HB 317-EDUC. FUNDING: BASIC/SPEC NEEDS/TRANSPORT  8:06:03 AM CHAIR SEATON announced that the first order of business would be HOUSE BILL NO. 317 "An Act increasing the special needs funding and base student allocation for public schools, and extending the adjustment for student transportation funding; and providing for an effective date." 8:06:23 AM KATIE KOESTER, Staff, to Representative Paul Seaton, Alaska State Legislature, introduced HB 317 and a sectional analysis, paraphrasing from a prepared statement, which read as follows [original punctuation provided]: HB 317 - forward funding education, increasing block grant funding & extending inflation adjustment to pupil transportation funding. Sec. 1  Extends the inflation adjustment for pupil transportation established in the Joint Legislative Education Funding Task Force legislation passed in 2008 for three more years until 2014. Takes the adjustments from reflecting any changes in the Anchorage Consumer Price Index to any increases in the Anchorage CPI. This ensures that in a year with negative inflation year we do not reduce funding. Sec. 2  a.(1)Increases the block funding for special education gifted and talented, vocational, and bilingual education by 1.5% (this takes it from 1.2% BSA to 1.215% BSA). The intent is that this increase be directed to Vocational Education. (2) Second half of Sec. 2 jus tracks current law which is phases in the final year of the increases in special needs funding as established by the Joint Legislative Education Funding Task Force in 2008. Sec. 3, 4 & 5  Increases the Base Student Allocation by $125 for the next three fiscal years (FY11, FY12, and FY13). Sec. 6 the corresponding extension of pupil transportation inflation adjustment established in Sec. 1 Sec. 7,8 & 9 the corresponding effective dates to the increases in the BSA. * the reason the language of the bill references numbers in brackets is because we are amending legislation that has not taken effect yet in each section, so the number in brackets refers to that previous number. 8:09:25 AM MS. KOESTER pointed out the fiscal note and indicated that the Department of Education and Early Development (EED) is available for financial questions. In response to a committee question, she stated that the funding factor of 1.215, page 2, line 3, is the actual amount; an increase from current funding. 8:10:21 AM CHAIR SEATON clarified that the only change to Section 1 is the insertion of the term increases, and the deletion of "changes" in the Consumer Price Index (CPI). He reviewed the fiscal note, pointing out that the Alaska Military Youth Academy (AMYA) receives seven times the base student allocation, and requested that the department explain how this funding takes place and the budgetary effect. 8:12:45 AM EDDY JEANS, Director, School Finance and Facilities Section, Department of Education and Early Development (EED), established that the AMYA has, in statute, a unique funding formula that is tied to the base student allocation (BSA). Whenever the BSA is increased, the AMYA allocation is automatically adjusted upward. They do have a residential program, which is why they receive a seven times allocation, however, he opined, it would be safe to say that their residential costs are not going up every time the BSA is increased. 8:13:33 AM REPRESENTATIVE GARDNER pointed out that other schools have residential programs, and asked whether they receive a similar level of funding; such as Mt. Edgecombe. MR. JEANS responded that Mt. Edgecombe's residential program is funded by the department and comes directly from the general fund. When increases are requested for that program, it is included as part of EEC's budget process. He said that the dollar amount for the residential programs in Galena, Nenana, and Bethel are set in statute. The funding for these programs can only be adjusted through the legislative process to alter the stipend amount, and are not effected by adjustments to the BSA. REPRESENTATIVE GARDNER queried how the total funding per student compares. MR. JEANS recalled that when the funding mechanism was created for the AMYA, a dollar amount was established, and they backed it into the funding formula to achieve the amount. Since that time the BSA has been increased several times, providing AMYA and automatic increase, which may have been an unforeseeable consequence when the statute was originally drafted. CHAIR SEATON requested comparison information on the other programs, and what the effect is on the budget. MR. JEANS stated that all of the residential facilities are required to come before the legislature and justify the costs of their programs. The educational component is funded via the foundation formula, and they are seeing the increase benefits for that aspect of their program. He said that it may be difficult to split the two out, as the funding for AMYA is a blended number that covers the residential and education programs. The department will provide the committee with the total costs of each of the programs. 8:16:26 AM REPRESENTATIVE P. WILSON recalled that the AYMA has an abbreviated residency period, that is shorter than the other resident institutions. MR. JEANS said he would provide information to the committee. 8:17:23 AM REPRESENTATIVE BUCH asked whether the resident program at the Alaska Vocational Technical Center (AVTEC), is considered on the same basis. MR. JEANS answered that AVETC is funded 100 percent through the Department of Labor & Workforce Development (DLWD). REPRESENTATIVE BUCH reported that AMYA has a two session curriculum that runs for 7 months then begins again. This is a program for the highest risk students, that have fallen through all the cracks, and yet they produce an 80 percent success rate. He stressed the importance for supporting this type of facility, and how it differs from other residential facilities. He stated that he was not aware of the high level of state funding, but suggested that it is money well spent. 8:19:58 AM CHAIR SEATON stated that the question is not whether to cut the program, but to evaluate the appropriateness of having a seven times increase built into the formula. An alternative may be for the academy's administrators to come before the legislature to request funding. 8:20:49 AM REPRESENTATIVE MUNOZ directed attention to the fiscal note and asked why it is greatest in fiscal year (FY) 2012. MR. JEANS responded that the 2012 year represents the block funding increase from 20 to 21 1/2 percent, and raising the BSA by $125.00. In year two, the BSA is increased, again by $125.00, but not the block funding. The block funding remains at the higher rate. 8:22:34 AM CHAIR SEATON pointed out that an amendment has been prepared that will raise the block funding another 1 1/2 increments, bringing it to 23 percent, in the second year. Additionally, he mentioned the EED chart, in the committee packet that reflects the final ISER (Institute of Social and Economic Research) increase, and illustrates the block funding increases. To avoid any confusion regarding the application of the recommended increases, he said he would draft a letter of intent to accompany the bill. 8:28:44 AM CHAIR SEATON opened public testimony 8:29:02 AM AMY LUJAN, Executive Director, Alaska Association of School Business Officials (ALASBO) stated support for HB 317, as a means to forward fund education. She praised the base student allocation adjustment, previously established, and reported how the new three year plan will provide continuity to districts. The block grant will allow schools to carry out the committee's intent to provide career and technical/vocational education. Finally, she said that pupil transportation contracts are an important facet that will also be served better with forward funding. In response to a question from Chair Seaton, she agreed to provide information to the committee regarding how the pupil transportation contracts relate to the CPI. 8:33:43 AM MARY FRANCIS, Director, Alaska Council of School Administrators (ACSA), stated support for HB 317, citing forward funding as a tremendous advantage to the school districts, and praising the increase to the BSA. Further, she indicated that ASCA supports reestablishing categorical funding for career and technical education. She offered Position Statements 09-1 and 09-15, for inclusion in the committee packet. 8:36:33 AM CHAIR SEATON asked whether ASCA has any concern for appropriate use of the categorical funding, at the school board level. 8:37:40 AM MS. FRANCIS recalled the categorical funding that had been provided, at one time, for vocational education. One of the reasons vocational education foundered is because other categories took priority. If money is not directly tied to the development and enhancement of career and technical education, it may not be spent in that area, she cautioned. School boards and districts make decisions based on local needs. From her experience as a superintendent, she reported that categorical funding can work well. CHAIR SEATON solicited further input from the ASCA regarding structuring the block grant, which she agreed to provide. 8:41:39 AM DR. ANNMARIE O'BRIEN, Ed.D., Assistant Superintendent, Northwest Arctic Borough School District, stated support for HB 317, commending the committee for recognizing the importance of, and providing for, forward funding. She underscored the importance of the increase in the block grant funding and legislative support of vocational education. 8:44:35 AM DAVE JONES, Assistant Superintendent, Kenai Peninsula Borough School District, stated support for HB 317, stressing the importance of forward funding and the instrumental role it plays in teacher retention, planning, and continuity of educational programs. Morale has increased because of this type of approach, as teachers have been able to focus on educational programs, rather than focusing concern on budget shortfalls. 8:47:18 AM JIM NYGAARD, Superintendent, Cordova School District, stated support for HB 317, paraphrasing from a prepared statement, which read as follows [original punctuation provided]: Cordova Schools supports HB317 for the following reasons: Funding increases will help us compete with the increased costs of fuel/utilities, food, staff costs, and travel/shipping costs. We liked the 3 year package, but still appreciate the reduced 2 year proposal. Cordova has been very respectful of the increased block grant funding discussion. With the "Intensive" level funding currently offered to the state, we have been impressed. However, in Cordova we have a considerable population of special needs children that we do not get adequate funding for [and] that do not qualify for the additional funding. Thus, the appreciation for the increased block grant monies. Multiple year funding package has been a blessing for budgetary purposes. MR. NYGAARD added that the increased expectations for the final year of NCLB have not been discussed, but this consistent funding support will help attain the mark set for that program. 8:49:50 AM REPRESENTATIVE GARDNER requested further information on the itinerant students. MR. NYGAARD replied that specialists must be brought in on contract to provide special services, such as a speech pathologist. The service must be provided but the cost presents a burden. 8:50:55 AM PETER HOPPER (ph), stated support for HB 317, and said he had nothing further to add. 8:51:17 AM STEVEN BRADSHAW, Superintendent, Sitka School District, stated support for HB 317, and thanked the committee for furthering local control of the block funding, as well as for the proposed increases. The vast majority of the 20 percent block, for the past 10 years, has gone towards special education, and vocational programs have been cut. Additionally, he reported how needs, and funding, for English as a Second Language program have surged. 8:54:32 AM CHAIR SEATON said that the bill would be held, and public testimony will remain open. [HB 317 was held over.]