SENATE COMMITTEE SUBSTITUTE FOR COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 191(HES) "An Act relating to charter schools." REPRESENTATIVE FRED DYSON recounted legislation passed in 1995 that established Alaska's first charter school statutes. He told of a wide movement across the country to allow parents to participate in creating a school that fits their needs. Representative Dyson relayed conversations he had with Representative Bettye Davis shortly after he was first elected in which he was told he needed to revisit the charter school statutes. Representative Davis asserted to him that the existing statutes would not work. He added that national experts on the subject have stated that Alaska's laws are amongst the weakest in the nation. Representative Dyson stressed that the charter schools in the state are struggling and that his office along with the Anchorage School District have been working with charter schools to craft legislation to allow charter schools to survive an possibly to prosper. Representative Dyson highlighted some minor points of the bill that he said everyone could agree on. These, he said include provisions to double the number of charter schools allowed to operate and the elimination of the geographical distribution of the school's locations. He added the bill also extends the sunset provision of the exiting statute and allows occupation of public buildings by charter schools. Representative Dyson then shared that the most substantial portion of the legislation addresses funding. Most charter schools elsewhere in the country, he said are provided start-up funds, which he said Alaska does not provide. He did note that the Fairbanks school district has made attempts to secure funding for a charter school located in that community. Representative Dyson next talked about changes made to the bill in the committee process in attempt to meet criticisms of the Anchorage and Fairbanks school districts. He stated that the Senate Health, Education and Social Services Committee deleted two paragraphs of the original bill addressing financial requirements plus another provision stipulating that charter schools receive a share of the local contribution as well as state funding. Representative Dyson allowed that the resulting committee substitute addresses the necessary technical changes but does not provide additional funding for charter schools. Representative Dyson spoke of the accounting procedures necessary to show how the charter school's funding is expended. Representative Dyson cautioned that Alaska's charter schools would not survive without much more help. He expressed, "I think it's cruel to string them along." He stated that the current version of the bill gives the schools no hope since it no longer contains the funding provisions. GAIL MCCANN testified via teleconference from Fairbanks asking the sponsor to not give up on charter schools. She wanted all public schools to secure more funding as the University of Alaska has in recent years. KITTY MATHERS testified via teleconference from Fairbanks to request the Committee vote in favor of the original version of the bill. She stressed that the current committee substitute allows the charter schools to exist, but not to survive. JOHN TIEMESSEN, attorney and father of charter school student, testified via teleconference from Fairbanks about the need for work on the charter school structure and to fully fund schools. MISSY LIEBERMAN, parent of a child in Chinook Charter School testified via teleconference from Fairbanks in support of the bill and the idea behind it to help charter schools get equal funding and not have to compete with other schools. BARBARA GERARD testified via teleconference from Mat-Su about a recent evaluation showing the positive impacts of charter schools. She stated that this bill strengthens the charter school process. JIM POSEY testified via teleconference from Anchorage about the growth of the local charter school. He expressed the reduced assistance provided in the committee substitute "puts an dagger into the hearts" of those who work for public education. ANTHONY HUSSY, Chair, Academic Policy Council, Walden Pond Charter School testified via teleconference from Anchorage about the school and some of the special needs of their students. MARY CARTER, mother and board member of Walden Pond Charter School, testified via teleconference from Anchorage about the growth she has seen in her daughter since attending this school. LORNA REECE, parent of student of Walden Pond Charter School, testified via teleconference from Anchorage. She spoke of her experiences in Anchorage schools and why she chose to send her son to a charter school. MIKE FISHER, Assistant Superintendent, Fairbanks North Star School District, testified via teleconference from Fairbanks about his concerns with Section 2 of the bill in subparagraph 5, requiring itemization of administrative costs, and subparagraph 14, stipulating that the charter school budget must be increased to reflect operating cost savings. KATHY GELLISPY, Legislative Co-Chair, Anchorage School Board testified in Juneau that the district could not support the bill. She suggested changing the provision dictating accounting methods for charter school related expenditures. Ms. Gellispy also requested deletion of subparagraph 14 from page 2, lines 27-31 of the committee substitute. She argued that no school receives funding for services that are not provided. Ms. Gellispy went into great detail of the various expenditures incurred by both charter schools and regular schools and the hardship the district would incur if the accounting and funding requirements of this legislation were imposed. Tape: SFC - 00 #90, Side A 7:56 PM Ms. Gellispy offered that the Anchorage School District wants to work with the legislature to make the charter school statutes stronger than they currently are. Ms. Gellispy detailed the handout accompanying the district's April 14, 2000 memo to the Senate Finance Committee. [Copy on file] She explained how this list shows the budgeted cost per student for each of the district's schools. She pointed out that the average spent per charter school student is $4,264 compared to the average of $3,732 spent for all other elementary students. She attested that the district is funding its charter schools in a fair and equitable manner. CARL ROSE, Executive Director, Association of Alaska School Boards, testified in Juneau saying the organization is on record in support of charter schools. He said the difficulty with this legislation is the inability to come to agreement on the appropriation. He surmised that by attaching charter schools to an already struggling system is not the way to ensure success for charter schools. He cautioned of the potential for charter schools to operate without any oversight of the local school boards, and thus being funded without requiring any accountability. He thought the possibility existed that some new charter schools would not get approval because of these funding issues. He suggested the legislature adequately fund all schools. Amendment #1: This amendment adds a new bill section on page 3, following line 7 of the committee substitute to read as follows. "Sec. 4. AS 14.03.260 is amended by adding a new subsection to read: (e) In addition to the amount provided to an approved charter school in the annual program budget under (a) of this section, a charter school budget must include an allocation equal to the amount determined by dividing the amount of local revenues contributed under AS 14.17.410(c) by the average daily membership of the district and multiplying that number by the average daily membership of the charter school." Co-Chair Parnell moved for adoption. Senator Wilken objected. Co-Chair Parnell explained this amendment requires the local school districts to share excess local contributions with the charter schools. He asserted that parents of charter school students pay property taxes that are used to fund all public schools except their child's. He said that this is an issue of equity. Representative Dyson agreed with Co-Chair Parnell's statements. Co-Chair Parnell stated that all public schools should be funded. Senator Phillips referred to the Anchorage School District's list of budgeted funds spent per student of various schools in the district. He noted how more funds are spent for charter school students. Co-Chair Parnell responded that three of the listed charter schools included special needs students. Secondly, he said the issue was not about the amount of money spent per student, which is a red herring. Instead he asserted the issue is about getting equitable funding at the on-set with the ability for the school board to make adjustments later. Senator Phillips thought all of the schools include the special needs expenditures in their budgets. [Ms. Gellispy affirmed, but out of range of the recording system.] Senator Green noted there may well be a comparability in the amount allotted to the per student calculation. She wanted to know if there is a difference in the expenditure allotted to the charter schools. Representative Dyson replied that several of those schools have to pay the costs to occupy a facility, whereas other schools don't have to pay rent. Senator Wilken stated that in 1995, the funding for charter schools was clearly set forth. He quoted, "the amount generated by students enrolled in charter schools to be determined in the same manner as would be for a student enrolled in another public school in that school district." He stressed this agreement was reached with the intent that it would be adhered to for ten years. Senator Wilken noted the amount of money the Anchorage School District spends for charter school students. He thought the matter of paying leasing costs for charter schools is already addressed the organization and operation of a charter school chapter of state statute. Senator Wilken understood that the charter school laws were to allow parents to organize to provide an educational opportunity that they could not receive in a normal public school in that district. He stressed that these parents can negotiate a contract to define their school, which includes the facility the school will occupy. He added that while the charter school may have to address disabilities, there is no library, no band, no athletic program, transportation requirements, and are not required to have open enrollment, as a public school must. Senator Wilken attested that although charter schools have approached the Fairbanks and Anchorage school districts with complaints that they don't receive enough money, they are getting more money than required in the 1995 legislation. Senator Wilken stressed that this amendment, along with other proposed changes, "cements in place a 'must do' and a confrontation between the charter school proponents and the school board every budget season." He stated that the message this legislation sends to the school districts is that they don't know what they are doing and regardless of the needs of most students, the district must spend a specific amount on charter school students. Senator Phillips asked about the location of the Walden Pond Charter School in the Diamond Mall and other charter schools' lease agreements. PEGGY ROBINSON, President, Anchorage School Board, talked about the charter school's five year lease. It was established that Walden Pond is the only charter school that pays rent. The others pay some combination of utilities. A roll call was taken on the motion. IN FAVOR: Senator Donley, Senator Leman, Senator Green, Co- Chair Parnell and Co-Chair Torgerson OPPOSED: Senator Adams, Senator Wilken and Senator Phillips ABSENT: Senator P. Kelly The motion PASSED (5-3-1) The amendment was ADOPTED. Amendment #2: This amendment makes the following changes to page 2, lines 10 through 13 of the committee substitute as follows. Delete "(5) a statement of the charter school's funding allocation from the local school board, including the itemized costs of administrative or other services to be provided [AND COSTS ASSIGNABLE] to the charter school [PROGRAM BUDGET];" Insert "(5) a statement of the charter school's funding allocation from the local school board and costs assignable to the charter school program budget." New text underlined [DELETED TEXT BRACKETED] Senator Wilken moved for adoption. Senator Green objected. Senator Wilken noted this amendment is connected to Amendment #3. He expressed that it would be difficult and expensive for school districts to account for these expenditures as required in the legislation. He thought that to require a separate accounting system for under 200 students to keep track of itemized costs was unreasonable. He pointed out, for example, that the charter schools in Fairbanks uses the district's discipline system but the district does not charge the charter school for that service. He suspected there would be great difficulty in trying to establish an accounting method to itemize that particular service in addition to the multiple other similar services that are interrelated between the district and the charter schools. Representative Dyson had no objection to the amendment since he thought the premise of the language would not change. He stated that the belief that the bill would require establishment of a separate accounting system was "either grossly misunderstood or a red herring." He noted that the district would still be responsible for showing an accounting of all expenditures. Co-Chair Torgerson thought the word "itemize" was the difficulty. The amendment was ADOPTED without objection. Amendment #3: This amendment deletes subparagraph (14) on page 2, line 27, through page 3, line 1 of the committee substitute. "a clause providing that the charter school's budget shall be increased to reflect operating cost savings achieved by the charter school; in this paragraph, "operating cost savings" means the estimated value of educational or related services provided by the district to all schools in the district that are not provided to the charter school; (15)" Senator Wilken moved for adoption. Co-Chair Torgerson objected for an explanation. Senator Wilken stressed that this language was a troubling inclusion in the bill. He predicted this would foster tensions each year between the charter schools and the school board. He suggested that this is giving credit for not doing something, which he remarked, is backward thinking. Co-Chair Torgerson removed his objection. Representative Dyson emphasized that this language is also misunderstood. He stressed that there would be no negotiations involved in this process. The school board is an advisory seat and the charter school can make no threats but must do what the board instructs. He shared that if a charter school can ease expenditures for the other schools, for example, by removing students from an over-crowded high school, the district can share a portion of the net savings with the charter school. He restated that if a district identifies savings as a result of the existence of a charter school, the savings could be passed along to the charter school. Senator Leman said Representative Dyson's comments make sense if the intent is interpreted to pass along some, but not all of the net savings. Representative Dyson responded that "the school district is in the driver's seat" and could pass along all, none, or a portion, of the savings to the charter school. Co-Chair Torgerson noted the language "shall be increased" is not optional. Senator Leman countered that the language does not stipulate what factor of the savings. He thought the language was poorly worded but that some of the money should be passed along to encourage further savings. He stressed that the legislature needs to provide a better incentive to quell the formula funding cost increases. Representative Dyson offered to change "shall" to "may". Senator Wilken commented that Amendment #1 set the baseline and this subparagraph increases that base by considering whether the charter school has a band, library and/or a transportation system. Senator Green noted Representative Dyson's example did happen in the Mat-Su school district. She shared that the district's charter school does have a band and has a variety of students, but has also eased overcrowding in the other schools. She noted that most charter schools are filling a need, have a big waiting list and should be supported. Senator Green supported extending the sunset date of the existing charter school statute at the very least. Senator Wilken moved to withdraw his motion to adopt Amendment #3. The amendment was WITHDRAWN without objection. Amendment #4: This amendment deletes "shall" and inserts "may" on page 2, line 27, of the committee substitute. The amended language reads as follows. (14) a clause providing that the charter school's budget may be increased to reflect operating cost savings achieved by the charter school; in this paragraph, "operating cost savings" means the estimated value of educational or related services provided by the district to all schools in the district that are not provided to the charter school; Co-Chair Parnell moved for adoption. There was no objection and the amendment was ADOPTED. Senator Wilken commented that this is an important issue and that while he supports charter schools, he does not want their interest to be championed at the expense of the other 129,000 students in the public K-12 education system. He stressed that the original legislation was an experiment but that the agreement was to wait ten years to review its success before making changes. Co-Chair Torgerson asked if the sponsor had reviewed the fiscal note. Representative Dyson had. Co-Chair Torgerson asked if the sponsor believed it takes one to two people to run the program. He thought the estimated cost of the legislation was too high. Co-Chair Parnell offered a motion to move CS HB 191 (FIN) as amended from Committee with accompanying $161,300 fiscal note from the Department of Education and Early Development. The bill was MOVED from Committee.