SB 219-GOV PANEL ON SCHOOL DISTRICT COST FACTORS    8:11:38 AM CHAIR STEVENS announced consideration of SB 219. This was the first hearing of the bill. 8:12:13 AM SENATOR HUGGINS joined the meeting. SENATOR WILKEN presented an overview of SB 219. He listed what was in the packet in addition to the sponsor statement: a bullet sheet giving the highlights of the legislation; a time line, some fiscal notes; an ISIS (Institute of Social and Economic Research) study cover sheet dated 2005; the American Institutes for Research (AIR) report dated 2003; the McDowell study dated 1998; and a historical review that looked back to 1983 and the difficulties in establishing district cost factors (DCF). SENATOR WILKEN read the following sponsor statement: Senate Bill 219 offers a unique opportunity for the Legislature to step back from the current debate over the accuracy of the proposed geographic cost indices used in the education funding formula and encourages the legislative body to consider a new approach to this difficult, recurring policy issue. Senate Bill 219 establishes a Select Panel on District Cost Factors within the Office of the Governor for the purpose of developing an updatable and durable model to measure actual relative cost differences in providing public education. Placement of this important panel under the purview of the governor affords an open, statewide perspective and fosters cooperation between all school districts. How to accurately measure the relative cost variances between Alaska's 53 school districts has been a constant source of aggravation, discourse, and contention within the legislature and the education community for the past 24 years. The Legislature has attempted many times to develop an updatable model to measure the differences in cost between school districts, but unfortunately an acceptable plan has been elusive. The Select Panel will take a fresh look at how to measure these differences with the goal of providing the State of Alaska with a fair, objective, accurate, and durable district cost model that educators and the public can support. The panel's finished work product will remove a perennial source of frustration for many. It is time to try the approach outlined in Senate Bill 219. Please join me in support of this legislation. SENATOR WILKEN said that what this does is put together a group of eight voting members. In 1983, the issue of DCF came up and the state was under pressure from the federal government to come up with an education formula. The legislature drafted one then and again in 1998, 2002, and 2005 and there is still acrimony about DCFs. He's not sure why they can do it now when they haven't been able to come up with an agreeable formula in the past. In 1994, then candidate-for-Governor Tony Knowles put out a questionnaire in which 80 percent of Alaskans responded that they had no faith in the school foundation formula. Education funding had gone up 54 percent and many asked where the money went. He said that part of the problem was that the DCF had been jimmied in 1985 and the acrimony has continued into the present. He said there are ways to take multiple inputs and update them with a reliable model but the committee needs to be free of politics and include technical people, one from the Anchorage School Board, two legislators, and three people with base in mathematical models and statistics. According to the time line, in May 2008 the committee would be organized and they would have 16 months to get two competing solicitations and then come forward in September 2010 with a suggested model in time for the Governor's budget. Current DCFs would fall away in 2011 and the legislature would be under the mandate to come up with new DCFs. 8:21:24 AM SENATOR WILKEN said he's very concerned that what the legislature is trying to do has already been tried and that it is setting itself up for failure. He proposed doing something new with the hope that in ten years all that would need to be done every year is provide new data. He reminded the committee that it is not measuring actual costs but the relative differences between actual costs. CHAIR STEVENS asked Senator Wilken to look at the second fiscal note regarding the child care program. SENATOR WILKEN said it has to do with the termination of the DCFs on the first day of the session. He said that today child care grants are adjusted by the DCF and if changes aren't made by 2011, the Department of Health and Social Services (DHSS) doesn't have any way to allocate the child care grants. This provides the authority to DHSS to make the adjustments until the legislature is able to do it. It doesn't kick in until 2011 and only if the legislature fails to come up with the DCF. 8:25:16 AM EDDY JEANS, Director, School Finance, Alaska Department of Education, Juneau, AK, said he understands Senator Wilken's concerns; but the Joint Education Funding Task Force suggested that a new joint task force be established specifically to address area cost factors. He said that is the next piece of legislation before the committee and the administration will be supporting that piece of legislation as recommended by the Education Funding Task Force. SENATOR OLSON said that since the cost differential is so fluid he is not convinced there ever will be a final answer; and he thought they should "bite the bullet, accept what we've got and continue on." MR. JEANS said it is just as Senator Wilken describes it: when the studies are done, every one goes down the list to see how their districts are impacted. He was surprised there was not more support for the ISER study because the amount for every single school district in the state went up. He understands concerns about the actual data that went into the study and said that debate will never go away. He remembered hearing years ago that it was the best data they had available at the time; that is what it is today; and when they get a new report in 5 years, that will be the best data at the time. SENATOR OLSON asked why they should even have this bill before them. MR. JEANS said it's because there are concerns with some of the factors that were considered in the ISER report and that they need to be addressed. He said they hope to improve on the cost factors as time moves on, because they do need to be adjusted periodically; but he doesn't expect 100 percent agreement on what the components are and how much weight to give each of those components. SENATOR OLSON asked if the concerns Mr. Jeans has raised are addressed in the bill. MR. JEANS replied that they are not; what this bill does is establish a commission in the governor's office. It is very specific on who the people appointed would represent. It creates a specific timeline in which the commission has to report. If the commission does not make recommendations, it actually repeals the cost differentials in statute, which would be painful for all school districts in the state. CHAIR STEVENS pointed out that Mr. Jeans has made a 25-year career of understanding these matters and expressed appreciation for his efforts. 8:30:14 AM CHAIR STEVENS said SB 19 would be held over.