Legislature(1997 - 1998)

03/19/1997 09:05 AM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                         March 19, 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 CONCURRENT RESOLUTION NO. 6                                            
 Relating to the Alaska Telemedicine Project.                                  
  - MOVED SCR 6 am 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                                                             
 SENATE BILL NO. 97                                                            
 "An Act giving notice of and approving a lease-purchase agreement             
 with the City of Seward for the construction and operation of an              
 addition to the Spring Creek Correctional Center, and setting                 
 conditions and limitations on the facility's construction and                 
  - MOVED SB 97 OUT OF COMMITTEE                                               
 SENATE BILL NO. 48                                                            
 "An Act making appropriations for the operating expenses of the               
 state's integrated comprehensive mental health program; and                   
 providing for an effective date."                                             
  - MOVED SB 48 OUT OF COMMITTEE                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
 SCR 6 - No previous Senate action to record.                                  
 SB 36 - See Senate Health, Education & Social Services Committee              
         minutes dated 2/12/97, 3/14/97 and 3/17/97.                           
 SB 85 - See Senate Health, Education & Social Services Committee              
         minutes dated 2/19/97, 3/14/97 and 3/17/97.                           
 SB 97 - See Senate Health, Education & Social Services minutes                
         dated 3/12/97.                                                        
 SB 48 - No previous Senate action to record.                                  
  WITNESS REGISTER                                                             
 Kathy Boucha Roberts                                                          
 Alaska Telemedicine Project                                                   
 Washington, D.C.                                                              
  POSITION STATEMENT:   Discussed the purpose behind SCR 6.                    
 Jordan Koko, Intern                                                           
 Senator Pearce                                                                
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
  POSITION STATEMENT:   Discussed the purpose behind SCR 6 and the             
                      amendment included in the packet.                        
 John Williams, Mayor                                                          
 City of Kenai                                                                 
 210 Fidalgo Street                                                            
 Kenai, Alaska 99611                                                           
  POSITION STATEMENT:   Discussed concern with SCR 6.                          
 Shirley Holloway, Commissioner                                                
 Department of Education                                                       
 801 W. 10th Street, Suite 200                                                 
 Juneau, Alaska 99801-1894                                                     
  POSITION STATEMENT:                                                          
 Rick Cross, Deputy Commissioner                                               
 Department of Education                                                       
 801 W. 10th Street, Suite 200                                                 
 Juneau, Alaska 99801-1894                                                     
  POSITION STATEMENT:   Discussed the four factors leading to a shift          
                      of money from rural and poor districts to                
                      provide funding for districts with the ability           
                      to provide funding.                                      
 Robert Herron, President                                                      
 Lower Kuskokwim School Board                                                  
 PO Box 602                                                                    
 Bethel, Alaska 995599                                                         
  POSITION STATEMENT:   Stated that the concept of no new dollars is           
 Patrick Doyle, Superintendent                                                 
 Copper River School District                                                  
 PO Box 108                                                                    
 Glennallen, Alaska 99588                                                      
  POSITION STATEMENT:   Discussed problems with CSSB 36(HES).                  
 Robert McClory, Parent & Counselor                                            
 102 Shoup Street                                                              
 Ketchikan, Alaska 99901                                                       
  POSITION STATEMENT:   Discussed the situation in Ketchikan.                  
 Tammy Morris, Parent                                                          
 390 Forest Park                                                               
 Ketchikan, Alaska 99901                                                       
  POSITION STATEMENT:   Discussed the differences between Ketchikan            
                      and Fairbanks schools.                                   
 Diane Gubatayao, Parent                                                       
 Member, Ketchikan Gateway School Board                                        
 867 Monroe Street                                                             
 Ketchikan, Alaska 99901                                                       
  POSITION STATEMENT:   Discussed the inequitable funding.                     
 Mike Murphy, Chairman                                                         
 Nome School Board                                                             
 PO Box 1062                                                                   
 Nome, Alaska 99762                                                            
  POSITION STATEMENT:   Suggested that a two tier system be applied.           
 David Stone                                                                   
 Rural Education                                                               
 PO Box 44                                                                     
 Point Hope, Alaska  99766                                                     
  POSITION STATEMENT:   Supported the current foundation funding               
 Kim Frankson, Member                                                          
 School Advisory Council                                                       
 PO Box 216                                                                    
 Point Hope, Alaska 99766                                                      
  POSITION STATEMENT:   Discussed the impacts of the proposals.                
 Oliver Leavitt, Member                                                        
 North Slope Borough Assembly                                                  
 PO Box 124                                                                    
 Barrow, Alaska                                                                
  POSITION STATEMENT:   Discussed the proposals as unconstitutional            
                      and discriminatory.                                      
 Caroline Cannon, Mayor                                                        
 City of Point Hope                                                            
 PO Box 34                                                                     
 Point Hope, Alaska 99766                                                      
  POSITION STATEMENT:   Opposed changes to the current foundation              
 Jeff Jessee, Executive Director                                               
 Alaska Mental Health Trust Authority                                          
 Department of Revenue                                                         
 3601 C Street, Suite 742                                                      
 Anchorage, Alaska 99503                                                       
  POSITION STATEMENT:   Reviewed the AMHTA budget recommendations.             
  ACTION NARRATIVE                                                             
  TAPE 97-28, SIDE A                                                           
               SCR  6 ALASKA TELEMEDICINE PROJECT                             
 Number 001                                                                    
  CHAIRMAN WILKEN  called the Senate Health, Education & Social                
 Services Committee (HES) to order at 9:05 a.m. and introduced                 
 SCR 6  as the first order of business before the committee.                   
  KATHY BOUCHA ROBERTS , representing the Alaska Telemedicine Project,         
 explained that the main reason for SCR 6 is to provide recognition            
 for the telecommunications and health care partners who have worked           
 on this project for a number of years.  This project has collected            
 data regarding health care needs statewide, demonstrated particular           
 applications, and will be evaluating telemedical activity.  Ms.               
 Boucha Roberts informed the committee that she spent time with                
 Alaska's Congressional staff who expressed the need for a                     
 consortium to form within Alaska.  The staff was pleased to be                
 informed that such a consortium had already been formed.                      
  JORDAN KOKO , intern for Senator Pearce, said that Senator Pearce            
 introduced this legislation in order to recognize the achievements            
 of the Alaska Telemedicine Project.  This legislation would further           
 recognize the project's achievements in providing accessibility to            
 health care to rural areas of Alaska.  The project has done much to           
 demonstrate the needs for health care in rural Alaska.  Mr. Koko              
 pointed out the amendment in the packet which is merely a                     
 housekeeping measure clarifing that AT&T and Alascom are a single             
 Number 102                                                                    
  SENATOR LEMAN  believed that this project provides information and           
 is available statewide, but the benefits are especially important             
 for rural Alaska.  Senator Leman asked if this electronic                     
 information was available in Anchorage.   JORDAN KOKO  said that the          
 information is available statewide, but is of particular importance           
 in rural Alaska.                                                              
  CHAIRMAN WILKEN  said that he would entertain a motion to adopt the          
 following amendment:                                                          
   Page 1, line 4:                                                             
   Following "and":                                                            
    Insert "AT&T"                                                              
   Following "Alascom,":                                                       
    Delete "Inc.,"                                                             
 Without objection, the amendment was adopted.                                 
  JOHN WILLIAMS , Mayor of the City of Kenai, noted that his testimony         
 was neither in support or opposition to SCR 6.  Mayor Williams was            
 concerned that the Alaska Telemedicine Project would be recognized            
 as the officially sanctioned telemedicine and telehealth project in           
 Alaska.  Currently in Kenai, construction on a $10.5 million                  
 training center intended to provide distance learning is scheduled.           
 This training project includes statewide education in the EMT field           
 which could be construed as telemedicine.  Mayor Williams expressed           
 concern that if one group is designated as the officially                     
 sanctioned telemedicine and telehealth group, that group could                
 interfere with other groups' ability to obtain grants.                        
 Number 162                                                                    
  KATHY BOUCHA ROBERTS  explained that the purpose of the formation of         
 the organization was to support the independent rural communities             
 granting opportunities.  The granting agencies would like                     
 collaborative efforts within a state.  The Alaska Telemedicine                
 Project would not impose on anyone's independence regarding                   
 granting.  If other projects need evaluators in order to comply               
 with proposal requirements, the Alaska Telemedicine Project has               
 those available now.  The project would like to collect statewide             
 data regarding third party payers and DHSF in order to provide                
 accurate data for the development of policy.  The Alaska                      
 Telemedicine Project would provide services to enhance other                  
 independent projects.  Ms. Boucha Roberts noted that in the future            
 the telecommunications network being developed will partner with              
 the education system, particularly distance delivery education.               
  MAYOR WILLIAMS  believed it worthwhile to add language regarding Ms.         
 Boucha Roberts' comments about partnering.   KATHY BOUCHA ROBERTS             
 interjected that there is also the opportunity for groups such as             
 the one in Kenai to join the Alaska Telemedicine Project as a                 
 member in order to have easy access to the services.                          
  CHAIRMAN WILKEN  requested that Mayor Williams fax his suggestions           
 to Senator Pearce's office.                                                   
  SENATOR LEMAN  applauded the efforts of Mayor Williams.  Senator             
 Leman moved to report SCR 6 am out of committee with individual               
 recommendations and accompanying zero fiscal note.  Without                   
 objection, it was so ordered.                                                 
                  SB  36 PUBLIC SCHOOL FUNDING                                
         SB  85 PUBLIC SCHOOL FUNDING/CHILD CARE GRANTS                        
 Number 225                                                                    
  CHAIRMAN WILKEN  introduced  SB 36  and  SB 85  as the next order of         
 business before the committee.                                                
  COMMISSIONER   SHIRLEY HOLLOWAY , Department of Education, noted that        
 many present have been part of the numerous efforts to rewrite the            
 formula.  Commissioner Holloway said that Deputy Commissioner Cross           
 would inform the committee of what the department views as                    
 strengths and areas of concern with the CS.                                   
  RICK CROSS , Deputy Commissioner of the Department of Education,             
 identified the following areas as strengths of the bill:                      
  Allocating money on a per student basis.                                     
  The 20 percent indicator for funding special needs students.                 
  Separating the funding for intensive needs students.                         
  The minimum school size at 10 students.                                      
  Addressing single site schools within the formula.                           
  The expansion of the area cost differential study.                           
  Assigning area cost differentials to funding communities.                    
  The elimination of considering impact aid.                                   
 Mr. Cross said that there are four areas of significant difference            
 between SB 85 and CSSB 36(HES).  Each of these four areas will                
 shift money from districts with little or no ability to provide               
 funding to those districts with the ability to provide funding.               
 The first area of difference is the required local effort.  Under             
 SB 85 the required local effort is maintained at the current 4                
 mills.  Under CSSB 36(HES), the required local effort is dropped to           
 3 mills.  This drop decreases the size of funding school districts            
 that are allowed from the required local sources.  If the pie                 
 remains the same as Mr. Cross believed to be the intent of CSSB
 36(HES), then the local portion is smaller and therefore the                  
 state's share is larger.  If the state's share is kept constant,              
 then money will be shifted from those districts without the ability           
 to pay, REAAs, to those districts with the ability to pay.                    
 Secondly, SB 85 contains a supplemental equalization factor.                  
 Supplemental equalization is the ratio of a district's wealth to a            
 statewide average which is inversely proportional to the amount of            
 money the district receives from the state.  The wealthier a                  
 district is, the less that district receives from the state.  This            
 factor would compensate poor districts.  The third area of                    
 difference is transportation.  CSSB 36(HES) keeps the                         
 transportation factor outside the formula as under the current                
 formula.  Transportation is the only area in education which has              
 been compensated for inflation.  As written, the transportation               
 regulations and statutes provide that as the cost of providing                
 education increases the compensation to districts that have                   
 transportation programs increases.  Mr. Cross said that was not               
 true for the foundation formula.  Those districts with                        
 transportation programs have received an inflationary increase, but           
 those districts without a significant transportation program have             
 not which would be continued under CSSB 36(HES).  Mr. Cross noted             
 that those districts with transportation programs tend to be the              
 wealthier districts with the ability to pay.  Therefore, this is a            
 third mechanism which would shift funding from poorer districts to            
 wealthier districts.                                                          
 Number 341                                                                    
 The fourth difference is the taxation.  Mr. Cross said that he                
 would be discussing the impact of taxing REAAs.  Currently, the               
 REAA pie has only one piece, state aid.  Federal aid is ignored               
 under SB 85 and CSSB 36(HES).  Under CSSB 36(HES), there would be             
 a method of taxation requiring the REAA to provide the equivalent             
 of a minimum local effort.  Therefore the REAA's pie has a state              
 and a local piece.  Mr. Cross understood that CSSB 36(HES) would              
 leave the state funding constant which would mean that the REAA               
 local piece would be placed in the pot and be redistributed.  This            
 is the fourth manner in which dollars would be shifted from poorer            
 districts to those districts with the capacity to pay.                        
 Mr. Cross did not believe there had been any discussion allowing              
 REAAs to have excess capacity.  The purpose of the taxation is to             
 provide for the REAA's local effort and supplant state effort.  The           
 REAA would not be able to generate additional funds beyond the                
 required minimum local effort as all organized boroughs are allowed           
 and under CSSB 36(HES) without limit.  Currently, the minimum                 
 required local effort is 4 mills.  On a statewide basis, the                  
 organized boroughs are contributing to education on average over 7            
 mills.  There is significant additional effort provided in areas              
 where people have the capacity to pay which the method of taxation            
 under CSSB 36(HES) would not provide to REAAs.  In conclusion, Mr.            
 Cross emphasized that the impact of the four mechanisms he                    
 discussed is excessive and would not fairly distribute dollars to             
 Number 387                                                                    
  COMMISSIONER HOLLOWAY  discussed the incentive level of additional           
 funds for those schools who try to achieve the Quality School                 
 Initiatives under SB 85.  The Quality School Initiatives has the              
 following four components:  high academic standards for students as           
 well as a mechanism to assess those standards, high professional              
 standards from an evaluation and licensure perspective, networking            
 between the school, the community and other agencies, and school              
 excellence standards driving the new accreditation system.                    
 Commissioner Holloway emphasized the need to stop giving dollars to           
 districts without the expectation of an increase in student                   
 learning.  Across the nation, struggles to improve the quality of             
 schools are occurring.  Commissioner Holloway informed the                    
 committee that she had just returned from the Chiefs States School            
 Officers meetings where one of the major topics was regarding                 
 improving schools and fixing the failing schools.  No matter the              
 political affiliation, those at the meeting agreed that high                  
 learning standards and assessing those standards must happen.                 
 Commissioner Holloway urged the committee to include in any                   
 foundation formula, core learnings and a mechanism to assess that             
 learning.  Everyone has an obligation to ensure that every student            
 leaves the system with the skill and knowledge to make choices                
 about their lives.  Commissioner Holloway quoted statute that                 
 supported this obligation.  Unless the expectation is tied to the             
 funding, that expectation will not be achieved.                               
 Number 433                                                                    
  SENATOR WARD  said that he had not heard from anyone that supported          
 SB 85.   COMMISSIONER HOLLOWAY  did not believe that anyone would             
 support a bill in which his/her school district is not perceived as           
 a winner.  Historically, that has been the problem with any                   
 foundation formula.  Many would like to maintain the current                  
 formula and request more dollars.  Commissioner Holloway was                  
 frustrated that no support could be garnered even for a proposal              
 that adds money to the foundation formula.                                    
  SENATOR WARD  understood Mr. Cross' comments to mean that CSSB
 36(HES) attacks the rural or poor in favor of the rich portions of            
 the state.  Does the current formula treat everyone fairly?     RICK          
 CROSS  explained that currently, there are areas that do not have             
 the capacity to generate revenue while other areas have that                  
 capacity.  Until that is changed, that must be accepted when                  
 developing a foundation formula.  CSSB 36(HES) has four powerful              
 mechanisms which shift money from those areas without the ability             
 to generate revenue under the current laws to areas that do.  The             
 compounding of those four mechanisms will have a marked and                   
 dramatic effect.  With regards to the lack of support for SB 85,              
 Mr. Cross said that some had stated support of SB 85 to him.  He              
 credited the Governor and the committee with accepting that the               
 current formula cannot continue.  Mr. Cross offered to work with              
 the committee.                                                                
  SENATOR WARD  reiterated that he had not found anyone that supported         
 SB 85.  If there is something out of balance, why was it not fixed            
 before.  Senator Ward suggested that the department submit                    
 recommended changes to the CS.                                                
 Number 501                                                                    
  CHAIRMAN WILKEN  believed that the initiative was Level III.  If             
 this type of initiative is necessary, why imbed such an initiative            
 in a yearly entitlement where it would be lost.  Chairman Wilken              
 asked if it would be better to take the concept of the Quality                
 Schools Initiative outside the foundation, review how it works on             
 a test basis.  If it improves some schools, then the initiative               
 could be brought back.                                                        
  COMMISSIONER HOLLOWAY  stated that the connection between the money          
 provided and the expectations of the school should be reviewed.               
 Commissioner Holloway looked forward to future conversations with             
 the committee regarding that issue.                                           
  CHAIRMAN WILKEN  believed that Level III was a variable that did not         
 add to the current goal.  Chairman Wilken requested that Mr. Cross            
 explain the transportation mechanism sometime.  Chairman Wilken               
 asked Mr. Cross if he meant that if the four components are left              
 untouched, there is concern that the educational opportunity would            
 be diminished for some in different regions of the state.   RICK              
 CROSS  agreed that was his concern.  When there are multiple factors          
 that do the same thing within a complicated system, compounding               
 occurs and a greater impact results.  Mr. Cross believed that to be           
 the case.                                                                     
  COMMISSIONER HOLLOWAY  mentioned that during the shift to                    
 unorganized boroughs, the Legislature committed to being the REAA's           
 borough assembly.  That commitment has not been upheld.                       
  SENATOR LEMAN  noted that Mr. Cross said that the current formula is         
 inequitable, yet the attempts to create greater equity as Mr. Cross           
 says creates shifts in the same direction.  Senator Leman said that           
 Mr. Cross may be right that the correction may be occurring in one            
 direction, but suggested that review of the current situation and             
 the end result is necessary.  The corrections are fairly small.               
 For example, Hydaburg receives $8,400 per student per year,                   
 Anchorage receives $4,000 and Ketchikan receives $2,900.  Those               
 numbers still illustrate the inequity in distribution, but not by             
 taking from the poor and giving to the rich.  If a correction is              
 applied, whoever wins supports the correction while whoever losses            
 complains.  For that reason, there has been no significant change             
 in the formula in the past.                                                   
  RICK CROSS  realized the need to correct, however there may be a             
 greater level of correction occurring than anticipated due to                 
 multiple factors with the same effect.  As the formula ages, the              
 correction may be more than anticipated.   SENATOR LEMAN  agreed that         
 Mr. Cross may be correct and said that he wanted to review that.              
  TAPE 97-28, SIDE B                                                           
 Number 586                                                                    
  ROBERT HERRON , President of the Lower Kuskokwim School Board,               
 believed that all testimony has echoed the same basic message                 
 voters last Fall supported:  take care of education.  Mr. Herron              
 said that the ground rules of simplicity, equity, and timing                  
 encompassed in CSSB 36(HES) are sound.  However, the fourth ground            
 rule of no new dollars is flawed.  Mr. Herron stated that no new              
 dollars will not work.                                                        
  PATRICK DOYLE , Superintendent of the Copper River School District,          
 informed the committee of the seven communities with schools in the           
 district which serve a total of 600 students.  Two of the schools             
 are one room schools.  Additionally, a correspondence school is               
 operated with approximately 170 students of which over 100 are from           
 outside the borders of the Copper River district.  Mr. Doyle stated           
 that over the past 15 years, the Copper River district has                    
 undertaken every possible conservation measure to reduce the costs            
 of operation without affecting the educational opportunities of its           
 students.  Staff was asked to do more and accept less. The staff              
 has given up many of the things that most teachers take for                   
 granted.  The Copper River district operates its extra-curricular             
 activities with volunteers.  In spite of all the obstacles, the               
 students in the Copper River School District perform among the best           
 in the state and continue on to high levels of success.                       
 The latest reverse "Robin Hood" strategies of the Legislature may             
 deliver the proverbial straw that breaks the back of the Copper               
 River School District.  The school districts of Alaska have been              
 reduced to competing with one another for a pool of dollars that is           
 too small to meet the educational needs of the students of Alaska.            
 Mr. Doyle indicated opposition to the concepts of CSSB 36(HES).               
 What is the equity in shifting inadequate financial support from              
 one group to another?  Where is the accountability from those who             
 provide the funding to produce quality education?  Mr. Doyle noted            
 that he would forward his comments to the committee.                          
 Number 513                                                                    
  ROBERT MCCLORY , parent and counselor in Ketchikan, did not believe          
 that his testimony was significantly different than others, but he            
 felt compelled to share his thoughts with the committee.  He                  
 discussed the impacts of the pulp mill's closure, particularly the            
 sizable cuts to the schools.  Mr. McClory mentioned the hold                  
 harmless clause and urged the committee to make the Educational               
 Endowment Fund a reality.  Mr. McClory informed the committee of              
 the following statistics found in the Educational Background &                
 Economic Status of the Spring of 1990.  Those with a degree beyond            
 high school on average earn $2,231 per month as compared to $1,077            
 for those with a high school diploma.  High school dropouts on                
 average earn $492 per month.  Doctoral degrees boost earnings to              
 $3,855 per month and those with special degrees earn about $5,000             
 per month. Mr. McClory urged the committee to show students that              
 just as politics can negatively impact the job market, so too can             
 the leaders positively shape the future.                                      
  TAMMY MORRIS , parent in Ketchikan, informed the committee that she          
 and her family had moved to Ketchikan from Fairbanks one and-a-half           
 years ago.  Ms. Morris noted that she had visited the schools in              
 Ketchikan to determine whether the move would be good for her                 
 children.  However there was a flaw in the planning, Ms. Morris did           
 not consider inquiring about the funding status of Ketchikan                  
 schools.  Only after relocating, when Ms. Morris' children began              
 attending the Ketchikan schools did she realize there was a                   
 problem.  The schools in Ketchikan were not equal to those in                 
 Fairbanks.  Ms. Morris informed the committee that Ketchikan                  
 schools do not have a nurse while Fairbanks schools do.  Ketchikan            
 students only receive one half hour of music each week.  Ms. Morris           
 noted the lack of physical education and current learning materials           
 in Ketchikan.  Ketchikan elementary schools do not receive any                
 counseling services while Fairbanks schools do.  One librarian in             
 Ketchikan divides her time among four elementary schools while each           
 Fairbanks school has a librarian.  If funding continues in the same           
 manner, the list will be longer.  Ms. Morris was ashamed that there           
 is adequate money in Alaska, but not all Alaskan children have                
 equal funding for education.  The Ketchikan district has been                 
 supporting the school district with as much as allowed, the                   
 difference can only be made by the state.                                     
  DIANE GUBATAYAO , parent and Ketchikan Gateway School Board Member,          
 informed the committee of the January 1997 Education Week which               
 grades Alaska with a D+ in equity and an F on allocation.  With               
 regards to the ties between quality education and teacher funding             
 and higher standards, Ms. Gubatayao asked if there have been                  
 studies that show flat funding in education lead to a decline in              
 education.  She mentioned the increase in oil prices and permanent            
 fund dividends.  In conclusion, Ms. Gubatayao said that she was               
 looking for someone to realize that funding is inequitable.                   
 Number 415                                                                    
  MIKE MURPHY , Chairman of the Nome School Board, stated that none of         
 the proposals solve the issues of accountability, equity, fairness,           
 and simplicity.  Mr. Murphy suggested that schools be funded in a             
 two tier system.  The operations and maintenance of the schools               
 should be funded first and then education.  Depending upon a                  
 schools location in Alaska, the cost of operation is different.               
 For example, if $5,000 per student is received for school A and it            
 costs $1,000 per student to maintain school A while school B only             
 needs $500 to operate and maintain school B, then school B is able            
 to spend $500 more on education.  That is not fair or equitable.              
 If costs for operation and maintenance are taken care of statewide,           
 that would be fair because those are fixed costs.  Mr. Murphy                 
 proposed that an average of operations and maintenance costs be               
 taken from the past five years in order to establish the state's              
 share.  However, the state must be willing to fund increases or               
 decreases as they occur.  Also incentives should be offered to                
 those school districts that work to lower costs.  If a district               
 saves $50,000 by reducing energy costs, the state could give the              
 district a percentage of the savings.                                         
 Now that operations and maintenance costs have been funded,                   
 education can be funded.  Mr. Murphy pointed out that several                 
 problems in the current proposals will disappear once the cost of             
 operations and maintenance are dealt with.  First, the dollars for            
 education become more equitable and fair because education is being           
 funded alone.  Second, the area cost differential battle becomes              
 smaller.  The figures are no longer skewed for the high cost of               
 operation and maintenance in rural Alaska.  The cost of education             
 is fairly average statewide when comparing teacher's salaries.  Mr.           
 Murphy did acknowledge differences in the cost of freight.  Mr.               
 Murphy stressed that education becomes more accountable when funded           
 alone.  Mr. Murphy also mentioned that the foundation formula has             
 not kept up with inflation.                                                   
  DAVID STONE , testifying from Point Hope, informed the committee of          
 Resolution 97-13 which requests $10 million for annual educational            
 support for the North Slope Borough School District.  This amount             
 would not even pay for operating two of the larger schools in the             
 district.  Mr. Stone opposed any reduction to the already                     
 inadequate educational funding from the State of Alaska.  He also             
 opposed any legislation changing the foundation formula such that             
 the North Slope Borough would be required to provide financial                
 support to the rest of the state.  The City Council of Point Hope             
 is opposed to any action by the Legislature that would reduce or              
 redistribute the current foundation funding of the North Slope                
 Borough.  The City Council of Point Hope supported the current                
 foundation funding formula.  Mr. Stone said that any decrease in              
 funds would be devastating, especially in the Point Hope area.  Mr.           
 Stone noted the air travel necessary in the North Slope.                      
  CHAIRMAN WILKEN  commented that the students from the North Slope            
 did a great job testifying before the committee last week.                    
 Number 325                                                                    
  KIM FRANKSON , Parent and School Advisory Council member from Point          
 Hope, discussed the impacts that would result with the loss of                
 funding to the North Slope.  The loss in funding would result in              
 the loss of services, such as access to libraries, to the students            
 and residents of the North Slope.  Ms. Frankson indicated that the            
 loss of funding could result in an increase in the welfare, social            
 service, and unemployment rolls.  Ms. Frankson pointed out that               
 people can lose their jobs as a result of the proposals before the            
  CHAIRMAN WILKEN  inquired as to the number of people wanting to              
 testify in Point Hope.  After discovering that four or five more              
 desired to testify, Chairman Wilken invited those folks to fax                
 their testimony or have one person speak for those remaining.                 
  OLIVER LEAVITT , North Slope Borough Assembly member, noted that the         
 committee had the full text of his testimony.  The North Slope has            
 been painted into a corner.  The people of the North Slope are                
 opposed to being zeroed out.  Mr. Leavitt noted that the Mayor and            
 the Assembly members believed that the foundation funding proposals           
 are unlawful under the Alaska State Constitution as well as federal           
 laws.  Mr. Leavitt quoted Article VII, Section 1 of the Alaska                
 State Constitution, the public school provision, which does not               
 permit the Legislature or the state to arbitrarily deny the school            
 children of the North Slope any and all state aid for education.              
 Most of the state education budget is produced by taxes and royalty           
 on the North Slope oil.  Although the Inupiat Eskimo people opposed           
 the North Slope oil development in the 1960s, an informal                     
 accommodation was reached between the residents of the North Slope,           
 the oil industry and the state.  Mr. Leavitt stressed that now a              
 major effort to deny any state education benefits to the residents            
 of the North Slope is underway.  This is mean spirited, short                 
 sighted, harmful to our children, and contrary to the state's long            
 term economic interests.  Mr Leavitt contended that this foundation           
 formula effort is diverting the borough's scarce resources from               
 projects that could generate revenue for the state, the borough,              
 and for the children.  In conclusion, Mr. Leavitt emphasized that             
 the quality of education of the children of the North Slope will be           
 protected.  Other local funding sources for North Slope schools               
 will have to be found if K-12 education funds are eliminated.  Mr.            
 Leavitt identified the following options if state aid is lost:                
 raising the millage rate from 18.5 to 20 mills, imposing annual               
 regulatory and license fees on new energy projects, and increasing            
 other tax and license fees on the oil industry.  Mr. Leavitt                  
 requested that the committee work with the borough on this issue.             
  CHAIRMAN WILKEN  noted that Barrow had just joined the meeting via           
 teleconference.  He asked that those wishing to testify fax their             
 testimony because there would not be time today to hear from                  
 Barrow.  Chairman Wilken asked if Point Hope had chosen a speaker.            
 Number 195                                                                    
  CAROLINE CANNON , Mayor of Point Hope, opposed any changes to the            
 current foundation formula in the North Slope School District.                
 Mayor Cannon discussed the community uses of the school facilities            
 and the high cost of living in the North Slope.  Mayor Cannon                 
 identified adequate funding by the state as the problem.  Alaska              
 has a constitutional responsibility to provide adequate funding for           
 all.  Mayor Cannon also pointed out that this proposal may be                 
 unconstitutional because it may discriminate against a community              
 that is 95 percent minority.                                                  
        SB  97 LEASE-PURCHASE SPRING CREEK CORRECTIONAL                       
  CHAIRMAN WILKEN  announced that  SB 97  would be the next order of           
 business before the committee and he intended to move it out of               
 committee today.                                                              
  SENATOR GREEN  moved to report SB 97 out of committee with                   
 individual recommendations and accompanying fiscal notes.  Without            
 objection, it was so ordered.                                                 
          SB  48 APPROPRIATION: MENTAL HEALTH PROGRAM                         
  CHAIRMAN WILKEN  introduced  SB 48  as the final order of business           
 before the committee.                                                         
  JEFF JESSEE , Executive Director of the Alaska Mental Health Trust           
 Authority (AMHTA), informed the committee that the primary mission            
 of the Trust Authority is to manage the trust in perpetuity to                
 enhance the lives of its beneficiaries.  Mr. Jessee began his                 
 review of the FY98 Mental Health Budget Overview document.  (See              
 Attachment A)  Mr. Jessee identified the beneficiaries of the                 
 Trust, which represent a broad group not limited to mental illness.           
 The comprehensive mental health program is broader than the                   
 beneficiaries.  Mr. Jessee emphasized that prevention is essential            
 for a long term strategy which is evident in the Trust's budget               
 Mr. Jessee explained that the AMHTA income account consists of                
 three percent of the Trust fund balance at the Alaska Permanent               
 Fund Corporation plus 100 percent of Trust land income.  The Trust            
 land office is $300,000 over the projected income for FY97 which              
 totals $1.3 million.  Mr. Jessee reviewed the sheet in Attachment             
 A which specifies where the funds go.  The colored sheet in                   
 Attachment A clarifies how the Trust develops budget                          
 recommendations per the existing structure of planning.                       
 Recommendations from various groups are made to the Trust who then            
 develops a strategic funding plan.                                            
  TAPE 97-29, SIDE A                                                           
 Number 008                                                                    
 Mr. Jessee explained that the separate appropriation bill for                 
 mental health is basically program budgeting.  Separate programs              
 for each beneficiary group was created which allowed focus on the             
 specific technology and funding mechanisms to meet that group's               
 needs.  However the negative impact of that separation was the loss           
 of the ability to integrate the services between populations.  For            
 example, dual diagnosis such as a person with alcoholism and a                
 mental illness could lead to that persons exclusion from one                  
 portion of the treatment.  A program budget attempts to obtain a              
 comprehensive view of the services and then integrate the services            
 which result in budget recommendations.                                       
 Mr. Jesse reviewed the funding priorities listed in Attachment A.             
 The closure of the Harborview Developmental Center is a high                  
 priority.  The difficulty in transitioning out of institutional               
 care is that the end result is apparent, but that transition                  
 requires double funding.  The institution must be run at full                 
 capacity while building up the community alternatives.  With                  
 Harborview, the Trust used Trust income to facilitate the                     
 transition to the community based delivery system.  Therefore,                
 general fund monies were freed to be placed into community                    
 programs.  Now that the population of Harborview decreases so does            
 the Trust's income support.  In FY98, everyone should be                      
 transitioned from Harborview.  Mr. Jessee believed that a similar             
 strategy should be utilized with the downsizing of API.                       
 Number 091                                                                    
 Mr. Jessee also mentioned the consumer outcome funding priority.              
 The trustees want to quantify the effect of the funding.  For                 
 example if there is an employment program, how many people were               
 placed into jobs.  Therefore some of the projects attempt to obtain           
 that outcome information.  Once that information is available, the            
 Trust and the Legislature has the basis to make rational funding              
 decisions based on the outcomes.                                              
 Mr. Jessee continued with the AMHTA budget recommendations included           
 in Attachment A.  Mr. Jessee stated that the AMHTA Authorized                 
 Receipts column are for important areas not extras as some believe.           
 The General Fund/Mental Health column illustrates the focus on                
 building the infrastructure which the state needs to provide for a            
 comprehensive program.  Mr. Jessee pointed out that Alaska has a              
 huge aging population which can be illustrated in the money                   
 requested for case management and increased respite care for                  
 seniors.  This is an attempt to avoid the more costly institutions.           
 The suggestions for the general fund are focused on strategic                 
 improvements in the manner in which services are delivered.                   
 Mr. Jessee turned to the Capital Budget recommendations included in           
 Attachment A.  Again the Trust has tried to partner with the state;           
 to use the Trust's funds as often as possible to match general                
 funds.  Mr. Jessee believed the match process worked well because             
 it ensures that there is a consistent direction.                              
 Number 159                                                                    
  SENATOR WARD  asked if the $50,000 for the UN Conference would be            
 utilized for providers to come or for people from Native                      
 communities to come.   JEFF JESSEE  clarified that the money will             
 attempt to get people from rural areas, primarily consumers, to               
 participate in that conference.  Mr. Jessee stressed that the                 
 intent is not to subsidize providers.                                         
  SENATOR WARD  asked if any of the appropriations went out to RFPs.           
  JEFF JESSEE  explained that virtually all of the money flowing from          
 the Trust goes to administrative agencies, either the DHSS or the             
 Commission on Aging.  The majority of those dollars are placed on             
 a RFP for competitive grants.  In further response to Senator Ward,           
 Mr. Jessee clarified that under the settlement AMHTA could freely             
 spend funds without legislative appropriation.  Mr. Jessee did not            
 want to create a set of grant administrators that would duplicate             
 the grant administrators that already exist within state                      
 government.  Therefore, AMHTA is working with those agencies as               
 surrogate administrators.  Mr. Jessee pointed out that grants under           
 $10,000 that are awarded three times a year are decided upon by the           
 staff, off budget.  Mr. Jessee discussed the outcomes measures area           
 which are done off budget in order to ensure that the trustees have           
  SENATOR ELLIS  requested that Mr. Jessee explain the $1 million              
 offer to Medicaid services and comment regarding the cuts proposed            
 by the House to Medicaid services.                                            
  JEFF JESSEE  explained that the trustees have tried to assist the            
 state in turning on Medicaid options such as vision and dental.               
 AMHTA is offering $1.5 million Trust income to match a similar                
 amount from the state to access a similar amount from the federal             
 government.  With regards to the proposed Medicaid reductions, Mr.            
 Jessee expressed concern that would eliminate the possibility for             
 the state and the Trust to work together to turn on those options.            
  CHAIRMAN WILKEN  said that he would entertain a motion.                      
  SENATOR GREEN  moved to report SB 48 out of committee with                   
 individual recommendations.  Without objection, it was so ordered.            
 There being no further business before the committee, the meeting             
 was adjourned at 10:55 a.m.                                                   

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