CS FOR SENATE BILL NO. 19(FIN) "An Act relating to allocations for the special education service agency; extending the special education service agency; and providing for an effective date." 1:55:28 PM TIM LAMKIN, STAFF, SENATOR GARY STEVENS, introduced the legislation. He communicated Senator Stevens' appreciation of the bill hearing. He shared that the bill was an opportunity to recognize an agency that did a large amount with very little. He explained that the Special Education Service Agency (SESA) was a community of people providing a unique set of services for severely disadvantaged youth. He stated there was trust and respect for the agency's work that involved helping many schools, students, and families. He noted the subject area was fairly sensitive and required significant compassion, patience, grace, and love. The bill would extend the SESA sunset to 2029 and adjusted the agency's funding formula to keep it whole over the next eight years. He reported that the latest audit was constructive and illuminated SESA's success and efficacy. He detailed that the SESA director was available online and the legislature's auditor was available in person to speak about the findings. Mr. Lamkin reviewed the sectional analysis (copy on file): Section 1: AS 14.30.650 is amended to increase the funding component for SESA, from an existing rate of $18.65 to $23.13 times the number of students in the state in average daily membership. Section 2: AS 44.66.010(a)(6) Extends the sunset date for SESA to June 30, 2029. Section 3: Provides for a retroactive effective date in the event the bill doesn't pass before June 30, 2021. Section 4: Makes the funding component described in Section 1 effective July 1, 2021. Section 5: Provides for an immediate effective date upon its passage. 1:58:04 PM Representative Carpenter asked why there was a change from the existing rate from $18.65 to $23.13. Mr. Lamkin answered that SESA's caseload had increased substantially with flat funding and flat staffing levels. He relayed that an upcoming PowerPoint presentation would explain the issue more thoroughly. Representative LeBon asked if the rate had been locked at $18.65 for quite some time. Mr. Lamkin replied that the rate had been set at $18.65 at the time of the last audit in 2013. Prior to that it had been 15 years since the last increase. 1:59:25 PM PATRICK PILLAI, EXECUTIVE DIRECTOR, SPECIAL EDUCATION SERVICE AGENCY (via teleconference), provided a PowerPoint presentation titled "SESA: Special Education Service Agency Introduction" (copy on file). He shared that he had joined SESA in 1994 as a deaf education specialist. He reviewed the presentation with prepared remarks beginning on slide 2: This is the homepage of SESA's website. It provides online access to program services and resources, a lending library, online professional development, e- modules, and an easy process for school districts to submit online referrals for SESA service. The agency's mission reflects a focus on addressing the unique special education needs of students, parents, and teachers across Alaska's 54 school districts. Mr. Pillai moved to slide 3: The statute establishing SESA addresses technical assistance and service to students with low incidence disabilities. Low incidence disabilities are defined as occurring in less than one percent of the total population. The rarity of the disability often means specialized services are not normally available in the school district. SESA affords such sites access to a specialist with an endorsement in a particular disability area in addition to other resources. 2:01:05 PM Mr. Pillai turned to slide 4: SESA's logic model captures the design of process to deliver specialized services to parents, schools, and school districts. The intent is to address the gap via solutions that promote availability of SESA's service through on-site and distance support. This approach creates broad participant training to address staff turnover and promises collaboration and networking amongst teachers and paraprofessionals. This in turn reduces isolation and ultimately provides retention of teachers especially in rural remote areas of the state. Mr. Pillai addressed technical assistance on slide 5: The continuum of services includes observations, assessments, educational interventions, modeling of educational strategies, in-service training, assistive technology, and many more pertinent activities based on requests from the child's educational team members. Specialists also work with vendors to troubleshoot assistive technology when teachers call with complaints of device non-functionality. Mr. Pillai turned to slides 6 and 7: In addition to specialist evaluation, the SESA management system is designed to collect data on various aspects of agency activity. Metrics focus on mission-centric activities such as site travel, creation of educational materials, training and in- services, and writing of student service reports. Data is analyzed to understand variables impacting service and the SESA budget. SESA's database allows us to run reports of agency productivity. The slide captures activities of technical assistance, number of schools and districts served, number of trainings conducted on-site and via distance delivery, and an analysis of expenses. 2:03:08 PM Mr. Pillai advanced to slide 8 and spoke about the customized management system: This slide is a visual example of the customized management system SESA designed to ensure data-driven decision making. Individual reports provide data on specialist activity allowing for measurement of productivity; number of reports completed with an agency timeframe of 10 working days; schools and sites requesting service; active student caseloads by district, location, and school etcetera. Mr. Pillai reviewed slide 9: Legislative audits and the program component of annual public audits run tests of compliance with regard to process and procedure. This section of the database was created in response for specific data and with feedback from auditors. Following a recommendation of the SESA board to go green, SESA management worked to eliminate paper files. All of SESA's student record keeping is now electronic. The compliance element of the SESA database drives quarterly compliance reviews. Mr. Pillai turned to slide 10: Slide 10 captures in red the number of students attending Alaska's schools in any given year between 2011 and 2020. The solid blue line captures the steadily increasing number of students on SESA's low incidence caseload. High turnover of staff in many districts often drives the need for repeated trainings for new staff, especially first-year teachers who may be encountering any given disability for the first time. Mr. Pillai moved to slide 11: Slide 11 is a history of SESA fund balance from 2013 and projected to 2023. The cycle captures low funds at the end of a sunset cycle, in this case 2013, higher funds at the middle of the cycle, and trending to lower fund balance at the end of the cycle as a result of the increase in cost. SESA's last funding increase was in 2013. At the end of [FY] 22, factoring for cost increase, we anticipate using $578,000 from fund balance. This is a result of the impact of the CPI index increase of 6.3 percent over the last eight years. Mr. Pillai looked at the fund balance on slide 12: Slide 12 illustrates SESA's projected withdrawals from fund balance in fiscal year 2022 moving into complete deficit in fiscal year 2025. SESA utilizes a cashflow of roughly $400,000 for day-to-day expenses. SESA revenues, annual support grant, and LID activity occurring between the initial grant award and disbursement of funds at a later date. Grants operate with an initial upfront award of roughly 25 percent of the grant total and thereafter are reimbursed upon submission of receipts for qualified grant expenditure post the activity. Mr. Pillai moved to slide 13 and discussed a proposed 24 percent funding increase: Slide 13 is the projection of the 24 percent proposed increase to SESA funding through Senate Bill 19. The bill would increase the current $18.65 times the number of students in the average daily membership in the prior fiscal year to $23.13. This would effectively fund SESA without interruption of services to families and school districts through June 30, 2029, the end of the period of reauthorization. Mr. Pillai addressed the recently completed legislative audit on slide 14: The recently completed legislative audit concurs that SESA meets the needs of students with low incidence disabilities, provides professional development opportunities to teachers and paraprofessionals, provides special education resources to parents and school districts, and concludes with the recommendation for an eight-year legislative reauthorization. Mr. Pillai relayed that he was happy to answer any questions. Co-Chair Merrick thanked Mr. Pillai for SESA's hard work with special needs students. 2:07:51 PM Co-Chair Merrick asked to hear a review of the recent legislative audit. KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, reported that the Division of Legislative Audit conducted a review of SESA dated April 2020 (copy on file). She began the presentation with the background information section on page 5 of the audit. She read from prepared remarks: SESA was created to help Alaskan school districts provide special education services to individuals with a low incidence disability. A low incidence disability occurs in less than 1 percent of the national school- aged population and the disabilities are more severe in nature and require specialized education intervention. SESA was established as a nonprofit organization whose governing board is the Governor's Council on Disabilities and Special Education, which is organizationally housed within the Department of Health and Social Services; however, its primary service, its low incidence outreach program is budgeted and funded through the Department of Education and Early Development. This funding is independent of the intensive needs funding that a district may otherwise receive. SESA's funding provides additional financial support to help ensure students affected by low incidence disabilities receive a free and appropriate public education that is required by state and federal laws. SESA's services are available to districts whose low incidence special education needs occur infrequently, making it difficult for the district to serve the low number of students in need of a particular service. SESA recruits, trains, and retains education specialists to provide technical assistance and training to parents, students, and district staff without regard to the state. The number and location of students served by SESA you will see in a map on page 8. That shows that as of February 2020 there were 335 students served in 48 school districts. You will also see that information broken out on page 27 in a separate table, which breaks out the number of students served by a low incidence disability category. Report conclusions begin on page 11. Overall, the audit concludes that SESA served the public's interest by assisting school districts and providing students affected by low incidence disabilities an education to meet the children's unique needs and by providing opportunities to enhance school district teachers' and paraprofessionals' capabilities and by providing resources. We are recommending an eight-year extension, which is the maximum allowed for in statute. As part of the audit, we did send a survey to school district special education directors in all 51 school districts. We received a 59 percent response rate and in general the school district special education directors viewed SESA services, staff availability and their expertise favorably. Those questions and responses can be found in Appendix C to the audit. As already discussed, on page 13 we do discuss their statutory funding formula and how it is $18.65 multiplied by the states average daily membership, again, set in 2013. Before that it was set 14 years earlier. That has not changed; however, the caseload has increased by 63 percent during the last 8 years. We did find that SESA's education specialists serving certain categories were experiencing high caseloads and as of February 2020 the agency had three education specialist vacancies. 2:11:45 PM Ms. Curtis shared that the agency had one recommendation beginning on page 18. The audit recommended SESA's executive director implement written procedures to ensure the reclassification of a student's referred disability was adequately supported and communicated to school district personnel. She detailed auditors reviewed 40 case files and found five students' disabilities as identified in the referral form from the school districts had been reclassified by an education specialist and had not found any documentation in the file regarding the reason for reclassification. Additionally, in four of the five cases there had been no visible communication back to the school district about the reclassification. Auditors believed a simple administrative fix should not be too much trouble to accomplish. She relayed that the board chair and the DHSS and DEED commissioners agreed with the report conclusions and the recommendation. 2:12:43 PM Representative Wool looked at the map on page 8 showing school districts and number of students. He listed Anchorage, Fairbanks, and Juneau and asked if the program did not serve large school districts by design. Ms. Curtis replied in the affirmative. She detailed there was a threshold. When a school district reached ten in a specific category, SESA worked with the district to transition away from SESA services to make sure the district hired its own specialists given SESA's limited resources. She added that there were some students in those categories, but much fewer than in other locations. Representative Wool asked if statute designated that SESA serve school districts with less than ten students [in a particular category] requiring intervention. Ms. Curtis answered that there was no statutory guidance. The prior sunset audit had found that some type of criteria was needed to specify when school districts needed to absorb students. She explained that school districts received special education intensive needs funding. She elaborated that SESA was in place to serve districts with needs in such a low number that the district did not have the services in place to address them. 2:14:27 PM Representative Rasmussen referenced page 8 and asked if multiple disabilities was a combination of one of the other six listed disabilities. She asked if there were any unlisted disabilities. 2:15:18 PM AT EASE 2:16:14 PM RECONVENED Ms. Curtis pointed to the definition of multiple disabilities on page 7; the definition listed out the different combinations that qualified a person for the classification. HEIDI TESHNER, DIRECTOR, FINANCE AND SUPPORT SERVICES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT (via teleconference), was available to present the fiscal note, OMB Component Number 2735. She stated that the bill would increase SESA's funding multiplier from $18.65 to $23.13 multiplied by the average daily membership (ADM) from the prior fiscal year. She elaborated that the governor's FY 22 budget request included a $2.4 million projected grant for SESA based on the statutory calculation. She detailed it had been determined by multiplying the FY 21 projected ADM of 128,923.91 times the $18.65. Based on the increased multiplier and the final FY 21 ADM count finalized in March 2021, the amended FY 22 SESA grant was $2,937,900 (determined by multiplying the final ADM of 127,015.30 times $23.13). The bill reflected an increase of $533,500. She noted the extension would carry out through June 2029 and DEED would adjust the budget annually based on the statutory calculation. SB 19 was HEARD and HELD in committee for further consideration. 2:19:48 PM AT EASE 2:19:56 PM RECONVENED