TAPE 93-9A, SIDE A Number 000 CHAIR BUNDE called the meeting to order at 3:03 p.m. and noted members present. He announced that the purpose of the meeting was to hear HB 45: APPROPRIATION, EDUCATION FUNDING AND SCHOOL DEBT. He announced that the meeting was being teleconferenced to Anchorage and Delta Junction. CHAIR BUNDE opened the meeting for public testimony, and invited the sponsor, Rep. Ron Larson, to testify. Number 048 REP. RON LARSON, speaking on behalf of the HOUSE FINANCE COMMITTEE, which sponsored HB 45, said the bill was introduced to give Alaska's 54 school districts advance notice of the state's minimum educational funding level in the coming year. The bill would provide funding at the statutory level for kindergarten, primary and secondary education and community school programs, and for school construction debt retirement, he said. Those levels included: 1) foundation program, $615 million, at $61,000 per educational unit; 2) pupil transportation, $28,572,000, despite the governor's proposed 10.5 percent cut; 3) community schools, $600,000 for community schools, the same as last year; and 4) debt service, $99,795,200, instead of $127 million. REP. LARSON said HB 45 does not address the issue of single- site schools, but leaves that and other sensitive issues up to the committee. He called the bill a vehicle to raise the issue of early funding, not necessarily the bill that must pass. REP. KOTT asked Rep. Larson whether the governor's budget cut takes into consideration the administrative costs of the child nutrition/student lunch program, and the $51.5 million it receives in matching funds. REP. LARSON answered that the $18.1 million in the FY94 budget is the same number as FY93. He continued, saying that the Alaska 2000 initiative considers taking approximately $4 million from the $8.4 million public school trust fund to provide school improvement grants. He said the bill is based on existing, not possible future, conditions. CHAIR BUNDE called for testimony from the remote sites. Number 152 LARRY WIGET, LEGISLATIVE LIAISON FOR THE ANCHORAGE SCHOOL DISTRICT, testified from Anchorage. Answering a question raised by Rep. Larson regarding pupil transportation, he said he had been told that HB 45 included 90 percent of the preferred allocation for pupil transportation. REP. LARSON said it was his intent to include in the bill money to fulfill the state's full funding obligation for transportation, and he would update the numbers before passage. Number 189 DUANE GUILEY, DIRECTOR OF THE DIVISION OF EDUCATION FINANCE AND SUPPORT SERVICES IN THE DEPARTMENT OF EDUCATION, testified in Juneau that the $28,572,000 included in HB 45 for pupil transportation is the best estimate of full funding, and the governor's budget includes an estimated proration of about 90 percent of the reimbursable amount. Mr. Giley continued, noting that the bill reflects a bond debt reimbursement cut of about $27 million, down to $99,795,200. Number 200 REP. BRICE asked what the value of the instructional unit would be today if it had been inflation-proofed when established at $60,000 per unit in 1987. MR. GILEY said he did not know the inflation rate and so could not answer the question. Number 226 REP. GARY DAVIS asked whether full funding of the debt obligation took into account the different levels of reimbursement required under the terms of the obligation. Number 228 MR. GILEY answered affirmatively. Some of the bonds payable through the debt reimbursement program were to be reimbursed at from 70 percent to 90 percent, and it includes some cash reimbursement for projects approved prior to the current debt program, which provides construction through direct grants. Number 235 REP. BRICE asked what the next year's reduction in debt reimbursement funding would be. MR. GILEY said such an estimate is difficult to make, as the Department of Education has some outstanding cash reimbursement obligations. But, he said, given the department's plans to see the state's share of debt obligations drop to less than 60 percent in five years, he could estimate the amount for next year at $85 million to $90 million. Number 255 GARY BADER, DIRECTOR OF THE DIVISION OF ADMINISTRATIVE SERVICES IN THE DEPARTMENT OF EDUCATION, offered himself and his staff to answer questions. CHAIR BUNDE, hearing no questions, invited Mr. Wiget to testify. MR. WIGET said that, while he had not analyzed all bills relating to the foundation formula, the Anchorage School District supports full funding for education. He asked the legislature to raise the foundation formula to $63,000 per educational unit, from the current $61,000 level, to help the district overcome its $10 million to $13 million budget deficit. CHAIR BUNDE invited Stephen McPhetres to testify. Number 296 STEPHEN McPHETRES, EXECUTIVE DIRECTOR OF THE ALASKA COUNCIL OF SCHOOL ADMINISTRATORS, testified from Juneau in support of EO 84, saying that early funding helps school districts plan their budgets, negotiate with labor unions, and perform other activities in advance. He added Anchorage's support for full funding of education. He said the question of equitable funding single-site schools remains to be addressed. Number 334 REP. KOTT asked if there had been any analysis done of how the closure of the Ft. Richardson army installation in Anchorage would affect the PL874 revenue allocations for Anchorage schools. MR. McPHETRES responded that the military bases in Alaska have a significant impact on the state's education revenue through the PL874 program. He added that the Anchorage district had made some study of the question. REP. BRICE referred to a proposed bill to fund the state foundation formula program at $621 million, and asked what increase that would bring in the education unit value. MR. GILEY answered that each $1,000 in instructional unit value costs the state $12 million. Hearing no further questions, CHAIR BUNDE asked the pleasure of the committee. REP. TOOHEY moved that the committee pass HB 45 out of the committee with individual recommendations. REP. B. DAVIS asked what effect such passage of HB 45 would have on other bills pertaining to the foundation formula, on the governor's other education bills, and on education bills from other legislators. CHAIR BUNDE responded that the committee would hear the governor's bills and decide on them later. At Rep. B. Davis' insistence, Chair Bunde said he did not intend not to hear education bills from other legislators. REP. AL VEZEY questioned whether the committee should pass out HB 45 before addressing other education bills, as Rep. Davis noted. Number 382 CHAIR BUNDE noted these concerns, but noted also that the bill originated in the House Finance Committee, which had asked its passage to benefit the state school districts. REP. AL VEZEY expressed concern that school districts might begin to plan their budgets based on the committee's passage of the bill, which might not be the final funding bill. Number 400 REP. LARSON said HB 45 was an attempt to set a minimum funding level early in the year, while the legislature considered other measures that might increase the funding level. CHAIR BUNDE repeated the motion to move HB 45 out with individual recommendations. Hearing no objections, the motion carried. CHAIR BUNDE adjourned the meeting.