current formula. CHAIRMAN WILKEN inquired as to which budget the savings would surface if this were to happen. COMMISSIONER PERDUE did not believe that this would happen within the next 60 days. In further response, Commissioner Perdue believed that this had a better than 50 percent chance to pass since this was taken up last year. Number 245 SENATOR LEMAN said that he would support SJR 23 in order to support equity in the program, however his support was not intended to suggest the need for more federal involvement in welfare or Medicaid programs. Senator Leman believed that decentralization and movement away from federal involvement would be better. SENATOR GREEN pointed out that testimony stated that Alaska and 10 other states are at the 50 percent level, but the packet information lists 16. BOB LABBE was not sure of the 10. The list will be effective in October. Perhaps, some have dropped to the 50 percent level due to the improvement in the economy in the lower 48. Mr. Labbe offered to check that. CHAIRMAN WILKEN said that he would entertain a motion to move SJR 23 from committee. SENATOR LEMAN moved to report SJR 23 out of committee with individual recommendations and the accompanying zero fiscal note. Without objection, it was so ordered. COMMISSIONER PERDUE stated that more flexibility for the state would be appreciated, but as Medicaid reform continues risk must not be shifted to the state. This is an entitlement program to which the federal government has an obligation. Care must be taken in order to ensure that risk is not passed to the state. SB 36 PUBLIC SCHOOL FUNDING SB 85 PUBLIC SCHOOL FUNDING/CHILD CARE GRANTS Number 302 CHAIRMAN WILKEN announced that SB 36 and SB 85 would be the next order of business. DENNIS WET HERELL , parent, informed the committee that he was a member of the 1993 Special Education Regulations Review Task Force. Mr. Wetherell was relieved by the language in Section 15 of the CS which reimburses districts for the cost of special education related transportation. Mr. Wetherell expressed discomfort with Section 14.17.420 on page 3 of the CS which provides for special needs funding. Under this provision, a total of 20 percent supplemental funding is available which is less than under the current law. Mr. Wetherell informed the committee that 14.5 percent of students are special education students with disabilities and another 4.5 percent are gifted. He suspected that several percent each fall into the bilingual and vocational education category. Under this proposal, 25 percent of the students are competing for 20 percent supplemental funding. The problem is further compounded because students with disabilities are protected by federal law as is the money to educate those students. Mr. Wetherell said that it was difficult if not impossible to reduce funding for students with disabilities. Therefore, 5.5 percent of the supplemental funding is left to be split among 10-11 percent of the students. Such a shortage will pit parent against parent, program against program, and a loss of services to all. Mr. Wetherell requested that the special needs funding factor be raised to 1.25 which can be accomplished without change to the total state contribution to education if the base student allocation is reduced to $3,640. Number 348 Mr. Wetherell was uncomfortable with a single pot of supplemental funding for all groups of special needs students. The 1993 Task Force discussed non-categorical funding in the context of students with disabilities only, gifted education was kept separate because it was not protected by federal law. This separation was done so as to provide parental leverage at the local level to ensure that state education funds were spent on the purpose for which the funds were allocated. The 1993 Task Force did not consider bilingual and vocational education because those categories do not fall under special education law. Mr. Wetherell requested that the three funding categories for the various groups of special needs students be restored. Mr. Wetherell suggested that supplemental funding grants in the amount of 14.5 percent for special education, 4.5 for gifted education, 3 percent for vocational education, and 3 percent for bilingual education. This would result in a special needs funding factor of 1.25. In response to Chairman Wilken, DENNIS WETHERELL said that his reference to page 3 was regarding special needs funding not intensive services. The 1993 Task Force reviewed intensive services as a separate funding category and the numbers of the task force seem to be similar to those in paragraph (2) of Section 14.17.420. CHAIRMAN WILKEN inquired as to the source of the increase from 1.20 to 1.25. DENNIS WETHERELL reiterated that 14.5 percent of the students have disabilities and 4.5 percent are gifted which totals 19 percent of the 20 percent allocation. There are probably 3 percent or more in each category of the vocational or bilingual categories. Therefore, all the categories total 25 percent. Mr. Wetherell specified that his calculation was based on the average number of students in each category statewide. In further response to Chairman Wilken, Mr. Wetherell clarified that the percentages for special education and gifted students are a percentage of the total ADM statewide, but the percentage for bilingual and vocational students was an approximation. CHAIRMAN WILKEN informed everyone that those numbers varied from 9- 70 percent of the total ADM depending on the district. Each school district would classify those categories and there was no auditing of that. Chairman Wilken said that it was confusing as to the reason why some school districts had such a disproportionate amount of students in those categories. If this method continues, some sort of auditing/verification would be required. Number 417 SUSAN STONE , parent, was concerned that each year's discussion of bills on education leave problems unsolved and education less than it was in the previous year. She noted the inadequate amount of money sent to Ketchikan which resulted in a divided community regarding how to spend the inadequate funds. Ms. Stone informed the committee she was educated in Alaska when Alaska's education was the envy of others. Ms. Stone discussed the losses in Ketchikan schools and the shame she felt with what is considered adequate for Alaskan schools. Parent groups are caught up in attempts to raise money rather than learning activities to enhance the learning experience. Ms. Stone expressed anger that Ketchikan's counselors leave the elementary schools when Ketchikan is experiencing anguish over job losses to a significant part of the community. Ms. Stone noted that the cost of living in Anchorage is lower than that of Ketchikan. Ms. Stone indicated the need to determine what it realistically costs to run a school by reviewing the market forces and educational requirements to determine the salary of teachers. Perhaps a standard reporting system could be devised in order to review school statistics from across the state. Ms. Stone said that Alaska has not kept up in education. She was glad to see the proposed increase in standards, but there are not enough resources to do the job. Ms. Stone informed the committee that she attended school in Alaska before oil money and was mystified that she had educational experiences that her children never had. Ms. Stone emphasized the need to plan for the needs of Alaskan children, not for what they can do without. Number 472 DAN BECK , Acting Superintendent for the Delta/Greely School District, said that Ms. Stone had some good points. Mr. Beck believed that the special needs factor would reduce some of the reporting requirements for the vocational and gifted education categories. The Delta/Greely School District has an influx of Russian and Eastern European students which results in a growing bilingual population. Mr. Beck said that the district could work within any funding factor for special needs that the Legislature determines adequate. Holding transportation separate and removing intensive needs from the special needs are both positive aspects of the CS. The school tax for REAAs is also a positive aspect of the CS. Mr. Beck suggested that the school tax be expanded to include the entire state because as it stands seasonal employees are missed. With regard to special education transportation, districts currently cannot be reimbursed for transportation services for an extended school year. The extended school year is required by the IAP and those costs are not reimbursable. SYD WRIGHT , a retired Principal, informed the committee that he had been an educator all of his life and mainly in Alaska. Mr. Wright referred to Alaska's poverty of spirit not resources, with regard to education. Mr. Wright identified the following improvements under the two proposals: counting students rather than units, fixing area differentials, removing the cap, incorporating single site funding, taxing unorganized boroughs, funding the Quality Schools Initiative, and consolidating gifted and special education classifications. Those are worthwhile, but minor; schools will not be significantly better. Mr. Wright noted that he had testified on the basic flaw of the foundation program in 1988, 1991, and now. Mr. Wright identified the problem as the failure to inflation proof the formula. In 10 years the foundation unit was increased once by 1.6 percent, during the same period Alaska's cost of living increased about 30 percent. Further the cost of college tuition has increased more than 300 percent and legislators increased their per diem by 50 percent three years ago and seven percent last year. During his time in education, Mr. Wright said that he has observed the following: significantly increased class size, indefinitely deferred maintenance of school buildings, loss of power to compete for the best teachers, loss of some of the best experienced teachers due to early retirement incentives, creation of hiring zero experience for incoming teachers, loss of music, art and physical education in elementary schools, reductions in the numbers of administrators while expecting more teacher evaluation, loss of buying power for technology, loss of electives in high school, and loss of air travel in Southeast for extra-curricular teams. Mr. Wright informed the committee that the national publication Teacher Magazine graded all 50 states on the state's financial support of schools in relation to the state's ability to pay - Alaska scored an F. In conclusion, Mr. Wright challenged the committee to put on a mantle of leadership. CHAIRMAN WILKEN requested that everyone on the network fax or mail testimony to the committee. Number 553 DR. KEITH TOLZIN , Superintendent of Ketchikan Gateway Borough School District, thanked Mr. Wright for his comments. Dr. Tolzin believed that the education tax, special needs and other non- categorical funding were positive aspects of the proposal. Dr. Tolzin reiterated the reductions experienced in Ketchikan, but noted that the district has also attempted to create solutions to bring spending in line with the available resources. For instance during bargaining with teachers this year, access to the Masters column was limited. Contracting the custodial services has also been reviewed for possible savings. Dr. Tolzin said that the district should not be reviewing such short-term solutions. Ketchikan believes that the area cost differential should be reviewed. Dr. Tolzin urged the committee to attempt a study that would be completed by January 1998 because districts cannot wait two years. Dr. Tolzin informed the committee that he was a proponent of the educational endowment, Alaska is not a poor state. The tax, if extended statewide, could begin to fund such an endowment. Dr. Tolzin echoed Mr. Beck's comment regarding taxing seasonal employees. CHAIRMAN WILKEN pointed out that page 14, lines 9-13 of the CS says that the Department of Education must submit a report regarding the student allocation based on the Consumer Price Index. TAPE 97-26, SIDE B SYD WRIGHT said that made him feel better. LISA BEZENEK , parent testifying from Ketchikan, agreed with Ms. Stone's comments. Ms. Bezenek was frustrated with the political process and the children being lost through it all. Ms. Bezenek explained that her husband brought her to Alaska by expounding the virtues of the educational system here. There are wonderful teachers in Ketchikan, but the teachers are strapped. Ms. Bezenek urged the committee to return to common sense with education. Perhaps, starting fresh would be an option; determine the cost of running a school with good programs and determine the amount of state aid. Ms. Bezenek informed the committee of the signatures being compiled that illustrate Ketchikan's support for a better education. CHAIRMAN WILKEN noted that Ketchikan has been at the table during each discussion and applauded its involvement. Number 545 RICHARD SWARNER , Executive Director for the Kenai Peninsula Borough School District, believed that the CS is the best effort thus far to deal with the formula. The CS encompasses the following positive aspects: the separation of the student transportation costs, the provision that all districts contribute to education funding, the funding of an area cost differential study, the concept of different area differentials for various funding communities, the 20 percent categorical funding, the separation of the intensive needs funding, the removal of the local effort cap, and the notion of reviewing the CPI or inflation costs for education. Mr. Swarner expressed concern with the funding community size factors. He pointed out that with a funding community of 21-40 students a factor of 2.2 is applied and with 41-80 students a factor of 1.9 is applied. That should be reviewed. Also the cost factors should be such that like communities have similar cost factors. Under Section 14.17.500, Mr. Swarner suggested that the student count date be changed to November 15th. Mr. Swarner said that while it may be appropriate to remove the cap, the Legislature must ensure that education is funded per the constitution. Mr. Swarner noted that the Kenai would submit written testimony. In response to Senator Green, RICHARD SWARNER supported taxation of all districts. SENATOR TORGERSON said that he was listening in via teleconference. Number 478 KAREN EAKES , President of the Ketchikan Education Association, commended the comments of Ms. Stone and Mr. Wright. She informed the committee that she was a 30 year resident of Ketchikan and a teacher with 26 years of experience of which 21 have been in Ketchikan. Ms. Eakes noted the lip service given to the importance of education, however the actions are not consistent with those words. There has been a continual decline in educational services in Ketchikan due to 10 years of flat funding, inflation, and inaccuracies in the local area cost differential. Ms. Eakes reiterated that Ketchikan does not have librarians, nurses, counselors, daytime custodians, or a classroom instructional aid in the elementary schools. Ketchikan only has half-time music and physical education in the elementary schools. Ms. Eakes noted the cuts at the middle school and high school level as well. In total, there have been some 50 staff cuts in Ketchikan over the past 10 years. All educational staff are stretched to the limit. Furthermore, many of the buildings and playgrounds in Ketchikan are inadequate and substandard. The district's technology is minimal and outdated, except at the high school. Ms. Eakes urged the committee to support the hold harmless provision for the coming school year. The closure of the pulp mill accentuates an already critical funding situation. Ms. Eakes informed the committee that the School Board is reviewing draft budget proposals that range in cuts of $470,000 in the status quo to over $2 million in a 90 percent funding situation. Alaska is wealthy and it is time to use that wealth to support and increase the educational funding. MIKE BROWN , parent, urged the committee to support the hold harmless provision for Ketchikan. Mr. Brown noted that he had submitted written comments to the committee last week. Mr. Brown said that Ketchikan and other communities have an area cost differential that does not reflect the cost of living of the area. He did not believe that Ketchikan was being provided equal protection as specified in the Alaska Constitution. Further, the CS says that the area cost differentials will be legislated which Mr. Brown believed would be a failure. Mr. Brown suggested that regulations should be enacted in order to provide the flexibility to change the area cost differentials in regulation. CHAIRMAN WILKEN thanked everyone on the teleconference network. KAREN HANSON-PITCHER , 25 year resident of Ketchikan and parent, echoed the concerns discussed by Ms. Eakes regarding the cuts in programs and positions in Ketchikan. The parents in Ketchikan have been supportive and have attempted to provide what is eliminated through the cuts. Parents and businesses raise money for technological purchases for the schools, even so, much of the computer equipment available would be considered outdated. Ms. Hanson-Pitcher expressed the need to provide a basic education. Ms. Hanson-Pitcher told the committee that her husband attended school in Ketchikan before the oil money and had more programs than their child does now. Education in Ketchikan is eroding due to the decrease in funding. Ms. Hanson-Pitcher understood the federal movement to be towards equitable funding; making the funding in ghetto and inner city schools equitable to the funding in affluent suburbs. That seems to be the intent of the state legislation as well, but that is not what is happening. The Ketchikan district is similar to the ghetto schools down South as more funding is lost. Alaska should be able to do better. Number 355 FORREST OLEMAUN , Board President of the North Slope Borough School District, said that the legislation before the committee could have a devastating affect and would infringe on the constitutional rights of the children of the North Slope. Mr. Olemaun suggested that when reviewing the foundation formula bills, the committee consider recommending the appointment of a task force to evaluate the facts and figures of the formula. The task force should include legislative and DOE representation, school business managers, superintendents, educators, and individuals from all parts of Alaska. Mr. Olemaun stressed that when considering this or any other formula the real issue, educating children, should not be forgotten. The education system on the North Slope has almost reached the ability to compete in the global market place. Mr. Olemaun reiterated that should this legislation pass, it would have devastating results on the North Slope's educational resources; "where would the Legislature go the next time they feel a need to increase the revenue to their constituents." SENATOR LEMAN noted that this was his ninth legislative session and much testimony has been taken on this issue over the years. Why would a task force with the make up Mr. Olemaun specified decide upon a different conclusion or recommendation than the Legislature? FORREST OLEMAUN did not have an answer, but felt that if all the facts and figures were provided to the people of Alaska the state would be headed in the right direction for all children in Alaska. SENATOR LEMAN appreciated Mr. Olemaun's testimony as well as prior testimony from the North Slope. He also understood the impact facing the North Slope Borough School District. Senator Leman ensured Mr. Olemaun that the committee would listen to those effected which is what is happening now. SENATOR GREEN mentioned that many present participated in a task force two years ago which resulted in three plans being brought forth. All three plans were rejected. Senator Green emphasized that the CS is a starting point and now the focus should be on how to make it better. Senator Green commended the Chair on all his work. Number 260 CHAIRMAN WILKEN informed Mr. Olemaun that Fairbanks had a bond issue in May 1996 which asked the people of the Fairbanks Northstar Borough whether they wanted to build new schools by spending 100 percent of their own money, $64 million, or ask the state to pay 70 percent of that. Some people tried to defeat the bond issue; one of the issues brought forth was regarding equity. How can Fairbanks be asked to spend money on schools when there are boroughs with a value four times greater with one-eighth of the students who pay very little for education? This is a place to start. Chairman Wilken hoped that Mr. Olemaun would appreciate his problem of how children are educated in the Interior of Alaska. TINA CORWIN , North Slope Borough School Board Member, said that any of the foundation formula bills would devastate the North Slope, especially when remembering when students were sent to schools in other cities or states. Ms. Corwin also recalled the plane crash in 1971 in which several rural students were lost. The children of the North Slope deserve to receive an education at home with their families. Ms. Corwin informed the committee that the North Slope Borough School District is one of the major employers in the villages. The passage of any of the bills would impact the economy of those villages which already have a low employment rate. Ms. Corwin pointed out that education costs on the North Slope are expensive. The North Slope would prefer to spend less money on those things the urban areas take for granted. Providing an education to urban students is much cheaper than in rural villages. The North Slope has 10 schools in its district, and seven of those can only be accessed by plane. Ms. Corwin suggested working on the formula together to help all Alaskan students. SENATOR LEMAN was sorry for the loss of those students in the 1971 crash. Senator Leman noted that the Mt. Edgecombe type education has been a successful model and there is a waiting list of students who want to participate. He also agreed that educating students in their own community is good. Senator Leman suggested that the Mt. Edgecombe type of education be reviewed in order to learn from it. Number 153 TINA CORWIN pointed out that it cost more for children to attend a BIA school than to attend school in Barrow. Ms. Corwin believed that it cost $20,000 per student at Mt. Edgecombe. SENATOR LEMAN was not sure about those numbers and requested those numbers and comparisons taking into account all the facilities. Senator Leman agreed that Mt. Edgecombe is expensive, but believed that it may not be far more expensive than some of the communities. TINA CORWIN agreed that it would range between different schools on the North Slope. SENATOR LEMAN said that the Mt. Edgecombe school would not be for everyone, but that opportunity should be provided. A number of leaders in Alaska were educated at Mt. Edgecombe. FORREST OLEMAUN pointed out that any school would be successful if allowed to limit the number of students in attendance as well as picking those students. LELAND DISHMAN , Superintendent of the North Slope Borough School District, commended the students from the North Slope that testified at the last meeting. Those students were chosen at random and only had two hours notice. Mr. Dishman stated that any counsel from Mr. Wright would be beneficial. Mr. Dishman informed the committee that the North Slope district is about the size of Michigan with a population of 2,550 students. The district has 10 schools, three of which are located 300 air miles from Mr. Dishman's office. Mr. Dishman feared that the students of the North Slope would lose the opportunity to attend accredited schools and receive an adequate education with the passage of this bill. This loss would be ironic since Alaska is considering forcing all of its schools to become accredited. Mr. Dishman reiterated the possible loss of jobs due to the passage of this bill which would ultimately result in increases in public assistance and welfare rolls statewide. Further, the district's curriculum would be reduced and students would not have the opportunity to attend specialized classes which are preparation for work or college. Mr. Dishman said that these students would not have the chance to live the American dream. Number 058 Mr. Dishman noted that one of the goals for Project 2000 is that every child will enter school ready to learn by the year 2000. The national and state goals also indicate the need for students to be able to use the technology to participate in the world market and obtain admission to quality colleges. Another national and state goal is to improve parental involvement in the schools. The passage of this bill would virtually eliminate all those goals, isolating the students of the North Slope, and their parents would be consumed with feeding the family by subsistence means. Mr. Dishman indicated that the board chairman had mentioned the possibility of the violation of the students of the North Slope's constitutional rights, perhaps he meant their civil rights. Even rural students have rights protected by the constitution. In conclusion, Mr. Dishman emphasized that he supported equity, however nothing is so inherently unequal as attempting to equalize unequals. Mr. Dishman suggested that a committee of urban and rural experts in school finance, cost of living, economic viability, technology, and civility be created in order to develop a plan that would fund education without dividing the state along rural and urban lines. Mr. Dishman suggested that everyone work together to create quality education statewide. TAPE 97-27, SIDE A SENATOR WARD said that there would not be such a committee. He suggested that Mr. Dishman determine what such a committee would have developed as a fair and equitable solution and provide that to the HESS committee. LELAND DISHMAN pointed out that there has been much discussion about some schools losing art, music, and physical education teachers. The elementary schools on the North Slope do not have such. With regards to overcrowding, the Barrow schools has 25-30 students in a classroom and in the village schools one teacher has 15-18 students from four grades. Mr. Dishman informed the committee that to have a school board meeting, noting the air travel involved, costs $20,000. With regards to Chairman Wilken's predicament, Mr. Dishman pointed out that Chairman Wilken was referring to capital project money and equating it to foundation money; those two are not tied together. Mr. Dishman understood the bond issue problem. In every community on the North Slope, the people voted schools as the number one priority. Number 044 SENATOR WARD understood that education is the number one priority for communities statewide. Senator Ward reiterated the need for Mr. Dishman to report his recommendations to the HESS committee because no other committee will be created. CHAIRMAN WILKEN believed that everyone was aware of the high costs in the North Slope. With regards to Mr. Dishman's comments that the passage of these bills would result in a decrease in funding for the North Slope, Chairman Wilken asked Mr. Dishman if he had given thought to how the North Slope Borough could participate more to education. LELAND DISHMAN said that the North Slope is capped at 20 mills from which the borough taxes at 18.50 and of that $60 million is capped for operations. For every $1 the state contributes, the North Slope Borough contributes $3. Mr. Dishman stressed that the money received from the state would not operate Barrow High School and the Polluck Elementary School. Therefore, eight schools must be operated from the funds of the North Slope Borough. Mr. Dishman informed the committee that the difference between what is taxed at 18.50 and 20 mills is surplus money that the oil companies have to pay that goes to the state. Mr. Dishman noted that he has sat on many committees regarding education funding, every committee determined that there was a funding problem not a distribution problem. CHAIRMAN WILKEN recommended that some thought be given to other funding sources within the North Slope Borough. With regards to bonds, Chairman Wilken said that bonds are votes about dollars. Bonds are a snapshot of the feeling on a particular issue. Chairman Wilken said that equity asks that citizens in the state participate to pay for their own education to the extent that they are able. Able is defined by the assessed valuation of the organization. Chairman Wilken said that was being requested from all, including the North Slope Borough. Number 162 MIKE AAMODT , Vice President of the North Slope Borough Assembly, discussed how he came to be a resident of the North Slope Borough. He is the owner of a small construction firm and since 1987 he has been involved in retirement planning for various groups. Mr. Aamodt informed the committee that he had reviewed the proposed school district budgets each year since he began on the assembly in 1985. Program elimination strips the children of the North Slope of equitable educational opportunities and destroys employment opportunities for residents. In the current budget proposal the district will provide a basic education comparable to that in the urban areas, more than just the basics is necessary. Intramural sports, proms, clubs, etc. are important for children. Mr. Aamodt asked the committee if it could imagine children going to a high school prom with 10 teenagers in the entire class; the North Slope Borough School District combines several schools together. Mr. Aamodt mentioned that a bus cannot be taken across town, the state has not tied towns in the North Slope with a road system as is the case in other districts. Mr. Aamodt reiterated that the proposals before the committee would place the North Slope Borough back to the time when either the BIA or the state ran the schools. Those systems were inadequate and inequitable. Mr. Aamodt discussed the time when he worked for the state school system before the Borough took over. There was not enough paper for use in the classrooms, ice had to be brought in from a lake 12 miles away in order to have water in school and honey buckets were used. During that time, two teachers attempted to teach 10 subjects at four grade levels in high school. Mr. Aamodt stressed that was only 20 years ago. Number 250 Mr. Aamodt discussed the district's goal of providing equity in education and the Borough Assembly's support of education. Funding from the state level should be increased and standards should be raised in the rural areas to the level of the North Slope in order to come closer to those in urban areas. The schools on the North Slope are approaching what he and his wife experienced as high schoolers more than 30 years ago when he and his wife graduated from Anchorage schools. The proposals before the committee resulting in a reduction in programs would destroy the basic economic fabric of the village economies. Mr. Aamodt noted that the district is attempting to replace certified people coming from outside with permanent residents, however the separation previously experienced creates difficulties in sending children away to college. The North Slope is close to producing graduates not hampered by the memory of separation which would increase those residents getting certified for school positions. Mr. Aamodt reiterated that the schools provide a large portion of the employment in many communities which these proposals would eliminate. Mr. Aamodt pointed out that the North Slope did not benefit from oil revenue which went to the state in order to help municipalities with their basic needs as well as to fund the permanent fund program. The North Slope Borough was established to prevent the continuation of inequality. Mr. Aamodt discussed the high property taxes in the North Slope. In conclusion, Mr. Aamodt pointed out that the state is mandated to provide education for Alaskan children. The proposal ignores that responsibility for the North Slope who is expected to provide 100 percent of the funding. Currently, the formula provides a portion of basic education and the North Slope provides the rest. Mr. Aamodt emphasized that basic education is defined differently in urban areas and rural areas. Mr. Aamodt suggested that the committee increase funding for all of Alaska, but not at the expense of a few districts. Furthermore, a permanent fund was developed in order to help the state in times of decreasing resources. Number 325 SENATOR LEMAN commented that he could imagine a class with 10 teens because he graduated with 16 students in Unalaska. Senator Leman also agreed that property taxes in the North Slope were high. He asked if a 2,000 square foot house close to $400,000 in value results in $200 per square foot. MIKE AAMODT explained that he became an assembly member because of this issue. Mr. Aamodt built the house and acknowledged that if a contractor were hired the house would have cost close to $200,000. The house is $96,000 in value, it is not worth $400,000. When building a house in the North, for every $1 spent on materials add another $1.5 for freight on that material. SENATOR LEMAN found it difficult to believe Mr. Aamodt's statement that the North Slope did not benefit from oil revenue. MIKE AAMODT explained that the state receives royalty from the North Slope's oil development. The North Slope has the tax base which Mr. Aamodt acknowledged as revenue, however it's not revenue that comes to the state and is given back to the North Slope in the form of major municipal assistance. Mr. Aamodt said that the North Slope does receive some assistance, but the state has not helped much with water and sewer projects. Revenues come to the state, the North Slope Borough just assesses taxes. Number 391 CARL ROSE , Executive Director of the Alaska Association of School Boards, said that he would provide the committee with written testimony. Mr. Rose said that he subscribed to Albert Einstein's philosophy that "no problem can be solved by the same consciousness that created it." The foundation was not designed to survive 10 years of inadequate funding with a 30 percent loss in buying power. Mr. Rose suggested that the foundation offset some of the down turn in the economy in the 1980s in some of the municipalities. The foundation provided some needy municipalities with additional state aid. Now many of the municipalities have increased the property value and as a result the foundation is working as designed; the foundation is reducing state aid to those areas with increasing property values. Mr. Rose clarified that equity is being defined in terms of population and how money should be distributed. No proposals in the last two years address the 30 percent loss in buying power. The 39 districts which must be held harmless under this proposal are evidence of not addressing that 30 percent loss in buying power. Mr. Rose expressed concern that there have been goals stated, but there are no answers for the changes taking place. He echoed Mr. Wright's comment that there are some positive aspects, but those only add up to a small percentage of the problem. How is the remaining money distributed minus the 30 percent loss in buying power? Mr. Rose said that the answer is 39 school district being held harmless in the first year and over time the hold harmless will be decreased and an increased local contribution through the mill rate will balance that. That moves toward a decreased state contribution and an increased local contribution or an increase in state mandates and a decreased state contribution and an increased local contribution. Mr. Rose stressed that the aforementioned problem should be addressed. Number 445 Mr. Rose acknowledged some good in the proposal before the committee, but the simplicity is lost when the numbers are generated. With regards to equity, for many equity is the status quo and any departure from that creates problems which may encourage litigation. Mr. Rose did not believe that the courts should decide how to fund Alaska's schools. He understood the fiscal gap and the resources of the state. The problems before the state require an abundant way of thinking. Mr. Rose said that there are solutions to these problems, although those solutions may not be politically palatable. There is a scarcity mentality today, there is not enough money which creates winners and losers, and haves and have-nots. Mr. Rose encouraged the committee to review how to place Alaskans in a position to be viable to the economy and the future. Mr. Rose offered to work with the committee. SENATOR LEMAN encouraged Mr. Rose to review why costs are high and determine how to provide a service at a less cost. CHAIRMAN WILKEN said that one of the definitions of equity is the ability of a district to pay for its education. He inquired as to Mr. Rose's definition of equity. CARL ROSE explained that for many districts what it currently receives is reality. A departure from that would raise serious questions. Requiring everyone to pay for education is a good move, however that does not equate to the actual numbers that get run. CHAIRMAN WILKEN stated that it was enlightening to read the Mat-Su decision by Justice Rebenowitz. That decision seemed to say that there is no equal protection clause for education under the Alaska Constitution. How education is funded is a majoritarian issue that must be dealt with through the Legislature which is occurring now. Number 495 KEVIN RITCHIE , Alaska Municipal League and the Alaska Conference of Mayors, noted that municipalities are the state's other partner in funding education. Currently, the State of Alaska funds about 75 percent of the cost of education and municipalities fund about 25 percent. Over the past years, the amount the municipalities contribute has increased substantially. Mr. Ritchie stressed that this is a state and municipal issue. He thanked Chairman Wilken for committing to talk with the Alaska Municipal League and the Conference of Mayors on April 1. Mr. Ritchie passed out some information to the committee which illustrated that municipalities face the same lack of resources as the state. The chart illustrated that there was a significant decline in revenues to the state in 1986, there was a decrease in the state contribution. Over the next three years up until 1992, the state contribution was brought to the level of 1986. During that same time, there were significant cuts in services in municipal schools but there was also a significant increase in local contribution to schools. The state's contribution flattened out after 1992 which accounts for the 30 percent loss in buying power. Mr. Ritchie pointed out that the gap is being filled by municipal governments and that increase is unlikely to continue. The next graph illustrates the funding of schools in 1996 with 1986 dollars. Municipalities have not totally offset the loss of purchasing power which is a result of the resources in communities. Mr. Ritchie said that municipalities and school districts have done much to create efficiency in programs, but both have also had to cut programs and staff. The last chart of the handout reviews trends in municipalities in general. Mr. Ritchie explained that the property tax issue has to do with the relationship between the state and municipalities. Mr. Ritchie acknowledged the work of some of the legislators in dealing with problems the municipalities have. The Conference of Mayors and the Municipal League have the same perspective as the state. Mr. Ritchie said that the basic goal, providing basic education, should be the determinant of whether the allocation process is fair or not. SENATOR LEMAN asked Mr. Ritchie if he could use the same time periods used in his charts to determine the actual state dollars versus municipal dollars as well as the federal component. TAPE 97-27, SIDE B CHAIRMAN WILKEN thanked everyone for the testimony. Chairman Wilken said that he would take the committee's lead regarding the pending course. The bill will be before the committee again on Wednesday. There being no further business before the committee, the meeting was adjourned at 11:25 a.m.