HOUSE BILL NO. 87 "An Act extending the special education service agency; and providing for an effective date." 1:33:36 PM Co-Chair Stoltze stated that committee concerns were addressed for HB 87 regarding the Special Education Service Agency (SESA). Representative Wilson MOVED to ADOPT the proposed committee substitute for HB 87, Work Draft, 28-LS0392\O, Mischel, 3/18/13,(FIN). Co-Chair Stoltze OBJECTED for discussion. Representative Wilson explained that the Department of Education and Early Development (DEED) would now have oversight of SESA versus the former Governor's Council of Disabilities and Special Education. The findings and recommendations on the audit report were considered when making the decision. She stressed "whereby state and federal law it is the requirement of the Department of Education and Early Development to make sure that the correct services were brought to our special education students." She noted that a special education director from the department met with SESA on regular intervals and the change will allow the legislature to better monitor the organization and its needs. REPRESENTATIVE PETE HIGGINS, spoke about the bill. He appreciated the committee tackling the issue of program oversight. Co-Chair Stoltze WITHDREW his OBJECTION.. 1:36:12 PM Representative Kawasaki MOVED a conceptual amendment. Representative Wilson OBJECTED. TO: CSHB 87 (FIN) Work Draft 28-LS0392\O Page 1, line 11: Delete "$15.75" Insert "$21.50 [$15.75]" Page 2, following line 6: Insert a new bill section to read: "*Sec. 2. AS 1430.650 is amended by adding a new subsection to read: (b) The funding allocated under (a) of this section shall be adjusted annually by multiplying the amount allocated in the immediately preceding fiscal year by 0.5 percent." Representative Kawasaki explained the amendment. He noted that recent discussions with Legislative Budget and Audit (LB&A) and DEED led to information about SESA's funding. The funding had not kept up with inflation or Base Student Allocation (BSA) increases. He noted that SESA was an agency that was flat-funded for many years while the total number of program participants increased substantially. The $21.50 would allow the program to keep up with inflation. Representative Wilson responded that the $15.75 was a minimum requirement. She noted that the education subcommittee did not discuss the issue because the program's oversight was through the Department of Health and Social Services (DHSS). The audit stated that the "plan did not have the number of students and school district personnel receiving services and all funding sources." She noted that the education subcommittee would detail the fund sources during the interim with the oversight located in DEED. Co-Chair Stoltze spoke against the amendment because he was philosophically opposed to indexing the appropriate channels when working through the budget process. Representative Gara pointed out the cost per special education student in Anchorage or Fairbanks of $50 thousand. He wondered what rural school districts received to educate special education students with severe handicaps. 1:39:03 PM Representative Higgins replied that the current funding was adequate, but the organization would prefer not to be flat funded. The SESA board understood that the state was operating under budget constraints. The goal of the legislation was to extend the sunset utilizing a subcommittee process to address the funding issue. Representative Gara clarified his question. He wondered if rural areas received funding for special education services in addition to SESA. Representative Higgins did not know the answer to the question. 1:40:42 PM Representative Wilson responded that the $15 was based on the average daily attendance and the numbers of students in the state. Representative Kawasaki reiterated that the SESA baseline budget was established 15 years ago. He noted that inflation alone decreased the value by over 36 percent. The sum was small and affected the most vulnerable people in rural Alaska who might not have the assets available within their own school districts. He pointed out that the joint legislative education task force recommendations advocated for an increase for the intensive needs resources to schools. He noted that not every intensive-needs student qualified for SESA, but he believed that the money was wisely spent and impacted those kids who needed the most help. Representative Wilson maintained her OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Gara, Kawasaki OPPOSED: Thompson, Costello, Edgmon, Neuman, Wilson, Holmes, Munoz, Stoltze and Austerman The conceptual amendment failed (2/9). 1:43:39 PM Representative Costello detailed one fiscal note for CSHB 87 showing an impact of $2,035,500 for fiscal year 2014 for every fiscal year following. Co-Chair Stoltze asked a department member if fiscal note was correct. MARCY HERMAN, SPECIAL ASSISTANT, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, responded yes. Representative Wilson MOVED to REPORT CSHB 87 (FIN) out of committee with individual recommendations and the accompanying fiscal note. Representative Kawasaki OBJECTED in favor of hearing from DEED about the implication of the legislation and the change in oversight from the council to the department. MS. ELIZABETH SWEENEY NUDELMAN, DIRECTOR, SCHOOL FINANCES AND FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, stated that the costs shown in the fiscal note would remain accurate if SESA continued to operate. Representative Kawasaki wondered how the substantive change in oversight would affect the program because DEED would take over administration and governance of the program. Ms. Nudleman replied that the SESA organization was run by a board of directors and the board, with the executive director would continue to operate the organization. She stated that the fiscal note would carry the same costs it had in prior years. She referred to the sponsor for questions regarding the CS. Co-Chair Stoltze wished that Representative Kawasaki had followed protocol by raising the point when the CS was discussed. Representative Kawasaki asked if SESA's nonprofit status impacted the department's ability to regulate the organization. Ms. Nudelman responded that the legislation consolidated by eliminating oversight from the Governor's Council on Disabilities and Special Education. She was unaware of further changes. The nonprofit was administered by a board. 1:50:27 PM Representative Gara stated that he did not understand the decision to consolidate the agencies governing SESA. Co-Chair Stoltze explained that the audit report recommendations were considered when making the decision. Representative Wilson clarified that the education subcommittee discussed the matter at great length. The council did not have the authority, if the money was not spent correctly, to do anything about it. With new and specific laws regulating special education, the decision to give DEED full oversight was prudent. She stated that the council would continue to review programs. The only change was providing authority to the department to ensure that the students got the help they need and money was spent correctly. The authority was also provided to DEED to bring the item forth in their budget for future program needs. Representative Gara appreciated the explanation. Representative Kawasaki WITHDREW his OBJECTION CSHB 87(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published fiscal impact note: FN1 (EED). 1:54:59 PM AT EASE 1:55:21 PM RECONVENED