HB 145-K-12 SCHOLARSHIP PROGRAM  CHAIR DICK announced that the next order of business would be HOUSE BILL NO. 145, "An Act establishing the parental choice scholarship program to be administered by school districts for the purpose of paying the cost of attending grades kindergarten through 12 at public and private schools; and providing for an effective date." [In front of the committee was Version D, adopted as the working draft on March 25, 2011] 8:37:07 AM REPRESENTATIVE WES KELLER, Alaska State Legislature, noted that a witness was on-line to address any concern that the bill was a threat to the public schools. He urged the committee to move the bill to enhance the discussion that it would trigger. 8:39:23 AM JEFF REED, State Programs & Government Relations Director, Foundation for Educational Choice, said that the foundation was founded in 1996, based on Dr. Milton Friedman's 1955 idea of school choice for all children. He explained that the idea was for students to be directly funded and to choose the school which was best for them. He reported that the findings of the foundation indicated that children made academic gains by having this choice. He said that both groups of children, those who chose to go to schools which better fit their needs and those who chose to stay in the public schools, did better. 8:42:48 AM CHAIR DICK expressed concern that the public schools would have a higher proportion of special needs students. 8:43:15 AM MR. REED replied that many of the school choice programs were developed toward special needs children and the parents chose them for the appropriateness for their child. He reported on the statistics that supported this statement. He stated that public schools benefited from the resulting smaller class size. 8:44:52 AM REPRESENTATIVE SEATON directed attention to HB 145, which allowed the private school to select the children they would accept, with no parameters on exclusions for religion or special needs. He asked if the schools he described had a different type of selection process. 8:46:24 AM MR. REED explained that the majority of school choice programs did not require private schools to accept all children. He reported that private schools accepted a diverse set of students for many reasons, including the need to fill empty seats, and for economic diversity. He stated that the mission statement of the religious schools was to serve the neediest. He opined that evidence indicated that a lot of private schools do not turn down students, and merely used the screening process for placement purposes. 8:48:46 AM REPRESENTATIVE CISSNA, acknowledging the rural location and the diverse needs of many of the schools, stated that it was difficult to compare Alaska to other states. She directed attention to the huge transportation costs, and she expressed reservations for how this could work for Alaska. 8:50:59 AM MR. REED referred to the Florida special needs scholarship program, which was based on a student's Individual Education Plan (IEP), and reported that the dollars attached to the IEP could be taken to the school of choice. There was no stipulation that the local public school could not be attended. However, concerned citizens would often establish schools for children with common issues, and he remarked on Representative Cissna's earlier comments about entrepreneurship. He stressed that the important aspect was that every student was eligible to make a choice, which forced accountability on the public schools. 8:54:08 AM REPRESENTATIVE CISSNA asked if transportation was included in these programs. MR. REED replied that it varied. He said that his organization had not researched the transportation component of school choice. He reported that Maine and Vermont used the tuition dollars on a case by case basis. He described an assortment of methods for transportation, which included rerouting of bus routes and car pools. 8:56:47 AM CHAIR DICK asked if there had been any rush out of the public schools and if there had been any chaos. 8:57:23 AM MR. REED replied that there had not been any mass exodus from the public schools. He pointed to various school choice programs, and noted the percentage of use in different cities. He referred to school choice programs as "fire alarms," stating that these were safety mechanisms. He stated that the rate of use for the school choice program started small. 8:59:13 AM REPRESENTATIVE SEATON, referring to the aforementioned comparative analyses that indicated public schools were improving, asked if this was similar for states with and without school choice programs. MR. REED replied that this had not been analyzed, but that the studies had been going on for years in geographic areas where public schools were affected by school choice programs. He pointed out that the school choice program funding allowed for distance learning, which could be an advantage in Alaska. He offered his belief that many of the wide spread gains of the education reform environment in Florida, specifically on the fourth grade reading scores on the national assessment of educational progress, were a direct result of the school choice program. 9:02:20 AM CHAIR DICK asked if other states also had the need for a constitutional amendment to provide school choice. 9:03:04 AM MR. REED replied that these were Blaine Amendments in many state constitutions, although some were not as restrictive as others. He allowed that some of the decisions were also based on case law. 9:04:37 AM MIKE KELLY, as a former legislator, reflected that Alaska had struggled for decades with meeting educational standards. He listed the low high school graduation rate, a high remediation rate for students entering the University of Alaska, and low quality education ratings as problems. He said that although more money was spent on education in Alaska than in most states, the educational quality and results had remained "dismal." He stated his belief that the school choice program in HB 145 would affect the necessary changes. He stated that it had worked well elsewhere, as it put parent and students in primary control, "not the NEA and their activists who make the average legislator quake and who believe they know better than parents in matters of educating our children." He said that the proposed bill would introduce competition in all schools, would cause more positive results in the public education system, and would offer a competitive alternative by allowing parents to make the choice where their kids would go to school, "a fairly American way of doing things." He stated that it would reduce the overall cost of education infrastructure and operation, and would introduce fairness. He said that the proposed bill would allow for a parallel education system to be put in place, and he encouraged its passage from the House Education Standing Committee. 9:08:17 AM REPRESENTATIVE CISSNA, addressing the tax alluded to by Mr. Kelly, pointed out that this was not a state tax, but a property tax; and she offered her belief that this was a local community issue, not a state issue. 9:10:37 AM MR. KELLY offered his belief that "the dollars at the state level belong to the citizens of Alaska" and that this proposed bill offered an opportunity for a change, which was most efficient at the state level. REPRESENTATIVE KELLER reflected that the oil taxes, the major source of state revenue, were directed into the state general fund, which paid for public schools. 9:12:40 AM CHAIR DICK closed public testimony. 9:12:42 AM REPRESENTATIVE SEATON, directing attention to page 2, line 3, read: "regardless of the attendance area in the school district in which the student resides." He asked, since the foundation formula and geographic cost differentials were outlined in statute and the district provided the school choice program money to the student, if the intention of the sponsor was for the money provided to be equal to the money paid by the district in which the student was attending school. 9:14:05 AM REPRESENTATIVE KELLER replied that it was based on the cost for a "similarly situated" student in the school district being attended. He said the Department of Education and Early Development (EED) would write the new regulations and guidelines. 9:15:11 AM REPRESENTATIVE SEATON offered his belief that the bill specifically stated otherwise, as the bill did not include a statement about physical address of the school, and that the intention did not appear to be in statute. 9:15:50 AM REPRESENTATIVE KELLER explained that the funding for the school of choice was based on the actual cost of the education, as noted on page 2, lines 12-13. It would be the lesser of the cost the district determined for a similarly situated student or the actual educational cost for the student. He stated that it would be based on the cost of the participating school. 9:16:20 AM REPRESENTATIVE SEATON expressed his disagreement. He emphasized that the proposed bill stated that the school's cost, including the proration for its facility and operating expenses, would be established by the individual school, not by the district. He asked how the financial parameters would be created, as they did not exist in the current version of the bill. 9:17:33 AM REPRESENTATIVE KELLER responded that the proposed bill explicitly left the district in charge of administering the funding based on the existing funding formula. He reported that the amount paid to the participating school would be based on the lesser of the amount of money generated by the student or the actual cost of education. He said that the details for use by education programs would be written in regulation, and he opined that it would include restrictions. 9:18:41 AM REPRESENTATIVE SEATON pointed out that the method of schooling was not determined in the proposed bill. He opined that 100 percent of the student funding received by a school, both state and local, would be covered, no matter where the student attended school. He offered his belief that no financial parameters existed in the proposed bill. 9:19:30 AM The committee took an at-ease from 9:19 a.m. to 9:21 a.m. 9:21:47 AM REPRESENTATIVE PRUITT, on behalf of Representative Dick, moved to adopt Amendment 1, which read [original punctuation provided]: Remove p 2 lines 12-13 Remove line 6 " (1) that is equal to the lesser of" Add line 7 "70% of" Remove line 10 "100 percent" Add line 10 "70 percent" 9:21:55 AM REPRESENTATIVE P. WILSON objected for discussion. 9:21:59 AM CHAIR DICK read: [original punctuation provided] [Included in members' packets] There is currently a 70/30 rule, where school districts must spend at least 70% of funding on classroom instruction unless waived. Intent of Amendment #1: The districts will pass through 70% of the monies received from the state for instruction, and the 30% administrative and building costs associated with each student will remain with the district to maintain. He said that this proposed amendment would simplify the "brick and mortar" concerns of the school left behind. 9:23:14 AM REPRESENTATIVE FEIGE, pointing out that local tax money was applied to the school district, asked if only 70 percent of what the state provided would be enough to educate a child in a private school. 9:24:12 AM CHAIR DICK asked if deleting "from the state" would satisfy that concern. 9:24:23 AM REPRESENTATIVE FEIGE asked if the state had the authority to dictate to municipalities how to spend its tax money. 9:24:39 AM REPRESENTATIVE P. WILSON explained that the 70/30 rule covered every school to which Alaska provided funding. She pointed out that the federal government paid the difference in funding for communities which had no local taxes. 9:25:20 AM CHAIR DICK, in response to Representative Seaton, said that the 70/30 rule was not part of the proposed Amendment 1, it was just an indicator. REPRESENTATIVE SEATON, directing attention to Version D, page 2, line 10, asked if it would be necessary to delete "and local" in order to eliminate any reference to the state dictating to local municipalities. 9:26:21 AM REPRESENTATIVE KELLER explained that any percentage was an arbitrary indicator. He opined that this would be deliberated during future discussions on this proposed bill, especially as the EED structured guidelines for the regulations. 9:27:33 AM REPRESENTATIVE CISSNA offered her belief that the proposed bill brought forth many interesting ideas, but that it was necessary for further outcome studies by EED. 9:28:26 AM CHAIR DICK asked if her comments were directed toward the proposed Amendment 1 or toward the proposed bill. 9:28:31 AM REPRESENTATIVE CISSNA replied that it was merely a statement. She stated her hesitancy to vote on an issue for which there were still many questions. CHAIR DICK replied that EED was available for questions. 9:29:04 AM REPRESENTATIVE P. WILSON stated that it cost more to run a public school, and she expressed her support for proposed Amendment 1, as it would not take money from the smaller schools. 9:30:24 AM REPRESENTATIVE PRUITT asked if an intention of the bill was for the student to have the full tuition paid for them. REPRESENTATIVE KELLER replied that the proposed bill did not address that specifically. He directed attention to page 3, lines 25-31, which stated, in part, that "The department shall adopt regulations necessary to carry out the program in a manner that ensures the highest number of student and school participation..." He said that the question itself would be a policy question for the committee. 9:31:57 AM REPRESENTATIVE FEIGE questioned whether the private schools would be allowed to charge additional tuition. 9:33:10 AM REPRESENTATIVE KELLER replied that the proposed bill allowed private schools to charge additional tuition. 9:33:31 AM REPRESENTATIVE SEATON moved to adopt Amendment 1 to proposed Amendment 1, as follows: Page 2, line 10, after "from all state" Delete "and local" 9:34:25 AM CHAIR DICK objected for discussion. REPRESENTATIVE SEATON explained that local municipalities should not be mandated by the state for how they will spend tax dollars. 9:35:47 AM REPRESENTATIVE KELLER replied that this was the prerogative of the committee, in which case he would suggest an adjustment from 70 percent back to 100 percent in proposed Amendment 1. 9:36:17 AM REPRESENTATIVE FEIGE suggested that it was necessary to understand where all the education money was coming from. He opined that, should the committee follow the suggestion of the bill sponsor, the large municipalities would have money to maintain the facilities, but the rural school districts would suffer if the student count decreased. 9:37:41 AM REPRESENTATIVE KELLER offered his belief that the student would still be part of the student count which qualified schools for funding. 9:38:10 AM REPRESENTATIVE FEIGE asked that this be verified. He opined that, should a student leave a community to attend school elsewhere, then the count would be affected. 9:38:39 AM REPRESENTATIVE KELLER, referring to page 3, lines 9-10, said that the requirements for being a private school included the maintenance of monthly attendance records which were reported to the local school superintendent. 9:40:26 AM REPRESENTATIVE SEATON explained that the State of Alaska received federal dollars for education which were used to offset the local contributions, but he stated that it was state dollars that funded the schools. He pointed out that local municipalities could not contribute more than 23 percent of the school cost, but they did not have to contribute. He stated that every municipality did not have the money; often, in the rural districts, 100 percent of the funding was received from the state, which included federal contributions. 9:42:24 AM REPRESENTATIVE P. WILSON questioned how the student count would work. 9:43:20 AM JIM POUND, Staff, Representative Wes Keller, Alaska State Legislature, referred to page 2, line 22, and read: "A participating school shall include students who are enrolled under this section in the student count for purposes of calculating state aid under AS 14.17.610." He said that the private school would do the student count, and this would be used in determining the financial support for the school district. 9:43:45 AM MR. POUND, in response to Representative P. Wilson, said that the funding would be based on the school district in which the student was attending school. REPRESENTATIVE P. WILSON offered her belief that 95 percent of the testimony on HB 145 had been received from parents whose children were already attending private schools. She asked for clarification for the school being funded by the state. MR. POUND replied that the funding would be provided to the district, which would "transfer the money to the appropriate school based on the student." REPRESENTATIVE P. WILSON asked to clarify that, although a student may have never attended a public school, this proposed bill would send revenue to the school district, which would, in turn, forward the revenue to the private school. MR. POUND agreed. 9:45:19 AM REPRESENTATIVE FEIGE pointed out that a child attending a private school had not been counted in the district. He opined that private schools which were accepted into the program by the school district would increase the district student counts and the commensurate amount of revenue. 9:46:25 AM MR. POUND agreed that although this was the principle, it was dependent on the school district accepting the private school into the district. 9:46:32 AM REPRESENTATIVE SEATON stated that he could not find any criteria for acceptance or denial of a school in the proposed bill. He asked if a school district could refuse to accept any private schools. 9:47:34 AM REPRESENTATIVE KELLER replied that EED would establish the regulations. He noted that the proposed bill stated that a school would be accepted if it met all the criteria. 9:48:44 AM REPRESENTATIVE SEATON asked if a school district had any choice but acceptance, if the school had complied with the EED criteria. 9:49:29 AM REPRESENTATIVE KELLER replied that the intent was to minimize the basis for rejection of a school, in order to encourage participation and competition. 9:49:43 AM CHAIR DICK withdrew proposed Amendment 1. He asked the bill sponsor to further review the funding percentage and the issue for the state mandating to the municipality as previously discussed on page 2, line 10. REPRESENTATIVE KELLER requested that EED also be consulted. 9:50:52 AM The committee took an at-ease from 9:50 a.m. to 9:52 a.m. REPRESENTATIVE SEATON withdrew proposed Amendment 1 to proposed Amendment 1. 9:53:13 AM REPRESENTATIVE PRUITT moved to adopt Amendment 2, which read [original punctuation provided]: Remove: Page 2 lines 14-18 Insert: Page 2 line 14- "Those parents who choose to send their children to schools of choice other than public schools will assume full responsibility for transporting their children to the school of their choice." 9:53:19 AM REPRESENTATIVE KAWASAKI objected for discussion. 9:53:23 AM CHAIR DICK stated that the intent of proposed Amendment 2 was to "remove confusion regarding transportation of students." 9:53:57 AM REPRESENTATIVE FEIGE asked how this would affect a rural school district, and he offered his belief that proposed Amendment 2 held the school district responsible for all transportation to other public schools. 9:54:35 AM CHAIR DICK explained that the intent of the amendment was to remove the burden for transportation from the school districts. 9:55:00 AM REPRESENTATIVE FEIGE suggested inserting "local" in front of "public schools." REPRESENTATIVE P. WILSON suggested the removal of "other than public schools." 9:55:53 AM REPRESENTATIVE KELLER opined that lines 14-18 contained language permissive to the option of transportation by the school district. He asked about retaining lines 14-18, while also adding: "Those parents who choose to send their children to schools of choice other than public schools will assume full responsibility for transporting their children to the school of their choice." 9:56:43 AM REPRESENTATIVE P. WILSON suggested that lines 14-18 allowed a local school district the option to include transportation. 9:57:39 AM CHAIR DICK suggested an addition to proposed Amendment 2, which stated: "the district may participate in the transportation of students." 9:57:56 AM REPRESENTATIVE FEIGE suggested, instead of removing lines 14-18, to include the insert from proposed Amendment 2 after line 18. 9:58:50 AM REPRESENTATIVE SEATON moved Amendment 1 to proposed Amendment 2, which would delete "Remove: Page 2 lines 14-18" and, after "schools of choice" delete "other than public schools." There being no objection, Amendment 1 to proposed Amendment 2 was adopted. 10:00:20 AM REPRESENTATIVE SEATON suggested to make proposed Amendment 2, as amended, a conceptual amendment, as follows: Page 2, line 14, before "If a parent or legal guardian" Insert: "Those parents who choose to send their children to schools of choice will assume the full responsibility for transporting their children to the school of their choice." REPRESENTATIVE PRUITT agreed that proposed Amendment 2, as amended, should be a conceptual amendment. 10:01:35 AM REPRESENTATIVE KAWASAKI removed his objection, but stated that he still had questions. There being no further objections, conceptual Amendment 2, as amended, was adopted. 10:02:06 AM REPRESENTATIVE KELLER agreed to present at a future committee meeting the requested information on funding percentage and state mandates to municipality expenditures. 10:02:28 AM REPRESENTATIVE SEATON requested a legal opinion regarding the state mandate for local tax expenditures. [HB 145 was held over.]