SB 244-QUALITY SCHOOL GRANT FUND INCREASE COMMISSIONER RICK CROSS, Department of Education and Early Development, informed committee members that SB 244 increases the current $16 average daily membership amount paid in quality school grants to $52. The cost of this proposal will amount to about $7.6 million. The quality school grant is a targeted, value added, accountability grant, designed to accomplish the State's goal of bringing accountability and high standards of student achievement in Alaska's public schools. In 1998, when the Quality School Initiative and grant program was established, it was specifically targeted by the Legislature to fund accountability. The accountability grants will jump start the kind of changes that need to occur in Alaska's schools to ensure that all students reach high standards. COMMISSIONER CROSS said the State will save $19.9 million this year as the result of three changes: declining school enrollment; increased local property values which have shifted the responsibility for school funding from the State to local communities; and increases in federal Impact to Aid payments that Alaska receives. School districts anticipated higher revenues this year and have had to make significant adjustments to their budgets to accommodate for the loss of revenue. Some districts are facing as much as $4 million in reductions in expenditures. The $7.6 million of grants will give school districts money to raise standards and student achievement, and it will allow teachers to spend more time on task with students. In 1998, Minnesota allocated $70 million to help school districts implement new standards. Last year, the Washington State Legislature passed a $113 million package of initiatives to support reforms. In 1999, the Connecticut Legislature passed a budget that added $70 million to help schools get better results. The State of Louisiana set aside $200 million for reforms which amounts to about $256 per student. These states, and a number of others, are recognizing that additional resources are needed to support schools as they raise standards and hold students and teachers accountable. He hopes Alaska will do the same. Number 1239 SENATOR WILKEN pointed out that DOE submitted a zero fiscal note although the cost of the increase will be $7.6 million. COMMISSIONER CROSS explained the zero fiscal note reflects the fact that the Governor's budget for the foundation includes the $7.6 million. If a different budget is used, the fiscal note will need to be changed. He noted that the fiscal note contains a statement explaining that the money has been accounted for in the Governor's budget in the Foundation Program. SENATOR WILKEN maintained that fiscal notes are to reflect changes in current spending. SENATOR PETE KELLY agreed that the fiscal note should reflect the $7.6 million. SENATOR WILKEN surmised that the fiscal note reflects a diversion from the normal process and requires users to "connect the dots." CHAIRMAN MILLER agreed. COMMISSIONER CROSS said his understanding is that DOE is to work off of the Governor's budget and therefore the fiscal note is correct. He added that the fiscal note is clear about the costs associated with the bill. CHAIRMAN MILLER stated that the next committee of referral is where the fiscal note will be reviewed. Number 1282 SENATOR PETE KELLY asked if DOE has written its fiscal notes based on the current year's budget or the projected budget in the past. COMMISSIONER CROSS acknowledged that he has not been involved for too many years but he repeated that the rules DOE is to go by require that the fiscal note reflect the cost if the money is not accounted for in the Governor's budget. SENATOR ELTON asked for an explanation of the application process the districts use and the number of districts that have participated in the Quality Schools grant program at the $16 level. COMMISSIONER CROSS replied that all districts have participated in the grant program and the application process was designed by DOE. Each district submits an application explaining how the money will be targeted and on what programs. The districts use the money for various programs that target poor student performance, i.e. summer school programs, tutoring, and extended-day programs. DOE reviews applications and asks for clarification if the use of the money is unclear. The program is not competitive: each district is allotted a specific amount. SENATOR ELTON asked if DOE checks to see whether it is substituting Quality Schools Initiative grant funding for programs that would have otherwise been funded from other sources, thereby freeing up dollars in an existing budget to be spent on functions not related to quality schools. COMMISSIONER CROSS indicated that DOE's auditing of school districts is fairly broad but is getting better as time goes on. If DOE found a district was substituting quality school money for a different program funded through a different grant, it would question that expenditure. Number 1497 SENATOR ELTON commented that he is not opposed to the concept of SB 244, but he sees several ways to tackle this problem. He noted that if DOE does not audit to ensure that the additional money will be spent on academics, then Senator Wilken's approach (SB 198) might be better. COMMISSIONER CROSS said he supports Senator Wilken's bill but he is asking for support of SB 244 because it will ensure that money is targeted to meet an immediate need that school districts face. Regarding the auditing, DOE follows up to make sure the districts are providing the services they were given the grant money for. CARL ROSE, Executive Director of the Association of Alaska School Boards (AASB), expressed support for SB 244 for the following reasons. Many school districts anticipated the $19 million that is not forthcoming so they are going through severe budget reductions as a result. Two issues face Alaska school districts: operational costs and the quality initiatives that have been mandated. The quality initiatives serve a purpose but will require school districts to address student achievement on the upcoming exams. He does not believe Alaska will see wholesale success on those exams at the start. As younger students go through the bench marking process at the third, sixth and eighth grades, they will be ready for the qualifying exam. He is very concerned about remediation for those students who do not fare well in the new system. The AASB supports both SB 244 and SB 198. Each bill addresses a different issue: one is categorical through grants, the other gives districts latitude for operations. Alaska has the responsibility of ensuring that its students are as successful as possible in our global economy. SENATOR ELTON asked if remediation programs would be eligible for funding from a quality school grant. MR. ROSE said the question of why students do not score well on the upcoming exam and what we can do to help those students will be on the table. Providing those students with more of the same is probably not the answer so the AASB is looking at new strategies. SENATOR ELTON asked if the grant money is used for remediation, whether the district would receive $52 per student who needed remediation or whether it would get $52 per ADM in the district which could be used to remediate fewer students. MR. ROSE said he believes each school district will come up with strategies they feel will meet their students' needs and they will apply to DOE. Number 1880 VERNON MARSHALL, NEA-Alaska, stated support for SB 244 and commended the committee for acting on SB 198. The Senate HESS committee has been the first committee to step to the plate and try to deal with the school funding issue as it applies to 2001 and beyond. The school year of 1999-2000 will probably be remembered as the year of the "test." In March the first exit exam will be administered and he assumes that before the end of the school term, the bench mark testing at grades 3,6, and 8 will occur. The next significant date will be the year 2002 because the exam given in March will be given to seniors and determine whether they receive a diploma. During that year every school will be designated. The next two years are years of opportunity. Test results will be available in the fall of the year 2000 and at that time educators will have to review the results and look at the curriculum to educate better. The issue of remediation will also have to be addressed. He hopes the remediation programs in place in Fairbanks are replicated throughout Alaska because that model is held up with respect. The average teacher salary in Alaska has fallen to $47,100. The average is decreasing, but the money saved does not appear to be used for other personnel services by school districts. He suspects that much of that money is being plowed into remediation, curriculum realignment, and other things. He asked for support of SB 244 and said it is a good coupler with SB 198. There being no further testimony or discussion, SENATOR WILKEN moved SB 244 with individual recommendations and its accompanying fiscal note. There being no objection, the motion carried.