HB 317-EDUC. FUNDING: BASIC/SPEC NEEDS/TRANSPORT  9:01:48 AM CHAIR SEATON announced that the next 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." 9:02:09 AM KATIE KOESTER, Staff, Representative Paul Seaton, Alaska State Legislature, introduced the amendment, stating: What this amendment does is it replicates the 1.50 percent increase in block funding, for the fiscal year 2012 (FY 12). If you recall, in HB 317, we increase funding for the base student allocation (BSA) by $125 dollars for the next three fiscal years, and also increase for the first fiscal year the block grants. This would ... take that increase and extend it by an additional year that would make the first year be a 1.50 percent increase, and the second year a 3 percent increase. ... The actual amendment inserts a section 3, on page 2, following line 9, that mimics the section preceding it with a different factor ... instead of 1.215, it's 1.23. MS. KOESTER said the additional aspects of the amendment serve to renumber the sections appropriately. 9:04:55 AM CHAIR SEATON moved Amendment 1, labeled 26-LS1378\E.2, Mischel, 2/4/10, which read: Page 2, following line 9: Insert a new bill section to read:  "* Sec. 3. AS 14.17.420(a), as amended by sec. 6, ch. 9, SLA 2008, and by sec. 2 of this Act, is amended to read: (a) As a component of public school funding, a district is eligible for special needs funding and may be eligible for intensive services funding as follows: (1) special needs funding is available to a district to assist the district in providing special education, gifted and talented education, vocational education, and bilingual education services to its students; a special needs funding factor of 1.23 [1.215] shall be applied as set out in AS 14.17.410(b)(1); (2) in addition to the special needs funding for which a district is eligible under (1) of this subsection, a district is eligible for intensive services funding for each special education student who needs and receives intensive services and is enrolled on the last day of the count period; for each such student, intensive services funding is equal to the intensive student count multiplied by 13." Renumber the following bill sections accordingly. Page 2, line 13: Delete "sec. 2" Insert "sec. 4" Page 2, line 16: Delete "secs. 2 and 3" Insert "secs. 4 and 5" Page 2, line 22: Delete "Sections 2 and 3" Insert "Sections 2 and 4" Page 2, line 23: Delete "Section 4" Insert "Sections 3 and 5" Page 2, line 24: Delete "Section 5" Insert "Section 6" CHAIR SEATON, hearing no objection, announced that Amendment 1, to HB 317, was adopted. 9:06:19 AM CHAIR SEATON offered Conceptual Amendment 2, removing the third year of the forward funding. REPRESENTATIVE GARDNER objected for discussion. 9:06:54 AM CHAIR SEATON explained that Conceptual Amendment 2 would remove the necessity for a new legislature to pass a continuation bill in the first half of a session. Currently, a newly formed education committee would need to come to terms with the funding formula, and craft an appropriate continuation bill, which he opined could prove difficult. 9:08:18 AM REPRESENTATIVE GARDNER pointed out that adding a fourth year would serve the same purpose, relieving any urgency, and provide more security for the school districts. CHAIR SEATON stated reluctance to extending it as far as four years, due to all of the variables involved in the funding formula. He opined that it would be prudent to have a shorter projection period, which would allow adequate time within the legislature to understand the situation and continue the forward funding. Further, the historical aspect of the intent, and reasoning, used to develop forward funding has a better opportunity to be passed on to the upcoming legislative members, but may be lost two legislatures removed. REPRESENTATIVE GARDNER recognized that modifications to the bill could subsequently occur. However, she maintained that the education committee has the opportunity to indicate definite intent for forward funding, and said it is important to have a plan in place. 9:11:38 AM REPRESENTATIVE GARDNER offered Conceptual Amendment 1, to Conceptual Amendment 2, increasing the forward funding by one year. CHAIR SEATON objected for discussion. 9:12:00 AM CHAIR SEATON reiterated his concern for the difficulty it would pose, in projecting appropriate funding formula figures, and predicted that nebulous fiscal projections would hinder the movement of the bill through the legislative process. He expressed hope that the intent would not become altered, in the future, and forward funding would be continued. He maintained his objection. 9:13:14 AM A roll call vote was taken. Representatives Wilson and Gardner voted in favor of Conceptual Amendment 1, to Conceptual Amendment 2. Representatives Buch and Seaton voted against it. Therefore, the amendment to Conceptual Amendment 2 failed by a vote of 2-2. CHAIR SEATON, hearing no further objection, announced that Conceptual Amendment 2 was adopted. 9:15:24 AM REPRESENTATIVE BUCH opined that HB 317 will be a bill which will continue to evolve. 9:16:35 AM CARL ROSE, Executive Director, Association of Alaska School Boards (AASB), expressed support for the failed amendment, and indicated interest in having the forward funding extended to ten years. The idea for forward funding that came through the education task force has been crafted in a suitable way and is supported by the association, as amended. 9:19:11 AM CHAIR SEATON directed the committee's attention to the handout titled "The Department of Education and Early Development - School Finance. Response to House Education Committee Questions of 2/1/2010," and asked the department to explain the five page document. 9:20:02 AM EDDY JEANS, Director, School Finance and Facilities Section, Department of Education and Early Development (EED), said that the document addresses four questions, beginning with funding comparisons for the Alaska Military Youth Academy (AMYA) to the other residential school programs. Page 2 provides a breakout of dollars generated through the foundation funding, as well as residential funding provided by the state. He reminded the committee that the legislature passed a residential funding program for Galena, Lower Kuskokwim, and Nenana. The Mt. Edgecumbe residential program is funded through the department's operating budget. Question two regards how AMYA schedules the residential program. He reported that the academy runs two 22 week residential sessions each year. Funding is received on the basis of seven times the base student allocation (BSA) via the funding formula, and pays for the residential, as well as the instructional, programs. AMYA has a second allocation, which is an adjustment to provide follow-up mentorship to the graduates. Question three addresses the pupil transportation contract adjustments for ties to the CPI (Consumer Price Index). Many of the contracts allow for upward or downward CPI adjustments. Pupil transportation is covered by a grant based on the number of students, and even if the number of students decline on a particular route, it still must be run, but state support will be less. He stated support for the [proposed language of CSHB 317, Version S] regarding the adjustment to student transportation funding. The final question deals with the 1.50 percent adjustment, intended to provide additional support for career and technical programs. He said he reviewed the history of funding for these programs. In 1998, when categorical funding was in place, 8.5 million was allocated for vocational education, and the total foundation program was $795 million, or 1.08 percent categorically identified for vocational education. He said, "Even back then, those dollars were intended for the additional costs of vocational programs, not the base cost of those programs." Directing attention to page 5, of the handout, he explained that adding 1.215 percent will identify roughly 1.07 percent of the total, or $14.7 million out of a $1.4 billion dollar budget. Increasing it by the additional three percent, 1.230, means nearly $30 million would be provided out of a $1.4 billion dollar budget, or 2.14 percent. He opined that this would be a good direction to take if it is clearly understood that these are dollars to offset additional costs of running vocational education programs, on top of what is already in place. 9:25:01 AM CHAIR SEATON asked concurrence from the committee to have a letter of intent crafted to specify that the career technical vocational component is not being supplanted in the block grant, by the increase proposed in the bill. With no objection, a letter of intent will accompany the bill. 9:25:46 AM REPRESENTATIVE BUCH returned to page 2, of the 5 page handout, and clarified that Mt. Edgecombe is funded through the department's operating budget. MR. JEANS confirmed his understanding. REPRESENTATIVE BUCH recalled concern for loss of federal funding, and the ability for the state to maintain the facilities. He asked whether the department expects the other residential programs to be funded similarly in the future. MR. JEANS said Mt. Edgecombe is unique, as a state owned and operated school, which is why the residential component shows up in the department's budget. However, if Galena requested to contract with the state to operate another state school, an amendments could be made to the department's budget to fund the residential component. The legislature passed a funding mechanism to provide the residential costs for Galena, Lower Kuskokwim, and Nenana, as a separate component outside of the foundation formula. These three schools are not funded through the operating funds, but rather out of the department's grant budget. 9:28:22 AM REPRESENTATIVE BUCH noted that the AMYA tracks the post graduates, to know whether the young adults have continued as productive citizens. He expressed an interest in seeing the AMYA tracking model expanded to other programs, which may require a minimal fiscal note, but will result in important feedback that will validate the efforts being made by the department. MR. JEANS agreed that the AMYA fiscal component for post graduate progress tracking/mentoring is not expensive. He reported tracking, will be implemented through the cooperative agreements that the department is entering into with the UA system, and Department of Labor & Workforce Development (DLWD), especially if students remain in the state. A unique student identifier is also under consideration, which will also be helpful for tracking. 9:30:57 AM CHAIR SEATON commented that a recent news article indicated how another state has employed a unique identifier to track students, and expanded its use to track students across other states. MR. JEANS added that participants in the K-12 pilot program were required to utilize the EED student ID [identification] system. The progress of these students will be tracked and analyzed to enable the department to determine the benefits of the program. 9:32:11 AM REPRESENTATIVE BUCH indicated an interest in establishing a means for tracking homeschooled children. He said that they often come into the system later, perhaps through the AMYA, and there should be a way to correct the information to reflect a student's history. CHAIR SEATON agreed that the information is valuable and the committee is interested in supporting the department's efforts to implement a meaningful tracking system. He requested that the department provide the committee with information regarding any statutes that may need amending to allow these actions to be put into place. 9:34:07 AM CHAIR SEATON directed attention to page 2, of the departmental handout, and stated that the funding formula applies a built in base student allocation escalator, of seven, to be applied for the AMYA program. With the formula increases, forward funding, and other legislative actions that have occurred, the escalator needs to be reviewed. An unintended consequence is being recognized where the funding mechanism, the multiplier, may no longer correspond with the needs of the AMYA program. He asked Mr. Jeans whether HB 317 would be the appropriate vehicle for changing that funding program. MR. JEANS recommended that it be addressed in another bill, and also to have the academy express their needs directly to the committee. CHAIR SEATON said the academy would be invited to address the committee, and provide a full overview of the program. 9:40:54 AM CHAIR SEATON solicited response to the revisions made to the bill, and announced that HB 317 would be held for further consideration.