SB 236-FACILITIES CONSTITUTING A SCHOOL  9:04:42 AM CHAIR HOLLAND announced the consideration of SENATE BILL NO. 236 "An Act relating to facilities constituting a school." CHAIR HOLLAND asked Mr. King to introduce SB 236, a committee bill. 9:05:05 AM ED KING, Staff, Senator Roger Holland, Alaska State Legislature, Juneau, Alaska, introduced SB 236 by reading the sponsor statement: [Original punctuation provided.] SB 236 seeks to remedy a technical problem in the education funding formula. The problem occurs when a district with a single school and more than 425 students opens a charter school. Under current law, the existence of the charter school implies that there is no longer "only one facility administered as a school." Consequently, the district must calculate the adjusted ADM in the public school with a lower school size factor. As a result, opening a charter school in such a district comes with a financial penalty of about $1 million per year. SB 236 adds three words to existing law: "excluding charter schools." These three words allow the district to maintain its full funding and remove the disincentive a school board faces when considering a charter school application. While it is tempting to consider the fiscal note as a $1 million per year funding increase, it's important to remember that simply closing the charter school would yield the same result. The Senate Education Committee supports charter schools and requests your support in removing this barrier to ensure they are available to students across the state. 9:06:18 AM CHAIR HOLLAND noted there was a committee substitute (CS) for the committee to consider. 9:06:26 AM SENATOR HUGHES moved to adopt the proposed CS for SB 236, work order 32-LS1642\B, as the working document. 9:06:41 AM CHAIR HOLLAND objected for purposes of discussion and asked Mr. King for an explanation of the changes between version A and version B. 9:06:47 AM MR. KING explained that the committee substitute adds Section 2 to SB 236, adding an effective date of July 1, 2022, ensuring no partial-year funding obligations. 9:07:01 AM CHAIR HOLLAND removed his objection; he found no further objection, and CSSB 236, version B, was adopted. 9:07:24 AM ANDREW LOVITT, Director of Budget & Finance, Lower Yukon School District, Mountain Village, said he had held the position for six years. He read his testimony: [Original punctuation provided.] LYSD is seeking your support of SB 236. SB 236 will remedy a funding issue that unfairly penalizes the Lower Yukon School District for opening a charter school in Hooper Bay. The penalty within the statute for adding a charter school in Hooper Bay resulted in an annual reduction in funding of $1,033,000 for FY 2021, and $1,021,000 for FY2022. Until this funding penalty is remedied, LYSD will lose approximately $1 million each year. The District operates two separate educational programs in the Hooper Bay School; the conventional K- 12 school and a 4th -8th grade charter school that features a culturally relevant, place based on learning curriculum for its students. Additionally, the school has a K-3 Yupik Immersion program but is not part of the charter school and functions as part of the conventional school as a special program. Some would argue that SB 236 has a fiscal note to the State of Alaska of $1 million annually. LYSD sees the opposite; to date our loss of foundation funding has resulted in fiscal surplus to the state of $2 million dollars for the FY 21 and FY 22. As a result of the Hooper Bay Charter School, our district has same number of students- the exact same students- inside of the same school building- and yet we realize a funding penalty of over $1 million per year. By adding the three words "excluding charter  schools" to AS 14.17.905, the annual funding penalty is remedied and it becomes feasible to fund Hooper Bay's Charter School. As it stands now, the statute is punitive and this unintended $1 million annual funding penalty impacts our entire school district and effectively jeopardizes rural Alaskans' access to school choice. SB 236 would remedy this funding problem and support charter school equity for the rural Alaska school districts. Thank you for sponsoring and scheduling this legislation, thank you for your time and consideration and I'm open for any questions. 9:09:39 AM SENATOR BEGICH said if the district got rid of the charter school, there would not be a penalty, and kids would still be in the same school building. He asked if SB 236 would erase the penalty. He opined that the statute unfairly penalizes small districts and prevents them from having charter schools. MR. LEAVITT responded yes. 9:10:13 AM CHAIR HOLLAND asked whether SB 236 would affect other schools in Alaska. MR. LOVITT replied that it would not. 9:10:35 AM MR. KING said that while Hooper Bay's charter school was the only district affected, the statute could cause the same problem for other communities; therefore, the legislation was necessary. 9:11:13 AM ELWIN BLACKWELL, School Finance Manager, Department of Education and Early Development (DEED), Juneau, Alaska, replied that no other school or district would be affected by SB 236. Average daily membership (ADM) numbers do not show any other school or district falling under this statute section anytime soon. SENATOR HUGHES asked Mr. Leavitt when the problem was discovered. 9:12:16 AM MR. LOVITT replied that the issue had occurred once before when the school's enrollment exceeded 425 students. The problem was resolved in 2018. The district knew funding would be an issue when the community pushed for a charter school. However, he said he was unsure whether the charter school understood the districtwide impact. SENATOR HUGHES asked whether the charter school was impacted by the loss of funds since its funding was in place, and she questioned why it took two years to request the change. 9:13:27 AM MR. LOVITT replied that the charter school received total funding, and the rest of the district incurred the penalty. He said the request was delayed due to the charter school opening late in the year and legislation failing to gain traction due to Covid shutdowns. CHAIR HOLLAND responded that he would accept some blame for the delay. He said he had heard of the legislation as a freshman senator and should have given it more attention. SENATOR HUGHES said that it makes sense that Covid would cause a delay. 9:14:36 AM CHAIR HOLLAND held SB 236 in committee.