SENATE BILL NO. 57 "An Act relating to charter school funding." 9:05:36 AM Senator Joe Thomas, Sponsor, explained that the legislation corrects a flaw in school funding law as it applies to charter schools with fewer than 150 students, which he called the "charter school penalty." He read parts of the Sponsor Statement (Copy on File): Current law results in these charter schools receiving 30 to 45 percent less state funding than neighborhood schools of their same size. SB 57 funds these charter schools at a per-child rate closer to that of average, urban elementary schools. Charter schools are public schools that provide valuable education options to Alaska families. They increase learning opportunities and encourage parent and community involvement in our schools. Charter schools are designed and managed by parent-elected boards, under contracts with local school districts. They create school choice within the public school system. The process of choosing engages parents and gives them a feeling of ownership, which encourages student achievement. In 1995, the legislature passed Alaska's initial charter school law. SB 57 solves the funding problem in an equitable, fiscally responsible manner. It will support our schools and districts as they carry out the legislature's intent in creating the charter school law. The root of the problem is the way the foundation formula calculates the "adjusted student count" for charter schools versus neighborhood schools. Charter schools with an enrollment of less than 150 students are not treated as separate schools for the purpose of the adjusted student count calculations. The impact of this system on charter schools is shown in the attached graph. The consequences are that the law provides an inadequate amount of money for charter schools with fewer than 150 students to survive, and there is dramatic decrease in funding when a charter school's enrollment drops from 150 to 149 students. School districts can be penalized for allowing school choice. SB 57 states that charter schools with fewer than 150 students will have their student count adjusted by the same per-student rate as neighborhood schools with 400 students. It also contains a one-year, hold-harmless provision for charter schools that are either in their first year of operation or who had more than 150 students the previous year. These schools will receive 95 percent of the per-student rate of neighborhood schools with 150 students. 9:09:04 AM Senator Huggins MOVED to ADOPT Amendment 1, 26-LS0238\E.2, Mischel, 4/1/09: Page 1, line 1, following "charter": Insert "and alternative" Page 2, following line 6: Insert a new subsection to read: "(e) If an alternative school has a student count of more than 120 but less than 175 for the current year and is in the first year of operation, or had a student count of 175 or more in the previous year of operation, the adjusted student count for the school shall be calculated by multiplying the student count by 95 percent of the student rate for a school that has a student count of 175." Reletter the following subsection accordingly. Page 2, line 7: Delete "(c) and (d)" Insert "(c) - (e)" Page 2, line 10: Delete "AS 14.17.905(b)" Insert "AS 14.17.905" Page 2, following line 10: Insert new material to read: "Sec. 14.17.905. Facilities constituting a school.  (a) For purposes of this chapter, the determination of the number of schools in a district is subject to the following: (1) a community with an ADM of at least 10, but not more than 100, shall be counted as one school; (2) a community with an ADM of at least 101, but not more than 425, shall be counted as (A) one elementary school, which includes those students in grades kindergarten through six; and (B) one secondary school, which includes students in grades seven through 12; (3) in a community with an ADM of greater than 425, each facility that is administered as a separate school shall be counted as one school, except that each alternative school with an ADM of less than 175 [200] shall be counted as a part of the school in the district with the highest ADM." Co-Chair Stedman OBJECTED for discussion. Senator Huggins described past experience with charter schools in the Matanuska-Susitna (Mat-Su) Valley. He commented that the original charter school law was put in place in a different era and the provisions can cause schools to lose significant funding when the loss of one student changes the count from 150 to 149. He has been supportive in the past of financial correction to the situation and he wanted the change to be put into statute. Senator Huggins described similar issues for alternative schools and noted a resolution from the Mat-Su Borough School District ("Resolution No. 09-002," Copy on File). In the same way charter schools must have a minimum of 150 students, alternative schools must have a minimum of 200. Alternative schools suffer from the same funding problems if they lose a single student below the minimum. The amendment would address the issue for alternative schools. 9:11:24 AM JODY SIMPSON, STAFF, SENATOR CHARLIE HUGGINS, SPONSOR, addressed the mechanics of Amendment 1. She explained that the threshold for alternative schools would be lowered from 200 to 175 students. Alternative schools that consistently have fewer than 175 students will continue to be funded as if their students attended the largest in the district, and will not get the 1.18 rate that SB 57 gives to charter schools. The amendment also puts in place the one-year hold- harmless provision for alternative schools with more than 175 students the previous year or schools in the first year of operation. Alternative schools will receive 95 percent of the per-student rate for the 175 count. Alternative schools will have to submit a plan for the hold-harmless year and work with their school board to determine a course of action if enrollment projections are not met and the school no longer qualifies for the hold-harmless provision. She stressed that the measure is a legislative priority for the Mat-Su School Board. EDDY JEANS, DIRECTOR, SCHOOL FINANCE AND FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, expressed support for the amendment. He pointed out that the amendment addresses the problem that occurs when an alternative school falls below the 200 student mark. 9:14:16 AM Co-Chair Hoffman asked how many schools would be covered by the bill before the amendment and how many schools had between 175 and 200 students. Mr. Jeans answered that the original bill addressed four charter schools with student counts below 150. The amendment would address one alternative school. A total of five schools would be affected. Senator Olson requested the Sponsor's opinion of the amendment. Senator Thomas replied that he was supportive of the amendment. Co-Chair Stedman WITHDREW his OBJECTION to Amendment 1. There being NO further OBJECTION, Amendment 1 was adopted. 9:15:43 AM Mr. Jeans referred to the fiscal note and emphasized that page 2 lists the four charter schools that would qualify for the additional funding for small schools. The schools with enrollment under 150 would be funded at the 1.18 rate. Page 3 of the note shows the fiscal impact of the amendment. One school would generate an additional $600,000. The total fiscal note is $1,314,300. Co-Chair Stedman asked if the fiscal note would change from the draft version. Mr. Jeans did not expect a change. Co-Chair Stedman opened public testimony. KIKI ABRAHAMSON, TEACHER, FIREWEED ACADEMY and ALASKA CHARTER SCHOOL ASSOCIATION, HOMER (testified via teleconference), testified in support of the legislation. She emphasized the importance of providing equitable funding for educational alternatives. 9:18:22 AM Senator Ellis thought the legislation addressed unfinished business and stated support for the improvements to the bill. Senator Huggins informed the committee that his wife was employed by the Mat-Su school district. Senator Olson spoke for constituents in his district who support the bill, particularly the Nome Charter School. Senator Ellis noted the presence of Juneau charter school students in the audience. 9:19:52 AM AT EASE 9:20:31 AM RECONVENED BRENDA TAYLOR, PRESIDENT, ACADEMIC POLICY COMMITTEE, JUNEAU COMMUNITY CHARTER SCHOOL, introduced four students who were present in the room. The group supported the legislation. Co-Chair Stedman commended the students for taking part in the legislative process. Ms. Taylor told the committee that the students were representing other students who wanted to be there but were unable to attend. Co-Chair Stedman closed public testimony. Senator Thomas MOVED to report SB 57 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS SB 57(FIN) was REPORTED out of Committee with a "do pass" recommendation and with attached fiscal note by the Department of Education and Early Development.