SB 139-EDUCATION: FUNDING/TAX CREDITS/PROGRAMS  8:16:16 AM CHAIR STEVENS announced that the next order of business would be SB 139. He said the committee would take up Sections 14, 15, and 16, which relate to the Base Student Allocation. 8:16:43 AM LES MORSE, Deputy Commissioner, Department of Education and Early Development (DEED), Juneau, Alaska, presented information on SB 139. ELIZABETH NUDELMAN, Director, School Finance, Department of Education and Early Development (DEED), Juneau, Alaska, presented information related to SB 139. 8:17:22 AM At ease 8:17:56 AM MR. MORSE said Sections 14, 15, and 16 begin on page 9 of the bill. These sections provide a modest increase in the Base Student Allocation (BSA) the first year for $85 and the following two years, $58 each. That works out to 1.5 percent increase the first year and 1 percent each of the two following years. The increase was put forward to begin a dialogue around, not only the funding of education, but greater educational issues. He said it is an appropriate increase considering the fiscal climate and it is a piece of a larger package. SENATOR GARDNER noted in Section 13 an increase in the stipend for room and board expenses. She requested a comparison of the 1.5 percent increase and the almost 50 percent stipend increase. MR. MORSE explained that they are looked at differently. Boarding school students also receive the BSA. The boarding school stipend reflects true costs that go beyond the BSA. SENATOR GARDNER concluded that for the boarding school stipend, true cost numbers are used; for the BSA they are not used. MR. MORSE clarified that the BSA was brought forward as a modest increase and the administration is interested in a dialogue continuing within the legislative process. The stipend is based on true costs. 8:21:21 AM SENATOR DUNLEAVY asked how much money has been put into education over the last 10 years. He said the BSA gets lost in the discussion. He asked if the BSA is the only component for funding schools. MR. MORSE offered to provide further information about the amount spent on education. He said there are other pieces of the formula besides the BSA, such as the cost differential and intensive student funding. The funding during the past 10 years has increased. There are those who would argue that other thing should be included as education funding, such as retirement costs. 8:23:05 AM MS. NUDELMAN concurred. CHAIR STEVENS suggested including the cost of transportation, fuel, and energy. SENATOR DUNLEAVY said there is a narrative being spun that no money is going to education. He understood that upwards of $100 million additional per year has been going to education, which includes retirement costs and school construction, while the student population has declined. He asked if that was correct. MR. MORSE said that sounds correct. Some feel that retirement and debt should not be counted as part of education funding. 8:24:42 AM SENATOR DUNLEAVY pointed out that the legislature has constructed an education system over the past 50 years, along with some help from the federal government. When educators are asking for resources, they are requesting funds for the program the legislature has developed. They are not greedy or out of line. He suggested the legislature either fund education with the funding level it needs to operate under the current construct, or change the construct. Keeping the current construct and not funding it is a disservice to Alaska's children. 8:26:14 AM SENATOR GARDNER addressed the issue of inflation-proofing the BSA in statute. MR. MORSE said the administration is supporting SB 139 in light of the current fiscal climate. SENATOR STEDMAN also requested the financial information Senator Dunleavy requested about the following costs: PERS/TRS, energy, major maintenance, new construction. That would provide a wide view of the total cost to the state. CHAIR STEVENS asked for the information in a reasonable amount of time. MR. MORSE agreed to provide the requested data. He said there is information from previous hearings available. 8:28:20 AM SENATOR GARDNER asked Mr. Morse if he could do a projection into the next year or two and include the per pupil monthly stipend for boarding schools. She thought that information should be reflected on the fiscal note. MR. MORSE said the information is found in a separate fiscal note. The analysis breaks out the number of students that receive the stipend. CHAIR STEVENS commented that there are a number of pieces involved; the committee's focus is on the BSA today. SENATOR HUGGINS pointed out that stipends are weighted toward Native populations. MR. MORSE said that is generally true. For example, Mt. Edgecombe serves mostly Alaska Native students from rural areas, as do most boarding schools. 8:30:03 AM SENATOR HUGGINS said he is very uncomfortable with distinguishing between funding Native students versus funding urban students. CHAIR STEVENS said the committee would get to that issue in more detail later. SENATOR STEDMAN noted the difficulty of projecting student enrollment. He said he has a hard time with the idea of embedding inflation indexes into budgetary processes. SENATOR DUNLEAVY stated that education is a constitutionally mandated program. He said the state funds adult education which is not mandated. He maintained that public education should be funded first, before other programs, up front. 8:34:07 AM SENATOR STEDMAN said he takes a broader view. He pointed out that there is a gas line pending, and due to the small population in Alaska, he wished to enhance training programs for Alaska gas line workers. CHAIR STEVENS said they are all good points. SENATOR HUGGINS returned to the topic of inflation proofing and maintained that the federal government is out of control. He agreed that education is the number one issue. He suggested that inflation proofing does bind future legislatures. CHAIR STEVENS held SB 139 in committee.