HB 82-INTERNET SERVICES FUNDING FOR SCHOOLS  8:04:08 AM CHAIR KELLER announced that the first order of business would be HOUSE BILL NO. 82, "An Act relating to funding for Internet services for schools." 8:04:22 AM REPRESENTATIVE VAZQUEZ moved CSHB 82, Version 29-LS0307\W as the working document. There being no objection, Version W was before the committee. 8:05:05 AM REPRESENTATIVE NEAL FOSTER, Alaska State Legislature, paraphrased from a prepared statement, which read as follows [original punctuation provided]: Last year when the legislature passed its omnibus education bill a program was created to help schools improve their internet service. The main driver for the need for increased internet speed and capacity was the implementation of the Department of Education's online testing. With the implementation of this program two groups were created, those who had 10megbits of service in 2014 and those who didn't. This bright line poses a problem in that school districts' internet contracts don't run on a yearly basis. They tend to run for periods of 3, 4, or 5 years. The Nome Public Schools for example had a contract that expired in 2013. While renewing that contract they were informed by the department that they would need to increase their internet capacity in order to comply with requirements for online testing. The school district did the right thing and took money from other places in their budget to fund that requirement. Because of the timing of that action they are not eligible for the program established last year. This bill seeks to correct this problem. 8:07:23 AM PAUL LABOLLE, Staff, Representative Neal Foster, Alaska State Legislature, presented the sectional analysis on the CS for HB 82, stating Section 1, reaches back in time for the service level that is the keystone for qualification for the program. He advised that when House Bill 278 was passed, the key driver for qualification for this internet program was to be part of the Federal E-Rate Program and have less than 10mgbits of service as of the effective date of the bill in 2014. He reiterated that HB 82 goes back in time to the qualification requiring schools to be part of the Federal E-Rate Program but the internet service level had to be below 10mgbits in 2013, and acknowledged that school district contracts work through multi- year cycles, not single year cycles. He referred to Sec. 2, and advised it prepares for additional funding in the supplemental budget allowing schools to qualify for funding if supplemental funding is available. He offered that this irrelevant section could be eliminated or remain. He noted that currently the program is funded at $3.6 million and is in both the House of Representative and the Senate side of the operating budget so it is a "non-conferenceable" item. Implementation of this legislation, he explained, will allow the same amount of money to be spread across more school districts, and the amount of money it will cost the state won't change. 8:10:01 AM CHAIR KELLER clarified that if Section 2 remains and generates a fiscal note, the Finance Committee would be involved, or this committee could calculate a zero fiscal note or determine the section is not necessary and the bill could go to the floor and be a factor in the end game. MR. LABOLLE responded that "maybe" Chair Keller is correct as the bill has a Finance Committee referral, but if there is a zero fiscal note it is possible the House Finance Committee would waive that referral. 8:11:08 AM REPRESENTATIVE SEATON asked how many schools would be affected. MR. LABOLLE deferred to the Department of Education and Early Development (EED), but opined the number is approximately seven school districts. 8:11:49 AM REPRESENTATIVE DRUMMOND stated that she is confused by this chart as it shows an approximate $6.2 million cost to upgrade to 10megabits per second, and the FY2015 total award to each school district is just under $5 million. She asked whether that is the annual cost of this program. MR. LABOLLE answered that last year, with the passage of House Bill 278, $5 million was appropriated to the program and that is the amount awarded to the schools. He noted it has been reduced in this year's budget to $3.6 million, which is the amount to be distributed to the participating school districts. 8:12:48 AM REPRESENTATIVE DRUMMOND commented that hopefully it will come up in conference committee as Broadband is one of the topics for conversation. MR. LABOLLE advised that both the House of Representatives and the Senate passed $3.6 million in the Broadband grant so it is a "non-conferenceable" item. REPRESENTATIVE DRUMMOND responded "That is unfortunate." She advised she has traveled to Nome on several occasions and has been disturbed by the lack of adequate internet access for the public schools. She opined it is critical with testing and curriculum only available via Broadband to provide this to schools and stated she is completely in support of this bill. 8:13:41 AM LINDA THIBODEAU, Director, Division of Libraries, Archives & Museums, Department of Education and Early Development, advised that the division distributed the funding this current fiscal year. REPRESENTATIVE SEATON asked Ms. Thibodeau to explain the charge and how much reduction, or additional schools would be added, and what proportional reduction among those would receive a portion of the $3.69 million. MS. THIBODEAU responded that if the supplemental funding was not included, the fiscal note would change. She was uncertain whether Representative Seaton was asking whether the supplemental funding is necessary. REPRESENTATIVE SEATON clarified that she should assume Sec. 2, of the bill is deleted. He said he is referring to Section 1, and the $3.6 million distribution among districts for the discounted E-Rate, and asked how many more school districts would there be, and how much of prorated discount would be to the other districts that are receiving funds under the program. He offered that he may be confused on the application of this, and to correct him. MS. THIBODEAU replied that EED did not collect information on how many districts, or how many extra schools ... how many schools in FY2014 would want this internet, or need this internet upgrade because it collected the amount they were paying and not bandwidth information. She advised the department did not have the information as to who needed upgrade bandwidth until it received the applications for this year's funding. At that point, she explained, what is shown in the chart for the funding is who applied and qualified for the program which was 28 districts, 122 schools. She mentioned that Representative Foster advised that seven more districts might qualify, but the department would have to wait and see when that happens. The department doesn't know how many districts have applied or schools, what their costs would be, what level of bandwidth they would need to upgrade to get to 10, who their vendor is, and what their fiber is or their mode of delivery of interest because bandwidth costs are different for every location. She said that during the application time the department would have to collect and perform the pro rata distribution with the funding available. 8:17:44 AM REPRESENTATIVE SEATON opined that the seven districts have already upgraded to 10, but were looking at moving back the date so they can qualify for the discounted program. MS. THIBODEAU answered that is her understanding as well. REPRESENTATIVE SEATON offered that it is unknown within the seven districts how many schools it includes and it won't be known until the distribution is made. MS. THIBODEAU said "That is correct." The numbers in the fiscal note relate only to the schools and school districts currently in the program. 8:19:00 AM CHAIR KELLER referred to the department's fiscal note Ms. Thibodeau provided of $4,064,000 is the total cost, of which $3.[6] has been allocated as it stands right now, and acknowledged it hasn't passed. MS. THIBODEAU agreed. 8:19:48 AM The committee took an at-ease from 8:19 to 8:20 a.m. 8:20:37 AM REPRESENTATIVE DRUMMOND reviewed the fiscal note and said the costs are just over $4 million and the proposal is to reduce it to $3.6 million. She asked whether each school will be proportionately reduced depending upon the available funds. MS. THIBODEAU responded that the districts may or may not decide to reduce their bandwidth, and what they'll get is a percentage of the costs they applied for, approximately 75-80 percent of their costs. She indicated they could find the remainder of the costs somewhere else in their budget. CHAIR KELLER opened public testimony. 8: 21:53 AM ROBIN JOHNSON, Nome Public Schools, stated she is representing Nome Public Schools, and paraphrased from a prepared statement, which read as follows [original punctuation provided]: In 2013 Nome Public Schools was in a contract renewal year for our internet services. In order to acquire E-Rate funding for our services we are tied to the contract renewal timelines set forth by the E Rate program. At this time EED had made it clear that State online testing would be a reality during our next year internet contract cycle, and we knew we did not have the bandwidth we would need to meet be able to test one at this time. We increased our bandwidth from 3Mbps to 11Mbps in 2013, in anticipation of the new testing requirements. This increase required that an additional 76K come from our general fund to cover just 20% of our annual internet expense. I ask that you pass HB 82, making the program retroactive to June 30, 2013 so that we receive the same funding opportunities as other districts in our situation. When speaking about broadband we should not be left out because of our contract renewal dates and the E- Rate application timeline. 8:23:51 AM REPRESENTATIVE SEATON asked how many schools are in the Nome school district. MS. JOHNSON replied there are four schools in the district, which are all based upon one internet connection. 8:24:12 AM REPRESENTATIVE VAZQUEZ asked the amount of their total school budget. MS. JOHNSON said she is a technology representative and doesn't have that information. REPRESENTATIVE VAZQUEZ surmised that within Ms. Johnson's division there is a budget, or does she not know about the budget. MS. JOHNSON responded she has a budget for the technology department and the internet services are under Communication. She advised the total internet amount the vendor receives is $381,000 for the annual internet service, with public schools paying 20 percent of that bill, and the E-Rate program paying the remainder. MS. JOHNSON, in response to Representative Vazquez, answered that GCI is their internet provider. REPRESENTATIVE VAZQUEZ surmised that the schools pay 20 percent and the rest is paid through the E-Rate. MS. JOHNSON said she was correct, and it is for the 2014-2015 school year. Next year their E-Rate eligibility has increased and they will be refunded 85 percent making their costs 15 percent, she explained. REPRESENTATIVE VAZQUEZ queried what the increase is attributed to. MS. JOHNSON responded that the percentage they are eligible for is based upon the (indisc.) reduced lunch count of students in the district, so it changes every year. 8:26:31 AM REPRESENTATIVE DRUMMOND asked the source of the GCI signal, satellite or microwave from Southcentral Alaska. MS. JOHSON replied that it is microwave from Southcentral Alaska. REPRESENTATIVE DRUMMOND recalled a fiber networks coming out of Ireland across the top of Canada and the United States heading for Japan. She opined they were going to drop internet service on the Northern and Northwest coast of Alaska. She asked Ms. Johnson whether she was aware of its existence and how soon it will arrive in the Nome area. MS. JOHNSON responded that she is aware of the Quintillion Network and opined there are "rumblings" that it will not happen at this point due to the expense of bringing that hub into the community. She remarked that if it were to happen it would be a year or two out before it would take place. 8:28:10 AM REPRESENTATIVE COLVER clarified that the terrace system is a fiber optic system across the tundra and when it gets closer to the coast it is relayed microwave tower to microwave tower, and is being extended all through the North and past Nome. He explained the microwave speed is almost as fast as fiber but a more economical system. He said the "over the top route" ... would have cheaper internet because it would be going to a place such as Japan, but he did not know whether it was capitalized for the over the top portion. 8:28:55 AM POSIE BOGGS, Non-Profit Literacy Programs, said she is testifying on behalf of Literate Nation, Alaska Coalition, Alaska Branch of the International Dyslexia Association, Decoding Dyslexia, and herself. She referred to the fact Alaska's literacy rates have not moved significantly in 10 years, that Alaska is last in reading, and related that literacy is a concern. She advised she has been tracking technology in literacy since 1994, when children were being "tortured" with the first version of "Dragon Naturally Speaking 7." During conferences she has attended, technology solutions have emerged to assist the literacy problems in Alaska. She conveyed that her business has been teaching students that school districts have failed to teach to read, and she could be put out of business with the new technology, and is "thrilled." She explained that the new technology offers the potential to move Alaska's reading levels significantly higher, but it requires good solid broadband. There are virtual reading coaches and internet based interventions, that Alaska could put into all of the resource classes and move the students out of special education. She described it as the best scientific research regarding reading instruction Alaska has ever had, and noted she is not selling any of the products. She asked the committee to fund as much broadband as possible because adult illiteracy in Alaska increases the per capita health care costs by $8,173. REPRESENTATIVE DRUMMOND noted Ms. Boggs excitement and believes she has the packet of information she gave her in February. MS. BOGGS answered in the affirmative and noted that every child in this state can be taught to read. REPRESENTATIVE DRUMMOND said she would share the packet with the committee. 8:34:35 AM CHAIR KELLER closed public testimony. 8:34:45 AM REPRESENTATIVE SEATON described the discussion as the financial distribution of an offset amount and opined it is a financial question that is looking at a distribution between those that qualify and how many qualify. The distribution rate may be in question, due to the e-rate discount, and the preparation of a chart may be helpful information for the committee. However, he said, it is a financial distribution question and stated support for the bill. 8:36:09 AM REPRESENTATIVE VAZQUEZ expressed hesitancy to support the bill, lacking clarity for how the funding is working and why the school district has a fiscal note of slightly over $4 million for this fiscal year, which continues to 2020. MR. LABOLLE responded that he had detailed conversations with the Department of Education and Early Development (EED) about the fiscal notes, and advised that the fiscal note isn't the cost to the state as it is the total need. He explained that if the legislature were to fully fund the program and need, this is the cost anticipated. He noted a grant funds the program and that grant program is the $3.6 million mention earlier, which is what is funded in the FY2016 budget. He stated that $3.6 million is going out to the program regardless of implementation of CSHB 82. REPRESENTATIVE VAZQUEZ asked whether it is a state or federal grant. MR. LABOLLE replied that the $3.6 million is a state grant, with a Federal E-rate Internet program involved, and in order to participate in this state program a participant must be a qualified recipient of the E-rate program. 8:38:49 AM REPRESENTATIVE VAZQUEZ requested the name of the department administering the state grant. MR. LABOLLE answered the Department of Education and Early Development. 8:39:00 AM REPRESENTATIVE TALERICO thanked the sponsor for bringing the bill as it is "really" appropriate, he said. CHAIR KELLER remarked that he agrees with Representative Vazquez but is willing to move the bill and let the House Finance Committee review the bill. 8:39:56 AM REPRESENTATIVE VAZQUEZ moved to report CS for HB 82, labeled 29- LS0307\W, Glover, 4/9/15, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 82(EDC) moved from the House Education Standing Committee. REPRESENTATIVE COLVER echoed Chair Keller's comments to let the House Finance Committee determine allocation of funds and future liabilities. 8:41:01 AM The committee took an at-ease from 8:41 p.m. to 8:44 a.m. 8:44:48 AM