SENATE CS FOR CS FOR HOUSE BILL NO. 203(HES) "An Act making an appropriation to the Legislative Budget and Audit Committee for a study of school district cost factors; and providing for an effective date." REPRESENTATIVE PEGGY WILSON explained that Alaska has a constitutional obligation to provide a full education for all students. The challenge inherent in the mission is to account for diverse geographic, cultural, and economic conditions. Representative Wilson stated the formula currently employed, while well intentioned, has unintentional consequences. HB 203 will provide factual answers and will propose an independent study of school cost differentials to be contracted by the Legislative Budget & Audit Committee at the cost of $350,000 dollars. Senator Austerman commented that in the past, there have been similar studies based on what is spent in schooling rather than on the actual costs. He questioned if it was the intent of the bill to include cost factors. Representative Wilson referenced Page 1, Line 10: "The cost should be based on cost providing education in each school district". She continued, the cost should include the cost of classroom instruction and administrative support. EDDY JEANS, Manger, School Finance and Facilities Section, Department of Education and Early Development, spoke on behalf of the Department in support of the proposed legislation. The Department is required to make recommended changes every other year to the cost differentials as passed in SB 36. The Department fulfilled its requirement this year and attempted to use the McDowell methodology, used in establishing the current cost differentials. He noted that the Department found the methodology "flawed" and did not work for the updating. The Department request that there be funding provided for a study. Senator Austerman asked about the changes made in the House Finance version of the legislation. Senator Wilken replied that there has been an attempt to measure the cost of education as compared to the cost of living. Senator Austerman stated that the cost of keeping a teacher in a remote area will differ from other places, which will have a direct cost link to the budget. Senator Wilken understood that the study would take into consideration variable issues throughout the State. Co-Chair Kelly suggested that the cost of the teacher's salary should be included in the cost of education. Senator Wilken agreed. He provided a history of the process. Senator Wilken pointed out that there have only been two studies. One was undertaken in 1982, a cost of living study. Another study was done in 1987. SFC 01 # 91, Side B 10:31 AM Senator Wilken continued that the 1987 study adjusted the 1982 study. That information is what was used until SB 36 passed. At that time, there was not a uniform chart and accounts being done for the entire State. The McDowell study undertaken in 1997 & 1998 updated all the costs of education information for the State of Alaska. He hoped that within ten years, the State would have a "rolling model" which constituents could trust. Co-Chair Donley noted that HB 203 would be HELD in Committee. Representative Wilson pointed out that there are only five states in the lower 48 that use some kind of a cost differential study. Each one is different. She acknowledged that this is not an easy process. She added that the cost of living in some districts is important because some districts have to provide housing. Some districts have no electricity or water. No teacher would be willing to go to a school district like that without adequate housing needs being provided for them.