SB 1-FOUNDATION FORMULA INCREASE  CHAIRWOMAN GREEN thanked Senator Taylor and asked Senator Wilken to present SB 1. SENATOR WILKEN, sponsor of SB 1, said that SB 1 is the most efficient bill regarding school funding. It simply increases the student dollar amount. He feels the case has been made by constituents that increased funding is needed for many good reasons. He asked that Jim Holt come forward and testify. MR. JIM HOLT, Superintendent of the Fairbanks School District, informed the committee that he has been with that school district for 30 years. He said he understands the reluctance of the Legislature to open up the formula in SB 36. The complexities described by Senator Taylor make that obvious. He also understands the Legislature's reluctance to tie the student dollar to a permanent inflation factor because the question of what inflation factor to use continues. He noted that grant funding allows the Legislature to target specific educational issues, hold school districts accountable, and not worry that the additional funding is being spent on salaries rather than students but it has become critical that additional funding be placed in the student dollar. MR. HOLT said no matter what numbers one believes, the bottom line is that inflation has eaten away at the educational dollar. If it cannot be tied to some kind of factor that takes that into consideration, the Legislature will periodically need to adjust that amount. For example, Fairbanks has had the second warmest winter on record. Even under those conditions, the fuel oil bill for the school district cost $200,000 more this year than last, purely due to inflation. He cannot use grant funds to pay that bill. He pointed out that raising property taxes to pay for school bonds is not a well received idea by retirees on fixed incomes. Likewise, all school superintendents in this state have been running their districts on a fixed income for almost all of the last 12 years. Every time there is an increase in inflation, fuel bills or teacher salaries increase and districts can spend less on the students. He asked legislators, when considering additional funding for education, that all of that money not be put into quality schools grants and learning opportunity grants, but to consider increasing the student dollar. Number 963 SENATOR LEMAN said he disagrees that the $200,000 increase in the fuel bill was due to inflation. Rather, it was an increase in the price of fuel. He noted both have the same effect on spending power. SENATOR WILKEN asked Mr. Holt to describe to the committee what the learning opportunity grants fund. MR. HOLT said the quality school grant that the Fairbanks School District received first was used to offer summer school for the first time in Fairbanks in about 20 years. The learning opportunity grants have allowed the Fairbanks district to fund special programs, particularly in reading, and hopefully next year in math, for elementary students who are unable to keep up. MR. JEFF WALTERS stated support for SB 1 and increases in funding for education. The Legislature must acknowledge losses due to inflation over the last 10 years. He said employees in his district are being squeezed by inflation, rising health costs, expectations of student performance on the high school qualifying exam and more. If districts do not get an increase, they will lose safety monitors on school buses, supplies and equipment, and the pupil-teacher ratio will have to be raised in grades 4 through 12. That seems counterproductive in light of state mandated exams. In addition, attracting and retaining high quality teachers is critically important across the state. He feels districts need a long range solution to funding, not a stop gap measure. Number 806 SENATOR LEMAN informed Mr. Walters that the Legislature fully funded pupil transportation so to draw any link between SB 1 and pupil transportation is a misrepresentation. CHAIRWOMAN GREEN noted that crossover on budgets can cause confusion. MR. DAVE JONES, Kodiak Island Borough School District Director of Finance, stated support for SB 1. He has calculated the amount of state revenue per student for each year since 1989. With quality schools initiative funds and the learning opportunity grants included, the Kodiak school district is receiving $30 less per student than it did in 1989. Over that same time period, inflation has increased over 30 percent. In addition, fuel costs have increased 56 percent since 1990. The lack of inflation proofing has resulted in severe cuts in Kodiak. Over $1 million has been cut in the last two fiscal years and Kodiak is facing another $500,000 next year if it receives no additional revenues. Passage of SB 1 will eliminate the need for further cuts and might allow the district to reinstate some of the programs cut in recent years. Number 677 CHAIRWOMAN GREEN announced that both SB 94 and SB 1 will be scheduled in committee again next week. She pointed out that the issue of supplemental equalization has been discussed at the Mat- Su school district. She plans to review that issue at the next meeting also. MR. EDDY JEANS, School Finance and Facilities Section, DOEED, stated support of SB 1. However, he suggested the committee consider rolling the learning opportunity grants into SB 1 as part of the ongoing funding formula so that school districts do not have to lobby for that money every year. CHAIRWOMAN GREEN asked if that creates a lot of work. MR. JEANS replied, "It keeps it interesting, Madame Chairman. I think you would remember the single site issues that we debated - single site funding on an annual basis for about 10 years." He pointed out that money is being allocated to districts at the same time quality school grants are allocated. The allocation methods are a little bit different but the monies are being targeted for the same purposes. If the money is going to be allocated to DOEED, it would prefer to have the money in the formula. MR. JEANS said that SB 1 and the learning opportunity grants are very close to the funding level recommended by the [Governor's] funding task force. The only thing missing is about a 1.5 percent annual increase for the next five years, also recommended by the task force. CHAIRWOMAN GREEN announced both bills will be heard on Monday and that next Wednesday, the committee will begin discussing the State of Alaska's reliance on Medicaid. SENATOR WILKEN asked if the committee will be discussing the competency exam again. CHAIRWOMAN GREEN said it would not. She then adjourned the meeting at 3:28 p.m.