SENATE BILL NO. 36 "An Act relating to transportation of public school students; relating to school construction grants; relating to the public school foundation program and to local aid for education; and providing for an effective date." Co-chairman Sharp called the committee to order and noted that they were still waiting for additional paperwork from Legal and therefore would stand in recess until approximately 10:30 a.m. (recessed - reconvened) Co-chairman Sharp reconvened the committee at approximately 11:05 a.m. He noted amendment #26 by Senator Parnell. Amendment #26 was MOVED by Senator Parnell. Senator Adams OBJECTED. Senator Parnell explained the amendment would delete provisions from the bill that would levy a tax on the unorganized areas of the State and the amendment also pulled out the third-class borough option. He said the ultimate goal was to change the education funding and to provide a more fair and simple formula. SB 36, as it exists before the committee presently, meets that goal. He did not that while he was willing to move the bill from committee in its current form, he felt the bill would fail to pass on the Senate Floor. Leaving the bill in its current form would mean that Alaska's children would continue losing ground under existing inadequate and inequitable funding system. They should not let the issue die here. The foundation formula must be fixed. Alaska's children deserve better, he said. Senator Adams responded. He said he was happy to see the committee finally moving in the right direction with the removal of the third-class boroughs, removal of the income tax, however, SB 36 was still unfair. With reference to a comment by Senator Parnell, that 82% of Alaska's children were entitled to State funding, what about the remaining children? Each child in the State of Alaska is entitled to education funding. Without further comment, Senator Adams WITHDREW his OBJECTION. Senator Torgerson OBJECTED. He said, for the same reasons Senator Adams spoke about equity, was the same reason he was objecting. He realized they were considering going back to a mandatory borough issue, but the transition to that is perhaps fifteen to twenty years away. It was too difficult to realize that some of the residents of the State of Alaska do not have to pay for education. The bill provides a transition of three years to come forward with the mechanism to tax themselves, and if not, the tax would be placed by this assembly. He felt that was a fair approach and noted he MAINTAINED his OBJECTION for the record. Senator Donley queried about page one, lines sixteen and seventeen and asked why that was necessary to have in the amendment. Senator Parnell responded that it was a question for the drafter. He only requested the tax portions be pulled out as well as the unorganized borough portion, thinking that subsequent legislation would require local contribution. Senator Donley indicated he wanted an answer regarding this matter before he voted. He felt individuals should be encouraged to make local contributions for education. Senator Parnell concurred and said he would be happy to take the matter up with the drafter as long as it did not damage what was trying to be accomplished. Co-chair Sharp asked if the drafter was present and committee members agreed that he could be summonsed. There being nothing further to discuss before the committee Co- chair Sharp said they would stand at ease. (11:12 a.m. - at ease) Co-chair Sharp called the committee back to order. He noted a temporary solution had been worked out. Senator Parnell indicated that lines sixteen and seventeen were current law. He MOVED to amend amendment #26. Beginning on line fifteen, page one to delete "and insert:" and further delete lines sixteen and seventeen. WITHOUT OBJECTION the amendment to amendment #26 was ADOPTED. Senator Phillips asked if the bill were to pass was it contingent on something else happening? Senator Donley explained that the amendment would delete section 40 of the present bill. Senator Phillips reads section 40, page 3, lines 16 through 19 into the record. He said therefore, this section was contingent on another piece of legislation. He noted what would happen if that particular piece of legislation failed. Senator Donley concurred. Senator Donley said that since this committee was the first body working on the bill the effective date could be amended any time throughout the process. At this time, Senator Phillips withdrew his concern. By a roll call vote of 6 - 1 (Sharp, Pearce, Donley, Adams, Parnell, Phillips - yea) (Torgerson - nay) amended amendment Senator Adams asked that since the amendment passed when would the new CS and departmental runs be available? Co- chairman Sharp indicated the new CS could be available as early as this afternoon. They will be distributed to the members as soon as possible and copies will be made available at the back of the committee room. LIOs will get theirs as soon as they are entered electronically. He advised the committee further that they would meet after 10:00 a.m. Monday morning with the new CS including the last amendment. He requested all committee members be present at that time. He advised Department of Education to look carefully at the new CS to see what changes, if any, were required other than perhaps eliminating some of the runs done based on taxation. He also requested Departments of Revenue and Labor to reevaluate their fiscal notes predicated on the last CS. They were no longer in the picture with the latest adjustment. He wanted the bill moved out of committee before the Floor session on Monday. Senator Adams also requested Department of Law be present Monday. Questions concerning constitutionality of certain provisions in the bill could be posed at that time. Co- chairman Sharp said he would take this matter under advisement. He further requested the Department of Education to come up with a two-page run based on a new identified heading. He felt it was imperative for them to know how much distortion new money added would go under the two programs. ADJOURNMENT Co-chairman Sharp adjourned the meeting at approximately 11:25 a.m. SFC-98 -4- 3/6/98