Legislature(1997 - 1998)

11/24/1997 01:30 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
        TOWN MEETING ON SCHOOL FUNDING REFORM                                  
      SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE                   
                     SENATE FINANCE COMMITTEE                                  
                            Bethel AK                                          
                        November 24, 1997                                      
                            1:30 P.M.                                          
                                                                               
SENATE HESS MEMBERS PRESENT                                                    
                                                                               
Senator Gary Wilken, Chairman                                                  
Senator Loren Leman, Vice-Chairman                                             
Senator Jerry Ward                                                             
                                                                               
SENATE HESS MEMBERS ABSENT                                                     
                                                                               
Senator Lyda Green                                                             
Senator Johnny Ellis                                                           
                                                                               
SENATE FINANCE MEMBERS PRESENT                                                 
                                                                               
Senator John Torgerson                                                         
Senator Al Adams                                                               
                                                                               
SENATE FINANCE MEMBERS ABSENT                                                  
                                                                               
Senator Drue Pearce, Co-Chairman                                               
Senator Bert Sharp, Co-Chairman                                                
Senator Dave Donley                                                            
Senator Sean Parnell                                                           
Senator Randy Phillips                                                         
                                                                               
ALSO IN ATTENDANCE                                                             
                                                                               
Senator Lyman Hoffman                                                          
                                                                               
COMMITTEE CALENDAR                                                             
                                                                               
TOWN MEETING ON PUBLIC SCHOOL FUNDING                                          
                                                                               
OTHER TOWN MEETINGS ON PUBLIC SCHOOL FUNDING                                   
                                                                               
Ketchikan - 11/12/97                                                           
Anchorage - 11/13/97                                                           
Wasilla - 11/18/97                                                             
Soldotna - 11/19/97                                                            
Fairbanks - 12/2/97                                                            
                                                                               
WITNESS REGISTER                                                               
                                                                               
THE FOLLOWING PEOPLE TESTIFIED:                                                
                                                                               
Mr. Willie Kasayulie, President                                                
Yupiit School District                                                         
P.O. Box 51100                                                                 
Akiachak AK 99551-0100                                                         
                                                                               
Mr. Bob Herron, Chairman                                                       
Lower Kuskokwim School District                                                
P.O. Box 602                                                                   
Bethel AK 99559                                                                
                                                                               
Ms. Kathy Sampson-Kruse                                                        
P.O. Box 287, #3042                                                            
Bethel AK 99559                                                                
                                                                               
Mr. Mike Williams                                                              
P.O. Box 27                                                                    
Akiak AK 99552                                                                 
                                                                               
Mr. Dario Notti                                                                
P.O. Box 2175                                                                  
Bethel AK 99559                                                                
                                                                               
Mr. Ed Gilley, School Superintendent                                           
985 KSD Way                                                                    
Chevak AK 99563                                                                
                                                                               
Mr. Elia Sallaffie                                                             
P.O. Box 324                                                                   
Bethel AK 99559                                                                
                                                                               
Mr. Jaque Longpre', ASB Representative                                         
Bethel Regional High School                                                    
Bethel AK 99559                                                                
                                                                               
Ms. Lucy Sparck                                                                
P.O. Box 267                                                                   
Bethel AK 99559                                                                
                                                                               
Mr. Pete Schaefer                                                              
Kotzebue AK                                                                    
                                                                               
Ms. Marie Carroll, Chief Administrative Officer                                
North Slope Borough                                                            
                                                                               
Mr. Leland Dishman                                                             
North Slope Borough School District                                            
P.O. Box 169                                                                   
Barrow AK 99723                                                                
                                                                               
Ms. Becky Gay                                                                  
3000 C Street, #200                                                            
Anchorage AK 99503                                                             
                                                                               
Mr. John Weise, Superintendent                                                 
Yupiit School District                                                         
                                                                               
Ms. Agnes Phillips, Mayor                                                      
P.O. Box 2111                                                                  
Bethel AK 99559                                                                
                                                                               
Mr. Bob Medinger                                                               
P.O. Box 305                                                                   
Bethel AK 99559                                                                
                                                                               
Mr. Will Updegrove                                                             
P.O. Box 2073                                                                  
Bethel AK 99559                                                                
                                                                               
Ms. Joan Hamilton                                                              
P.O. Box 1275                                                                  
Bethel AK 99559                                                                
                                                                               
Mr. Richard Kern                                                               
P.O. Box 6071                                                                  
Napaskiak                                                                      
                                                                               
Mr. Chris Fuedell                                                              
P.O. Box 788                                                                   
Bethel AK 99559                                                                
                                                                               
Mr. Julius Pleasant                                                            
P.O. Box 989                                                                   
Bethel AK 99559                                                                
                                                                               
Mr. Paul Sugar                                                                 
Bethel AK 99559                                                                
                                                                               
ACTION NARRATIVE                                                               
                                                                               
TAPE 97-56, SIDE A                                                             
                                                                               
CHAIRMAN WILKEN called the Joint Senate Health, Education and                  
Social Services and Finance Committee meeting to order at 1:30 p.m.            
and announced they would discuss education funding.                            
                                                                               
SENATOR HOFFMAN welcomed everyone to Bethel.                                   
                                                                               
SENATOR LEMAN said he hoped people would be thinking during this               
discussion about equity and what is fair across Alaska.  He also               
wanted them to consider that parents pay and participate in the                
cost of education because he believes that when parents are                    
actively involved in education, their children do better,                      
                                                                               
SENATOR ADAMS said he appreciated the senators from urban areas                
coming to Bethel although he disagrees with the way the legislation            
was put together.  He said the high enrollment problem is not just             
in urban areas; it's in rural areas also and this is a problem that            
they need to solve.  He hoped that they had solutions to offer                 
along with their testimony.                                                    
                                                                               
TAPE 97-56, SIDE B                                                             
                                                                               
SENATOR ADAMS offered capping the Permanent Fund dividend and using            
the excess for education or using some of the tobacco tax as                   
alternatives to be discussed.  He said we need to stop pitting                 
Alaskans against Alaskans which is what he thought this legislation            
did.                                                                           
                                                                               
SENATOR WARD said he wanted to talk about funding education in an              
equitable and fair manner.                                                     
                                                                               
SENATOR TORGERSON said the area/cost differential study is the                 
their way of recognizing higher cost of living throughout the                  
State. Last year the legislature awarded $275,000 to the McDowell              
Group to study the area/cost differential.  They also did the last             
area/cost differential he informed them.  The study is due February            
1 and will be one of the main components to any foundation formula             
rewrite.                                                                       
                                                                               
       SB 30 Mandatory Incorporation of Certain BoroughsSB
                     36 Public School Funding                                  
           SB 142 Regional Educational Attendance Areas                        
          SB 146 Public School Funding/Child Care Grants                       
         SB 193 Administrative Spending Limit For Schools                      
                                                                               
SENATOR TORGERSON said they would be discussing SB 36, SB 146, SB
193, SB 142, and SB 30.  His attempt with SB 30 was to make the                
rest of the State form up into boroughs as they did in 1963 under              
the first original mandatory borough bill which created the                    
boroughs we have today.  Eight of them were created in the first               
legislation and since then eight more have been generated on their             
own.  They were formed for basically two purposes - taxation and               
education.  If they would have divided the rest of the State into              
boroughs, it would be a lot easier today to go forward with the                
equity issue.                                                                  
                                                                               
SB 30 is an attempt to adopt the model borough boundary report that            
the Hickel administration did dividing the State into boroughs that            
was completed in 1991.  The model borough boundaries set a time                
line for districts to have a vote on whether or not to form a                  
borough.  If the districts choose not to have a borough, the State             
would assess an education tax, a mill rate of 4.5 mills.  So                   
everyone would be paying for education.  It wasn't forcing                     
government onto the borough areas. SB 30 got stopped in the House              
and he has reintroduced SB 142 which basically takes the vote part             
out.  It adopts the model borough boundary report and says a local             
effort for education of 4.5 mills must be paid no matter where you             
live in the State.  It also calls for only one school district per             
model borough boundary to consolidate school districts.  SB 142 is             
in the Finance Committee and is another approach for taxation in               
rural Alaska and would drop the number of school districts from 53             
down to 34.                                                                    
                                                                               
He said he hears from a lot of people that there is no taxation in             
rural Alaska.  However, there is wealth out there, although it                 
isn't necessarily in all villages, but collectively it's worth                 
about $3.2 billion.  A good portion of that is the pipeline.  There            
is a substantial amount of employment that generates around a half             
a billion dollars in payrolls.                                                 
                                                                               
Some people are concerned about eliminating school districts (SB
193) because local effort means local control.  He agrees with this            
to some degree and therefore SB 193 says you can have as many                  
school districts as you want, but he is going to tell them how much            
they can spend on administrative costs.  He reported that their                
administrative costs for both districts and schools combined run               
from a low of $695 to a high of $6,501 per student.  Their                     
districts run in size from a 31 student school district (Pelican)              
to 50,000 which is Anchorage.  SB 193 is an attempt to equalize                
that without getting into a debate about how many school districts             
we have.                                                                       
                                                                               
This takes one simple philosophy:  if you can take the unit value              
and times it by the area/cost differential (ACD) and that's o.k.               
for our kids, you should be able to take the same fixed number for             
administration and take the same area/cost differential for                    
administration.  This would save $21 million across the State.                 
                                                                               
CHAIRMAN WILKEN referring to his slide handout said SB 146 breaks              
down the education funding into four components: State support -               
$638 million (foundation funding), required local contribution                 
which has to be done in order to get the foundation funding,                   
optional local contributions, and assessment normalization (mill               
levying) for those areas that won't ever be able to fund their                 
education and need help from some of the wealthier districts.                  
                                                                               
The State support speaks to the issue of simplicity and the                    
required local contribution speaks to the issue of fairness with               
everyone paying their fair share.                                              
                                                                               
SENATOR WILKEN said they aim to put a bill on the Governor's desk              
that he will be able to sign.  He said this is top priority for                
them and there really is something happening.  He said one of the              
big issues is that some people say they can drive to a school                  
district from Fairbanks which doesn't pay anything for their                   
education.  He said it's time to build more schools in Fairbanks               
and that's his motivation.                                                     
                                                                               
When he first looked at the foundation formula he thought it might             
need just a little tweaking, but when he got into it, he found that            
it had to be thrown out and started all over again.                            
                                                                               
He asked that they agree on three things before they begin:  that              
they can trust the simple things and distrust the complicated                  
things, that everyone can pay their fair share, and that education             
is one of the top priorities of the government.  The first priority            
is the health and safety of the citizens and the second is                     
education.                                                                     
                                                                               
SB 146 is not an urban/rural issue, he said.  He explained figures             
on some of the charts in his handout.  This is not an attempt to               
take away from the rural communities and give to the urban.                    
                                                                               
CHAIRMAN WILKEN said he has heard that the foundation formula has              
been inflation proofed and how it has shrunk by 30% over the last              
10 years.  He suggested this is not the case.  In the last 10 years            
the money put by the State general fund towards education has                  
increased 51%; the number of students they have been asked to                  
educate has increased by 26%.  So the rate of funding has doubled.             
The question is where did the money go and he answered that it went            
to a formula that was broken.  He said the other seven states that             
use instructional units have found it doesn't work either.  So he              
wants to work toward the per student dollar and spread the money               
fairly and equally.                                                            
                                                                               
SB 146 makes this a per student allocation adjusted for size, cite,            
and special needs, plus developmentally disabled dollars which are             
fixed, minus the local contribution equaling $628 million.                     
                                                                               
Forty-three other states think the per student dollar is better                
than the instructional unit.  He thought this was because the voter            
who is in favor of education understood the student dollar concept             
better than the instructional unit.                                            
                                                                               
He explained that in order to get State support there is a required            
local contribution.  Organized areas have to give at least 4 mills             
of their assessed value or 35% of their prior need in order to                 
qualify.  The new formula suggests a 3 mill qualifier or a 100%                
prior need whichever is less.  The people he represents in                     
Fairbanks are paying 4 mills to qualify and they pay 8 mills in                
total toward education.  This is a problem in the North Slope                  
because they chose the 35% rather than the formula qualifier and               
pay about a half mill, about 1/16 of what the people he represents             
are paying.  This is not fair.                                                 
                                                                               
Another problem is in accepting federal money there is a limitation            
on the amount of money that can be put into education which four               
school districts have reached the cap on, Ketchikan, Kenai, Juneau,            
and Sitka.  The problem is that Unalaska, Valdez, and North Slope              
aren't paying what the people he represents pay.  So he has                    
attempted to define fair share based on assessed value.  It's a                
measure of wealth across the State.  It is validated through a                 
civil and a judicial process.  If he doesn't like what his house is            
assessed at, he complains about it and when it's all over, they                
have agreed on what it's worth.  It's information that is readily              
available and increases or decreases annually to reflect changes               
both up and down.                                                              
                                                                               
CHAIRMAN WILKEN discussed a graph of the unorganized areas.  He                
said some people are asking why we have 54 school districts in the             
State.  One school district found that a 2% sales tax would fund               
their complete education requirement.  This is just a suggestion               
that is well within their reach, he said.                                      
                                                                               
SB 146 takes $90 million and spreads it around from the more rich              
communities to the less rich.  You put money into the pot based on             
your relative wealth and get money out based on your relative                  
number of students.  If your relative wealth is greater than your              
relative number of students to educate, you contribute something to            
the fund.  If your number of students is more than your relative               
wealth, you take money out.                                                    
                                                                               
CHAIRMAN WILKEN explained that we operate under the federal                    
disparity law which affects 70% of our school districts, but we                
don't want a federal judge to dictate to us.  We can define what is            
disparity in Alaska and this is the attempt to begin that process.             
                                                                               
SENATOR ADAMS noted that there is always another position to a                 
presentation and the one they just heard was done by the majority.             
He represents people who are in the minority.  He reminded the                 
committee that they took an oath of office stating that every                  
Alaskan should be provided with an education and he agreed with                
this.  He didn't think they should consider taking somethings away             
from some school districts to give to others.                                  
                                                                               
He didn't think the payroll tax in the proposed legislation going              
to only people living in rural areas would be constitutional.                  
Every Alaskan across the State should pay that.  A sales tax is a              
local option and should be left to the local communities.                      
                                                                               
He explained that the proposed legislation takes away the 1/2% that            
goes to the North Slope school district.  However, the North Slope             
Borough pays the second highest mill rate next to Anchorage.  He               
said the North Slope is second in ones paying their fair share in              
education.  One of the problems they have is that they are right up            
to the cap.  He did not think this legislation was a fair and                  
equitable way to solve overcrowding and high enrollment.                       
                                                                               
SENATOR TORGERSON responded that he didn't agree that a sales tax              
is a local option and that the payroll tax would be                            
unconstitutional.  There are four boroughs that have come up with              
an equivalency way to beat their local effort and this is up to the            
local people.  [TAPE IS INDISCERNIBLE]  He noted that it is not                
unconstitutional to have a payroll tax to pay the equivalent to                
match the rest of the State if the legislature wants to impose that            
type of tax.                                                                   
                                                                               
TAPE 97-57, SIDE A                                                             
                                                                               
MR. WILLIE KASAYULIE, President, Yupiit School District, said many             
of the schools in the rural areas were built in the 1960s under the            
Bureau of Indian Affairs.  He said they keep hearing that there                
isn't enough money to educate our children, our most valuable                  
resource, and pointed out that the Permanent Fund is up to billions            
of dollars and continues to earn interest.  We think we're poor,               
but we are rich.  He supported an education endowment.                         
                                                                               
He said it wasn't equal to have extra curricular activities in                 
Anchorage and none in the bush communities.  He said they want                 
their children to be smart and to participate in those activities              
because that's an option they can take and make a career out of if             
they want to.                                                                  
                                                                               
He agreed that other sources of funding needed to be identified and            
it isn't necessary to take away from one district to give to                   
another.  He said we are talking about the future leaders of                   
Alaska, both native and non-native.                                            
                                                                               
MR. BOB HERRON, Chairman, Lower Kuskokwim School District, said                
despite what the graph says, they are loosing dollars every year               
and if they want a good product, children growing up and leading               
this State, they have to spend more money.                                     
                                                                               
SENATOR LEMAN explained they are operating on a five-year financial            
plan for reducing our budget deficit.  Some people say we don't                
have a deficit, but we do have one when you take recurring revenues            
and our annual expenses into account and set aside the earnings of             
the Permanent Fund and the pension funds as off limits.  He said               
they have been following the reduction plan, but have not reduced              
the funding to education.  They have increased it which indicates              
some level of what they are doing in terms of support.                         
                                                                               
He said there isn't a correlation between improving education and              
just spending more money on it.  He said they may have to increase             
funding for certain programs, but the first thing we should work on            
is how to improve what we have.                                                
                                                                               
CHAIRMAN WILKEN responded saying there was an Alaskan education                
survey done in 1995 by the Board of Education of 1,370 people, 30              
out of every election district, and 47% had kids in school at the              
time of their interview.  He thought it was a good snapshot and the            
Governor is probably looking at it when proposing his changes in               
education.  One of the questions was if the money to education was             
increased significantly tomorrow, would it improve the quality of              
education.  Two out of three people said no.  That should concern              
us.                                                                            
                                                                               
SENATOR ADAMS asked if anyone in this room was surveyed.  He said              
he can't find anyone who responded to this survey.  He thinks                  
someone made it up.                                                            
                                                                               
MS. KATHY SAMPSON-KRUSE said she is the mother of eight children,              
seven have gone to school in Bethel.  She does not support any of              
the proposals that are called "school reform."  She thought that               
they, in fact, take from those who have the least and in her region            
the number of people who have the least is growing.  She asked at              
what human cost did equity pay for itself.  She noted that they are            
going to loose all the bi-lingual funding and all of their teacher             
aides adding that and their immersion program has been successful              
so far.  They might also loose the services of their school social             
worker which are dire.                                                         
                                                                               
She did not think they could speak about education without                     
including a lot of elements in Alaska like tribal sovereignty.  She            
asked the legislators to give the voters a right to say whether or             
not they want a constitutional right to vote on school funding and             
offer the solution of establishing a PFD earning account.  She did             
not think they could cut the pieces of the pie any smaller.                    
                                                                               
MR. MIKE WILLIAMS said he is here as a parent and he thought the               
presentation was very slick and misleading in terms of the money               
that is being generated from the REAAs.  The villages in Lower                 
Kuskokwim are not rich just by looking at the unemployment and the             
condition of the fishing of Akiak.  That particular information is             
misleading.  All the money that seems to come into their areas are             
going into Fairbanks and Anchorage.  He invited them to go to his              
communities to see the conditions they have.                                   
                                                                               
We do not need to pit school districts against each other, he said.            
We need to be here for our children.  As a State we have $23                   
billion and we can afford to increase school funding.  He didn't               
think it was a true picture that there was more money going into               
our children.  Their traditional society had a good system of                  
education for their children and the transition from being                     
hunter/gatherers has been going on in the last 30 - 40 years.                  
                                                                               
SENATOR WARD said no one has any intention of taking any money away            
from anybody.  The original formula was thought up in Juneau and               
can be changed, but they need to know exactly what needs to be                 
changed.  He explained that a lot of people have told him that they            
don't want to loose their permanent fund dividend to pay for an                
education system that they are not 100% sure of.                               
                                                                               
SENATOR HOFFMAN said the Senate Democrats made a proposal for the              
endowment of education out of earnings from the Permanent Fund, but            
it was not to reduce the Permanent Fund Dividend principal.  The               
dividends would not decrease; however, they might not increase as              
fast as they might otherwise.                                                  
                                                                               
In the first three months of this year the Permanent Fund earned $1            
billion, he emphasized.  It's anticipated that this year it will               
earn $2.8 billion.  They propose to let the voters decide whether              
they want to spend some of the $2.8 billion earnings to set up an              
endowment for our children.                                                    
                                                                               
SENATOR HOFFMAN asked if he thought the voters should be allowed to            
vote on the endowment.                                                         
                                                                               
MR. WILLIAMS replied that definitely they should vote on it.  He               
would hate to see us in the same condition 10 years from now.                  
                                                                               
CHAIRMAN WILKEN said he would like to hear from him what he                    
considers would be a fair share from everyone around the State.                
                                                                               
MR. WILLIAMS added that they have worked hard on all the issues and            
strongly felt that any standards they set now should come with                 
fiscal notes from now on.                                                      
                                                                               
MR. DARIO NOTTI noted that it all depends on who pays for the                  
survey as to what the outcome is going to be and who interprets                
them.  The State Constitution is where we get the idea that the                
State owes all an education and he felt that maybe we should change            
that along with the part about subsistence and Indian country.  He             
said in Bethel they figured a 2% sales tax would cover their                   
contribution if they went to a first class city.                               
                                                                               
With Senator Torgerson's bill they asked themselves why they should            
go through all the expense of coming up with an administration and             
then in a couple of years get dragged back into the borough school             
district.  He asked if the 1% sales tax would go to the REAA school            
district or just Bethel.                                                       
                                                                               
CHAIRMAN WILKEN answered just Bethel.                                          
                                                                               
MR. NOTTI questioned whether the proposed income tax would be on               
the people who earned their money in rural Alaska or on those who              
educate their children in rural Alaska.  Many people educate their             
children in different districts than where they earn their living.             
                                                                               
He noted that the legislature waivers between community state-wide             
responsibility and local responsibility.  Fairbanks would not be               
able to pay much more than 3%, but Senator Adams' kids would do                
real well with 100% funding.  He likes the formula the way it is.              
                                                                               
MR. ED GILLEY, School Superintendent, Chevak, said their school                
project is a $26 million project.  It has no football stadiums or              
baseball fields, and no ice hockey rinks.  It's a basic school                 
designed in the bush and that's what it costs to educate 270                   
children.  Seventy percent of the funding for Fairbanks was paid by            
other folks.  In the case of REAAs the federal lands they live on              
can't have taxes raised by law.  Of the Title 8 monies that come to            
the State (about $69 million this year) 96% are captured by the                
Department of Education.  They take those funds away from the rural            
areas and distribute it to school districts that do not have                   
federal properties per se.  He said they need to take some of the              
earnings from the Permanent Fund (not the principal) as Governor               
Cowper proposed, and let it grow for 10 years and just the interest            
on that would fund education.  Take a small part of that and put it            
aside for school construction.                                                 
                                                                               
He said in the last five years they have allocated funds for bonded            
indebtedness for $243 million.  At the same time they have put $7              
million into schools in rural Alaska.  That is not fair and he                 
asked why they hadn't funded more schools in rural Alaska.  The                
Robinhood concept of taking from the rich and giving to the poor               
has never worked, he commented.                                                
                                                                               
In addition, when they talk about school improvement, the parents              
in the survey they quoted were asked what was the number one reason            
they would put more money into education, and they answered smaller            
class sizes.                                                                   
                                                                               
He urged them to look at Kentucky and Tennessee's better schools               
program where they teach basic skills first and computer skills                
next.                                                                          
                                                                               
He said the money Senator Wilken quoted as being appropriated just             
isn't there.  Most of the money went into student growth.  The                 
level of actual dollars to spend on education and what they can buy            
with those dollars has actually decreased.  Nobody wants to take               
from anybody else.  They want to do what's right with the formula              
which was designed to be funded adequately to take care of                     
inflation, but they haven't been funded by the legislature, except             
for once in 1991.                                                              
                                                                               
He noted that Mississippi, the poorest state in the nation spends              
51% of their money on education, and we spend 30% and we act like              
we're broke.                                                                   
                                                                               
He concluded saying don't cut funding.  Look at the quality                    
programs and put more money into education. Fix the things that are            
wrong with the formula and continue on.                                        
                                                                               
MR. MYRON NANENG, President, Village Council Presidents, said when             
the State took over education they did not make a big capital                  
investment.  They took over facilities that needed repair.  Many of            
the people in the villages were promised many things by the State              
of Alaska and look at where they are at today.  Urban centers feel             
that they contribute more to education, but they haven't.  A                   
majority of people who pay taxes in Anchorage do not necessarily               
work in Anchorage.                                                             
                                                                               
TAPE 97-57, SIDE B                                                             
                                                                               
[WAS NOT RECORDED]                                                             
                                                                               
TAPE 97-58, SIDE A                                                             
                                                                               
He said to look at how the State is taking money away from people              
in the villages and asked how much they are getting back for what              
they pay for.                                                                  
                                                                               
MR. ELIA SALLAFFIE, Bethel resident, invited the Committee members             
to go out to his schools and talk to the students, the ones who are            
inside and asked them about the quality of their educations and the            
conditions.  He stated if they are really for education, there                 
should be no political barriers; it should be one whole like the               
piece of pie they are using in the handout.                                    
                                                                               
SENATOR LEMAN said it was incorrect when he stated when the                    
Republicans came into control the list for school construction                 
pushed them down the list.  He explained that list is controlled by            
the administration and Department of Education.                                
                                                                               
MR. JAQUE LONGPRE', ASB representative from Bethel High School,                
said it seems to him that they support this bill because their                 
areas benefit from it.  However, for every gain there is in the                
world there is a loss.  The need of money per student varies                   
throughout the State.  It costs more to fund 15 sites for 1,000                
students than it does for one site for 1,000.  So it makes sense               
that rural Alaska needs more money per student.  It puzzles him why            
they fight to not give them the money while rural Alaska provides              
a majority of State revenue in oil and fisheries.                              
                                                                               
He asked why did rural Alaska generate the majority of State                   
revenue, but gets minority representation.  He said he has walked              
the halls of Lathrop High School in Fairbanks and it is not                    
suffering.  Rural teachers are working as hard as they can with                
inadequate funding.  They don't have choir, track, hockey, or                  
football that the urban schools take for granted.                              
                                                                               
MS. LUCY SPARCK said the traditional western education has not done            
well in the rural areas.  The way education is delivered could be              
better.  When their children leave the native communities to go to             
college and to urban areas it is hard for them to adjust to another            
environment.  They are faced not only with a new school, but a new             
culture.  In the end, she said, they cannot have less money to do              
a better job.  They need to add more for the upcoming students in              
their villages.                                                                
                                                                               
In the long run when looking at equity of economics the cost of                
development is very high in rural Alaska compared to urban areas.              
Urban areas are benefiting from rural Alaska economically, not just            
in education.                                                                  
                                                                               
MR. PETE SCHAEFER, Kotzebue, said he wanted to speak about equity              
and equality.  He thought he thought everything was all tied                   
together and separating education was really unfair when looking at            
all the associated costs coming with it like for fuel,                         
transportation, construction, and heat.  He said no real dollars               
had been available in bush Alaska for capital construction.                    
                                                                               
It has been pointed out that the curriculum has also been unequal.             
This puts the sparse population of rural Alaska at a significant               
disadvantage.  A rural tax for rural schools is not equal because              
of the population.                                                             
                                                                               
MS. MARIE CARROLL, Chief Administrative Officer, North Slope                   
Borough, asked for unanimous consent that the text of Mayor                    
Benjamin Nayak's keynote speech of November 20 at the Rural                    
Development Conference's meeting be made a part of the committee's             
hearing record.                                                                
                                                                               
CHAIRMAN WILKEN noted they had a copy of that speech and it would              
be part of the hearing record.                                                 
                                                                               
MS. CARROLL said this speech addressed two very important subjects:            
the fundamental importance of a properly funded system of public               
schools for all children who live in Alaska and on the North Slope;            
the second is that those who live in rural and urban areas of the              
State are in different ends of the same economic boat.  This means             
that everything that damages one group also damages the other.                 
They must, therefore, work to insure that both rural and urban                 
Alaska continue to share in the benefits of our growing natural                
resources based economy.                                                       
                                                                               
North Slope oil provides the revenue for more than 80% of the cost             
of State government and programs such as education.  People living             
on the North Slope bear the burden of accommodating oil development            
on their lands and waters.  North Slope must receive a fair shake              
of State aid for education and other essential public services.                
They strongly oppose legislation that would reduce or eliminate                
their right to receive State aid for their children and their 10               
public schools.  This unfair treatment is being proposed in                    
legislation pending before this committee.                                     
                                                                               
They do accord a high priority to education.  Their schools are new            
because in the past they didn't have any.  They had to send their              
children away to high school.  Rural residents should not be                   
punished because they invest in education and accord their                     
children's teacher the highest priority.  The North Slope borough              
is the second largest local property tax rate in the State, 18.52              
mills.  When the property rate is applied against the very high                
cost of homes on the North Slope, the individual tax burden exceeds            
that of every other Alaska community.  Their resident tax burden is            
more than one third higher than in Anchorage.  It is more than                 
twice as high as Juneau, Fairbanks, Ketchikan, and others.                     
                                                                               
It is important to understand that the North Slope Borough pays 37%            
of the cost of meeting their basic education needs as opposed to               
only 23% in Anchorage and 21% in Fairbanks.  They are doing all                
they can locally to support their children's education.  They are              
not trying to buy them a superior education, but are trying to                 
provide them with the same education urban children take for                   
granted.  It costs more money to do that in rural areas.  With a               
fair share of education funds they can succeed.  Rural and urban               
areas need to work together in educating our children, she                     
concluded.                                                                     
                                                                               
MR. LELAND DISHMAN said he has talked long and hard with him about             
the inequities across the State, not necessarily just in school                
funding, but in facilities and opportunities for kids and the                  
excessive cost of travel.  The North Slope has produced tremendous             
wealth for the State over the years and we have all seemed to get              
along fairly well and benefited from that.  It appears of late that            
a number of legislators feel it would be in their best interests to            
go ahead and "butcher the goose" and take all the eggs at one time             
and live happily for a few days without looking at the                         
consequences.  He said the bills before the committee are doing                
nothing but splitting the rural and urban folks.                               
                                                                               
In talking about equal and unequal there is nothing as inherently              
unequal as trying to equalize unequalness.  It cannot be done.                 
                                                                               
Senator Phillips said in a conversation to him that they were just             
rearranging the furniture, so to speak, but MR. DISHMAN responded              
that it was rearranging deck chairs on the Titanic.  It's a sinking            
ship and it's going to go down.  We do not need to rearrange                   
furniture, we need to buy more.  We need to buy lifeboats and put              
money into the programs that will allow our schools to maintain                
buoyancy and not sink.                                                         
                                                                               
He commented that the statistics saying there has been a 51%                   
increase in the cost of education and a 26% growth in student                  
population were questionable based on the fact that in 1988 the                
State of Alaska had flow through money to the school districts and             
asked them to pick up the cost of teacher retirement, about $25                
million which came out of the legislature into the foundation                  
program to the local districts.  Mt. Edgcumbe, a wonderful school,             
was a legislative cost and was not charge against the foundation in            
the 80's and now it's charged against the foundation.  Busing had              
some major changes and those costs came from the legislature                   
through the foundation.  So that additional 51% funding is a                   
disguise for all the added charges that have been taken out of the             
foundation.                                                                    
                                                                               
MR. DISHMAN questioned why their graphs went back to 1986 and                  
figured because that's when we had a major down-turn in the economy            
in this State and when it went down, the major urban areas had a               
down-turn in their tax base and their budgets were in bad shape.               
There wasn't enough tax money to continue operating schools.  He               
thought that out of the generosity of their hearts the legislature             
stepped up and put in a significant amount of money, particularly              
in urban areas.  Rural areas didn't loose anything because they                
didn't have anything.  He said the truth is that they have been                
generous through the years with urban Alaska and he has enjoyed                
their fellowship.  He pleaded that they don't pit urban against                
rural.                                                                         
                                                                               
On the North Slope, he said, they spend all their money trying to              
improve the quality of education.  It is more expensive because he             
has to fly 300 miles in three different directions to get to some              
of his outlying schools.  However, they try to provide quality                 
programs that are comparable to some of the smaller schools in                 
Anchorage.                                                                     
                                                                               
He concluded by asking that common sense prevail and to work                   
together.                                                                      
                                                                               
CHAIRMAN WILKEN thanked him and responded that he didn't have an               
answer on Mr. Edgcumbe or transportation, but he would talk to him             
about the other two when they get together.                                    
                                                                               
MS. BECKY GAY said she works for the North Slope Borough and                   
recently ran the Resource Development Council.  She assured Bethel             
and outlying areas that what they are hearing is not the prevailing            
Anchorage attitude.  It is the legislature externalizing an                    
internal problem that Anchorage has facing its own school district.            
                                                                               
She said they do not think like that.  No one wants to take money              
from one local district and give it to another.  This is not how               
things are supposed to work in America.  They know rural Alaska                
faces a much different delivery system and a much different                    
situation which is more costly.                                                
                                                                               
She has just returned from Ketchikan where there were mayors,                  
assembly, city council, and the Municipal League from around the               
State and she did not hear one person asking for this Robinhood                
attempt.  Many people were questioning the numbers and the                     
perspective of the legislature.  This is not starting at the local             
level.  Local people believe that local property taxes belong to               
the locality.  This may be a Republican way of getting around the              
no new tax pledge that they have made.  This is just taking someone            
else's taxes which is no different than charging new taxes.                    
                                                                               
Regarding the survey they are talking about, she wondered if anyone            
thought of asking the voters if taking money from the school                   
districts would improve education.  She thought that would also be             
a no answer.                                                                   
                                                                               
In Anchorage the school district, itself, is unequitable.  The bush            
people need to understand that.                                                
                                                                               
MS. GAY said in conclusion that everyone knows if Alaska goes to a             
per capita equalizer, particularly in education, it would be very              
bad for the bush.  She thanked them for coming out to Bethel, but              
said she couldn't support any of the legislation.                              
                                                                               
MR. JOHN WEISE, Superintendent, Yupiit School District, said he                
received all of his public schooling in Bethel under the                       
territorial and State school systems.   He remembers going to the              
new Kilbuck school and how good it was to move from the pool hall              
to a nice building with flush toilets.  Now the school is so                   
crowded that they hold classes in the bathroom.                                
                                                                               
Another exciting time for schools was the creation of REAA system              
from the SOS system where all of rural Alaska was under one                    
governance structure.  The REAA system gave them more say with                 
local boards and people they would elect.                                      
                                                                               
He thinks a lot of focus is on student learning, but he thought                
today it was on buildings and maintenance and whether or not urban             
and rural areas are equitable.  Rural areas started at the first               
percentile and have made a 30% gain in test scores since the advent            
of State schools.  Urban areas with a bell curve starting at the               
50th percentile are still there.  The increase in education has                
been in the rural areas.  The question of equity today is to decide            
what a dollar is worth to a rich man compared to a poor man.                   
Senator Wilken's proposal treats everyone alike; they are either               
all rich or all poor.  But they know that's not true.  What they               
should really be talking about is student learning.                            
                                                                               
TAPE 97-58, SIDE B                                                             
                                                                               
MR. WEISE said let's be the state that is the leader in the nation             
in technology as he thought they were going to be 20 years ago.                
Instead we are loosing ground.  We are getting into battles between            
rural and urban areas that he never heard about when he was young.             
                                                                               
MS. AGNES PHILLIPS, Bethel Mayor, said her concern in taking money             
away from rural areas is that they won't be allowed to spend the               
same amount of money on each child considering the greater expense             
in living in the outer areas.  She said many people live in the                
bush because all the foods they value are available out there for              
their families.  She said she had two sets of children.  Her                   
younger children get a good education in Bethel and her older ones             
got a good education in Fairbanks.  She hoped they had a good                  
disposition toward all their children in Alaska as if they were                
their own.  All parents want a good education for their own whether            
they live in the bush of a town.                                               
                                                                               
MR. BOB MEDINGER, Principal, School District 70, thanked them for              
coming to the bush to listen to them.  To compare their area                   
economically to the North Slope is tough.  In LKSB they are facing             
a $8 - $10 million cut, 18 - 20% of their budget.  He said they are            
just "chopping teachers" because you can't chop janitors who are               
needed.  His wife, a fourth grade teacher, has 33 kids in her class            
and one aide for an hour a week.  They know fourth grade teachers              
in Anchorage who don't have 33 kids in their classrooms.  It's                 
obvious if they cut more teachers, the numbers will go up.  His                
professional people are doing everything possible to give their                
kids the best education they can.  The numbers they are talking                
about are absolutely devastating.                                              
                                                                               
MR. MEDINGER said that the endowment and budget reserve are prime              
funding sources.  If their constituents do need some level of fair             
share to be paid, he asked them to get some real numbers and work              
together with Senator Adams and Senator Hoffman and look at what               
some of the options really are out here in terms of a possible mill            
rate or sales tax.  Some of the numbers they have are just not                 
going to work.                                                                 
                                                                               
MR. WILL UPDEGROVE highlighted some of the cost factors that go                
into education in the bush saying he sometimes does living cost                
surveys for the University of Alaska.  The latest one he did in                
September showed Bethel at a rate 50% higher than either Fairbanks             
or Anchorage for feeding a family of four.  People from the bush               
come to Bethel to buy their groceries because it's like Anchorage              
in comparison to their stores in the bush.  In that survey the                 
water and sewer rates are five to seven times higher per month in              
Bethel than Fairbanks.  Electricity, even with the subsidy from the            
State, runs over 15 cents per kilowatt hour versus eight cents in              
Anchorage and Fairbanks.                                                       
                                                                               
He urges them to consider, not only the differences in the cost of             
doing education throughout the State, but also the parity in                   
meeting the needs of the children, in a sense, no matter what they             
cost or where they are.                                                        
                                                                               
Bethel does get some of the funds for school busing, but looking at            
the LKSD as a whole it receives about $76 from the State on a per              
student basis.  Anchorage receives $216 and Fairbanks gets $322 per            
student.  If that were an equitable distribution of funding, Bethel            
would be able to take its share and still have $675,000 remaining              
for direct educational programs.  But it's not equitable, because              
some villages don't have to bus kids, but they do in Fairbanks and             
Anchorage. These differences need to be met on a state wide basis.             
They should look at these same sorts of factors on a state wide                
basis and provide for them.                                                    
                                                                               
MR. UNDEGROVE said he encouraged them to think about an educational            
endowment.  It doesn't make sense to him to say there is no new                
money for education, that it's not fiscally sound, or it's not a               
good investment.  If the legislature is going fulfill the State                
mandate to establish and maintain a system of public schools open              
to all the students of the State, they need to do so by not looking            
at the lowest common denominator or providing for the basic need,              
but seeking to promote the highest possible degree of excellence in            
education from all students.                                                   
                                                                               
MS. JOAN HAMILTON thanked them for coming to Bethel and said she               
speaks as a parent.  She said she had asked other parents why they             
didn't testify before other committees on education and the answers            
have been that no matter what the money is their children would                
still get a poor education.  This has been said to her over and                
over again.  She noted that they have 1,300% higher rate of suicide            
among Alaska native boys between 15 - 24, and a high rate among the            
girls, than in the rest of Alaska.  When you talk about suicide it             
means there is no hope.  She is a product of boarding schools and              
passed her eighth grade exam third of thirteen.  So she got a good             
education and there really wasn't any money.                                   
                                                                               
She realized as she was looking at the committee that she saw two              
friends and four enemies and she apologized for that because it is             
contributing to the problem and not the solution.  For the sake of             
their children they don't need to pit urban against rural, but she             
tends to be for the underdog; and rural right now is the underdog.             
                                                                               
MR. RICHARD KERN, teacher and parent, said that he is also a                   
Regional Director for NEA Alaska.  Two of the reasons he went into             
education is that he loves working with children; they have no                 
guile, they know they don't know everything yet, and they are                  
willing to learn.  He came to this meeting today in the same state             
of mind.  He wanted to learn something about economics.  What he               
hears is that by spending less we can fix it and do more.  Things              
of greater value have that value from his perspective because the              
design is better, the amount of care in manufacturing it is better,            
and the amount of time given to that manufacture is better.  All of            
those factors have a cost associated with them.  He thinks it's                
true of education as well.  He fails to understand how paying less             
for those kinds of items that are so valuable to what they do in               
education is going to fix what is wrong if there is, indeed,                   
anything wrong.                                                                
                                                                               
One thing he found on listening to Senator Wilken on Gavel to Gavel            
that $15 million could be raised from a tax on out-of-state workers            
in the Bristol Bay area; and his response was that $15 million                 
wasn't a lot of money as far as the deficit is concerned.  However,            
he understood Senator Torgerson say today that $20 million is a                
significant sum of money when we are looking at administrative                 
costs that can be saved.  Fifteen million dollars would pay for 150            
social workers in the State or a new school in Bethel to replace               
Kilbuck.  He concluded saying that he has an appreciation now that             
real money is between $15 and $20 million.                                     
                                                                               
MR. CHRIS FUEDELL, Bethel teacher, said he hoped this was not the              
only bush location they would have a discussions in on this                    
subject.  He appreciated Dr. John Weise's comments, particularly               
the 1% to 30% test score information.  He thought it was important             
to keep in mind that they are making progress.  He said there are              
disparities within every district and within every community.  He              
invited them to visit the Kilbuck school with its buckling                     
hallways, tiny classrooms, leaky ceilings, and no gymnasium where              
600 children go to school.                                                     
                                                                               
To Senator Leman's question of how to improve education he                     
responded that they each have their own answers, but most of them              
who daily struggle with this question know that funding cuts to any            
child's school will not help.  Most thinking people realize that a             
community can support the school and the children or they need to              
build more prisons.  No one likes to think that someone is taking              
a free ride on their coat tail or that urban children don't have               
equity with this area's rural children.  The bottom line is just a             
reflection of the State and community that creates it.  It takes a             
village to educate a child; it also takes the tools to work with.              
He urged them to, please, keep giving them those tools.                        
                                                                               
Nationally, there has been a huge slippage in Alaska's financial               
commitment to children in schools.  Fairly recently they were                  
leaders in that commitment.  With such a large bank account there              
is no rational reason our children should be short-changed.                    
                                                                               
MR. JULIUS PLEASANT, Inupiat, said he has six children.  He is a               
Bethel School Board member and welcomed them.  He said  education              
costs money, but so does ignorance.  There is nothing like the                 
equal treatment of unequals.                                                   
                                                                               
MR. PLEASANT said he appreciated their coming here and thought that            
they all meant well.  He urged the committee to not look so much at            
the dollars, but to look at the human resources, the young                     
developing minds.                                                              
                                                                               
MR. PAUL SUGAR, Bethel teacher, said he has very strong ties to                
Fairbanks.  He graduated from UAF and has many friends there.  He              
thought everyone here has strong ties to all of their communities,             
because that is the inherent nature of Alaska.                                 
                                                                               
First, he is a little bit baffled that we Alaskans have a                      
tremendous amount of creativity and ingenuity and he is amazed that            
the financial solutions we have come up with are solutions that                
every state in the lower 48 is flocking away from because of the               
inherent inequities in them, like using property taxes to pay for              
education.                                                                     
                                                                               
We look to the legislators as our leaders, he said, and they swore             
to uphold the Constitution which is for every single person and                
every single child.  This sets up the community feeling in the                 
entire State, everyone in their leadership roles as legislators and            
community members, to work together to raise all of our children.              
                                                                               
He urged them to find ways to leave the politics of division behind            
and stop looking at ways to divide the pie and start finding ways              
to make more pies.                                                             
                                                                               
CHAIRMAN WILKEN asked for closing comments.  All the attending                 
members thanked everyone for turning out and said they were glad to            
have this opportunity.                                                         
                                                                               
SENATOR TORGERSON remarked that the definition of equity seems to              
be a real big hangup and on who should pay and who shouldn't.  He              
urged them to follow the process and stay involved.                            
                                                                               
CHAIRMAN WILKEN said thank goodness that the issue was on the table            
and they now have the chance to do something about it.  He thanked             
everyone for their participation and adjourned the meeting.                    

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