SPONSOR SUBSTITUTE FOR SENATE BILL NO. 328 "An Act relating to the national forest income program in the Department of Community and Economic Development and to the authority of the department to adopt regulations; making conforming amendments; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated this bill, "provides the Department of Community and Economic Development with the necessary authority to adopt regulations necessary to implement a federal program commonly known as national forest receipts." Co-Chair Wilkin referenced an amendment made to the bill when last heard by the Senate Finance Committee. Amendment #1 adjusted the average daily membership requirement to apply only to children physically residing in the school districts receiving a share of the national forest income program. SENATOR BERT STEDMAN testified that he has been in contact with representatives of the City of Craig and the Craig School Board and received their financial calculations. The representatives expressed concerns about the funding cuts, especially concerning the Craig City School District and the limited amount of time it would have to adjust to the reduced funding. Co-Chair Wilken stated that an effective date, if agreed upon, should be specified for the provisions of Amendment #1. Senator Stedman informed that his earlier intention was to suggest an effective date of July 1, 2005, but recent input from the Department of Community and Economic Development indicates that an immediate effective date would not change funding. BILL ROLFZEN, State Revenue Sharing, Municipal Assistance, National Forest Receipts, Fish Tax, PILT, Division of Community Advocacy, Department of Community and Economic Development, testified that Section 1(m), added to the bill in the amendment, would impact the Craig City School District's funding for the FY 05 school year were it given a July 1, 2004 effective date. Similarly, a July 1, 2005 effective date would affect the District's funding for the FY 06 school year. Co-Chair Wilken asserted that an effective date of July 1, 2005 would be appropriate. Mr. Rolfzen affirmed. Senator Stedman agreed. Amendment #2: This conceptual amendment provides that AS 41.15.180(m) has an effective date of July 1, 2005. Co-Chair Wilken moved for adoption. There was no objection and the amendment was ADOPTED. Co-Chair Wilken referred a document titled "Department of Education and Early Development, Prepared on 3/24/04: Forest Receipt/Altered Statewide Correspondence ADM" [copy on file] which informs that six of 381.75 correspondence students in the Craig City School District reside within the District. He then referenced a second spreadsheet titled, "Department of Education and Early Development, Prepared 3/11/04, Correspondence History FY99-FY05 Projected" [copy on file] which shows considerable growth in the Craig City School District's PACE correspondence program. Senator Dyson requested a repeat of Mr. Rolfzen's earlier testimony Mr. Rolfzen presented his earlier testimony. Senator Dyson communicated that this legislation would ensure that the City of Craig would receive forest receipts for the correspondence students who reside within the Craig City School District. Mr. Rolfzen confirmed. Senator Dyson clarified that under Amendment #1 the City of Craig would not receive forest receipts for correspondence students who do not reside within the District. Mr. Rolfzen affirmed. JOHN BOLLING, City Administrator, City of Craig, testified via teleconference from an offnet location in Craig to express appreciation for the adoption of the effective date. He requested that any correspondent student residing within the Tongass National Forest be eligible for forest receipts. Senator Stedman interpreted Mr. Bolling's request to amend Amendment #1 to include all students living within the Tongass and Chugiak National Forests. Senator Dyson understood that the request asked that all students residing within the national forest be eligible for the forest receipt funding even if enrolled in a correspondence school headquartered outside the boundaries of the national forest. Senator Stedman explained that a school must be located within a national forest to receive forest receipts. Senator Dyson clarified that Mr. Bolling's request does not encompass students receiving their education from an institution located outside the national forest. Senator Stedman affirmed. RON ERICKSON, School Superintendent, Craig School Board, testified via teleconference from an offnet location in Craig about recent impacts of budget reductions and the "devastation" that additional reductions would have on the district without the adoption of Amendment #2. He also reiterated Mr. Bolling's request and urged the consideration of providing forest receipts for those students residing within the Tongass National Forest. Co-Chair Wilken asked if the correspondence students actually reside in the Craig City School District. Mr. Erickson answered no, that many correspondence students reside in other communities in the Tongass National Forest such as Ketchikan and would not otherwise be eligible for timber receipts because they are not enrolled in the Ketchikan School District, or any other school system. Co-Chair Wilken requested further clarification. EDDIE JEANS, Manager, School Finance and Facilities Section, Education Support Services, Department of Education and Early Development, explained that the City of Craig is serving 215.9 students who reside in the Ketchikan Gateway Borough. Mr. Bolling and Mr. Erickson are asking that the City of Craig receive forest receipts for those 215.9 students because they reside within the Tongass National Forest. Co-Chair Wilken expressed his understanding of the request. Senator Dyson understood Mr. Bolling and Mr. Erickson are requesting timber receipt funding for students enrolled in the Craig City School District and who also reside in the Tongass National Forest. Mr. Jeans affirmed this assessment. Senator Dyson asked the amount of forest receipts received per student. Mr. Jeans was unsure and deferred to Mr. Rolfzen. Senator Dyson asked how the 0.9 per student figure is calculated. Mr. Jeans explained the fraction represents a student who was enrolled for a portion of the school year. Mr. Rolfzen informed that in FY 04 the forest receipt amount per student is approximately $1,000. DOC WATERMAN, School Board President, Craig City School District, testified via teleconference from an offnet location in Craig that the purpose of the federal forest receipts program is to provide education to students residing in the Tongass National Forest. If the Craig City School District is the only district providing education to a student living in the Tongass National Forest, Craig should be eligible to receive the receipts allocated to that student. DOUG RHODES, Principal, Craig High School, testified via teleconference from an offnet location in Craig to support earlier testimony from the City of Craig and the Craig City School District. Senator Dyson offered a motion to report SS SB 328, 23-LS1620\H from Committee, as amended, with accompanying fiscal note and individual recommendations. There was no objection and CS SS SB 328 (FIN) MOVED from Committee with zero fiscal note #1 from the Department of Community and Economic Development.