SENATE BILL NO. 182 "An Act amending the amount of state funding provided to school districts for pupil transportation." Co-Chair Stedman relayed that SB 182 had not previously been heard by the committee. The intent was to introduce the legislation, hear public testimony, and set the bill aside for further review. 2:10:55 PM SENATOR KEVIN MEYER, SPONSOR, introduced SB 182. He discussed that education and addressing complex issues related to its delivery to students was a top priority of the Senate. He shared that as co-chairs of the Senate Education Committee both he and Senator Joe Thomas had been looking for ways to improve the system, including the passage of SB 171, which would increase the Base Student Allocation. Another important and costly item was pupil transportation that totaled approximately $62 million annually. He elaborated that up to 2003 the state provided funding for pupil transportation based on actual costs (derived from annual financial audits) that were reported to the Department of Education and Early Development (DEED). Subsequent to 2003 reimbursement had been determined on a per pupil basis; it had been determined that the method was underfunding pupil transportation costs, which had forced districts to take money out of classrooms to fund transportation. Additionally, there was no consistency between districts because they dealt with the issue in different ways (e.g. newer versus older school buses and other). Senator Meyer communicated that SB 182 would recalibrate the existing per pupil amount received by districts under the current grant program up to more realistic levels. The bill would change the per pupil program to an actual cost or reimbursable program similar to the system that was in place prior to 2003; the program would be based on annual financial audits reported to DEED. Additionally, the bill would give DEED oversight to control costs; the goal was for the department to line up all school districts that would allow a Request for Proposal (RFP) process to obtain competitive bids on the busing system (currently school districts were responsible for their own RFPs and rates were high in some areas). 2:14:39 PM Co-Chair Stedman noted the one fiscal note from DEED in the following estimates: an FY 12 supplemental in the amount of $8,103,300; an FY 13 appropriation for $10,450,300, which was in addition to the $62,202,700 in the governor's proposed FY 13 operating budget; and one additional full- time position. 2:15:32 PM DAVE JONES, ASSISTANT SUPERINTENDENT, KENAI PENINSULA SCHOOL DISTRICT, KENAI (via teleconference), testified in support of SB 182. He thanked the committee for addressing the issue. He stated that transportation costs had risen substantially and districts were forced to pull money from classrooms if the costs were not met within the transportation funding. He shared that the Kenai district had attempted many strategies to entice additional vendors to bid, but attempts had been unsuccessful. He stressed that without the legislature's help there would be a substantial deficit in the transportation fund. He urged the passage of the bill. 2:16:48 PM MIKE FISHER, CHIEF FINANCIAL OFFICER, FAIRBANKS NORTHSTAR SCHOOL DISTRICT, FAIRBANKS (via teleconference), voiced support for SB 182. He thanked the committee and sponsor for the work done on the transportation issue. He shared that the district bused over 7,000 students per day and covered over 1 million miles annually. He emphasized that the bill would help the district keep other critical operating dollars in the classroom. 2:17:29 PM STEVEN KALMES, DIRECTOR OF TRANSPORTATION, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE (via teleconference), testified in support of SB 182. He communicated that the district had seen significant increases in pupil transportation costs that surpassed the amount provided under the grant system. He pointed to steep fuel increases in recent years and shared that in 2006 the district had a fuel cap of $2.50 per gallon in its contract; prices were currently over $4.00 per gallon. Significant increases had occurred due to rising fuel and school bus costs; bus cost increases were a result of escalating costs for raw materials (3 percent to 5 percent annually). Additionally, bus costs had increased 7 percent to 10 percent in order to meet the 2010 federal mandate on diesel emissions. He relayed that federal requirements were growing; in the upcoming year the district would spend almost $500,000 on the transportation of homeless students. He stressed that due to the increased costs and lack of funding, the district was eating into the classroom funding; the shortfall was expected to be approximately $2.2 million. He reiterated the district's support of the legislation. 2:19:28 PM KEN FOREST, MAT-SU BOROUGH SCHOOL DISTRICT, PALMER (via teleconference), vocalized support for SB 182. The Mat-Su district was experiencing notable increases in expenses related to pupil transportation. He relayed that the district had conducted a competitive bid the prior year that had resulted in two bids; the low bid had been selected and approximately $11 million had been saved over the life of the contract; however, costs had still risen substantially. He communicated that the district would be eating into its general operating fund for about $3.4 million in the upcoming year. He thanked the committee for its efforts to move the bill forward. 2:20:38 PM BRUCE JOHNSON, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL ADMINISTRATORS, JUNEAU, spoke in support of SB 182. He recognized the school business officials that worked to determine accurate per student amounts included in the CS. He emphasized that the bill would help ensure that dollars destined for the classroom would not be diverted to transportation. Senator Meyer provided closing remarks. He stated that when the system moved from an actual cost basis to a per pupil basis in 2003 the legislature thought the change would save money; however, costs had increased and money had not been saved. He opined that the system had created inconsistencies between school districts related to busing standards. SB 182 was HEARD and HELD in committee for further consideration. Co-Chair Stedman discussed the schedule for the following day.