GENERAL SUBJECT(S): OVERVIEWS: Department of Education, K-12 Enrollment Department of Administration, General Services The following overview was taken in log note format. Tapes and handouts will be on file with the House Finance Committee through the 21st Legislative Session, contact 465-2156. After the 21st Legislative Session they will be available through the Legislative Library at 465- 3808. Time Meeting Convened at 1:35 p.m. Tape HFC 99-15, Side 1 and 2 PRESENT: X Representative G. Davis X Co-Chair Therriault X Representative Foster X Co-Chair Mulder X Representative Grussendorf X Representative Austerman X Representative Kohring X Representative Bunde X Representative Moses Absent Representative J. Davies X Representative Williams ALSO PRESENT: KAREN REHFELD, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION; RICHARD CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION; EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, DEPARTMENT OF EDUCATION; MARSHA HUBBARD, DIRECTOR, GENERAL SERVICES, DEPARTMENT OF ADMINISTRATION; KEITH GERKEN, DIVISION OF GENERAL SERVICES, DEPARTMENT OF ADMINISTRATION LOG SPEAKER DISCUSSION 000 HFC 99-15, SIDE 1 TAPE CHANGE 021 Co-Chair Mulder Convened the meeting at 1:35 p.m. DEPARTMENT OF EDUCATION 201 EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, DEPARTMENT OF EDUCATION Provided members with a handout detailing average daily membership (ADM) (copy on file). He reviewed the handout. The total statewide average daily membership was 2,104.27 students over the projected amount. 365 Co-Chair Therriault Questioned if the shift is from home schooling to correspondence students. 421 RICHARD CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION Observed that there is not a significant change from the overall projection. This is the first time student data has been collected by school. Observed that 75% of the new correspondence students had not been enrolled before. The department is attempting to determine if there is double counting of students. 580 Co-Chair Therriault Is Fairbanks the exception to the norm? 603 Mr. Cross The department anticipated the decline of Fairbanks numbers. They had observed a decrease in children entering kindergarten. Overall numbers are not deviating significantly from projections. 665 Co-Chair Therriault Referred to correspondence growth. 681 Mr. Cross Students were allowed to enroll in two school districts for the first time. The department had to track students to make sure that they are not being counted in duplicate. The department also needs to assure that the quality remains high as the correspondence program grows. 760 Mr. Cross Parents were surveyed in Galena. Parents were happy with the correspondence program. Most parents have no access to representation in a local school board. The department feels that they have additional responsibility to these parents, since they do not have representative. 881 Co-Chair Therriault Asked if they had feedback from Mat-Su. He noted that Mat-Su had a large drop in enrollment. 925 Mr. Jeans Explained that the department is trying to ascertain the reason for Mat-Su's change in enrollment.. 943 Co-Chair Therriault Questioned if there were a cap on correspondence studies programs. 957 Mr. Cross No restrictions are currently in place on correspondence studies programs. 997 Representative Bunde Asked for more information on quality control. Will pupil teacher ratio be included in their calculations? 1044 Mr. Cross Noted that the pupil teacher ratio would be considered in data. 1071 Representative Bunde Noted that the majority of school districts overestimated the number of students that they would have. 1116 Mr. Cross The department did an analysis of projected numbers versus actual numbers. No trend was identified. Nothing was found to contribute to projection amounts. 1186 Representative Bunde Urban/rural trend? 1207 Mr. Cross Questioned if student population is aging. They were unable to identify any trends. 1235 Co-Chair Therriault Compare average state population age. 1269 Co-Chair Therriault Questioned status of second count. 1289 Mr. Jeans The second count was eliminated, with one exception. The supplemental funding floor was implemented. The department must first establish the floor then limit increases. An optional account was allowed this year only. 1331 Mr. Jeans The new law changes on Nov. 5th 1387 Mr. Cross In response to a question by Representative Austerman, he noted that the department does not know where the new students have come from. They come from all over the state. 1432 Co-Chair Therriault Questioned if data exists to do studies. 1450 Mr. Cross The department has data for 1997 and 1998 that can be used. 1488 Representative Kohring Stressed that there should not be a cap on correspondence studies. Mr. Cross Responded that they have no intent to limit correspondence studies. 1600 Co-Chair Therriault Expressed concern that the quality of correspondence courses be maintained in light of increased growth. Co-Chair Therriault Referred to growth in the Alyeska Central school. Mr. Cross Increases are due to summer school. 1667 Representative G. Davis What is the amount paid for each correspondence student? Is there a requirement to indicate where they went the previous years? 1697 Mr. Cross Districts that operate correspondence courses and allow students outside their district to enter into cooperative agreements must identify where the student resides and notify their home district. Students can split their enrollment between districts. The department must make sure that the amount that districts receive for a student is not more than the total for each student. The program is compensated at 80 percent of the foundation formula per student. 1793 Representative Bunde How do we know if students are attending school? 1805 Mr. Cross The department has no way of knowing if a child has never been enrolled, unless reported by neighbor or social workers. They know that there are several children that are not attending. 95 percent of the increase in the Galena correspondence program had been home schooled. Home schooling can be done without any state supervision. DEPARTMENT OF ADMINISTRATION 1872 MARSHA HUBBARD, DIRECTOR, GENERAL SERVICES, DEPARTMENT OF ADMINISTRATION Discussed the Bank of America Building purchase. The department's leasing budget was reduced by $900,000 thousand dollars due to the purchase of the Bank of America Building and subsequent lease consolidations 1926 Ms. Hubbard The department anticipates that the next three units will be moved into the Bank of America Building in 1999. This should provide a significant savings in 2001. 2036 KEITH GERKEN, DIVISION OF GENERAL SERVICES, DEPARTMENT OF ADMINISTRATION Provided members with a handout, Bank of America Building Status Report (copy on file). Reviewed handout. 2063 Mr. Gerken Has spent time negotiating with tenants to vacate the building. Still in negotiations with a few tenants. Has had success in relocating tenants. Close to having it ready to fit all of the Anchorage staff for the Office of the Governor, and Department of Commerce and Economic Development. The Department of Natural Resources will also move in with the exception of the Division of Oil and Gas. 2105 Mr. Gerken There was good competition for the management contract. The management contract was awarded for a savings to the state. 2179 Mr. Gerken Discussed page 2. 2201 Mr. Gerken Still have issues to resolve. Not enough space for divisions of Senior services and Insurance. 2260 Mr. Gerken Estimated that they will be able to complete the move without additional funds. Ms. Hubbard Pointed out that purchases are being kept to a minimum. 2333 Co-Chair Therriault Questioned the number of tenants. 2359 Mr. Gerken Only two tenants are expected to remain in the building by the year 2006. After that point there is not much incentive to encourage tenants to move. 000 HFC 99-15, SIDE 2 TAPE CHANGE 043 Mr. Gerken Explained that the department is on track with the number of tenants that needed to be relocated. They paid more in property taxes then expected. Management costs are in accordance with the estimate amount. He suggested that the total savings might be greater than anticipated. 201 Mr. Gerken In response to a question by Co-Chair Mulder, Mr. Gerken explained that the state still leases 175,000 square feet in the Frontier Building. The state is preparing for its first big move from the Frontier Building to the Bank of America. The state is negotiating with the Frontier Building to recoup savings when the space they leave is occupied. 300 Mr. Gerken Explained that there are 50,000 square feet under state management by the Department of Natural Resources in the Bank of America Building. The rest has been cleared by tenants and is being prepared for occupancy. 355 Co-Chair Therriault Questioned the projected bond rate. 370 Mr. Gerken Thought it was 6 or 6.5 percent. The debt has not been sold yet. They expect the bond rate to be lower than anticipated. Payments were deferred for several years. 445 Representative Grussendorf Questioned if an agreement was made to only pay on private leases. 482 Mr. Gerken Correct, the state miscalculated how the tax would be calculated. The state paid approximately $250 thousand dollars in municipal tax. 538 Representative Kohring Spoke in support of putting the legislature in the Bank of America Building. 600 Co-Chair Therriault Referred to parking. 610 Mr. Gerken The consultant has substantiated that some additional parking will need to be rented. The department estimated that 60-75 additional spaces would be needed. The consultant estimates only 35 spaces will need to be rented. Looking at stacking 3 cars in a space. Seems to be plenty of spaces to rent. Need to work on providing public parking spaces for those visiting the building. 772 Co-Chair Mulder How much space is the state looking for outside of the Bank of America Building? 831 Mr. Gerken There are a number of small space proposals and one large one for the Division of Family and Youth Services. The Division of Family and Youth Services will need 30,000 square feet in Anchorage. 862 Mr. Gerken Their lease is expiring without an option to extend. They are also expanding to accommodate additional positions. 881 Ms. Hubbard Expect an interesting rental market in the next few years. 911 Co-Chair Mulder Suggested that the state look at the Arco building, anticipated rents will decrease. 946 Co-Chair Mulder Questioned if there are other big contracts in other parts of the state? 975 Mr. Gerken Pointed out that there would be a leasing contract for renewal in two years for the Department of Health and Social Services in Anchorage. Leasing is fairly stable. 1043 Ms. Hubbard Reviewed consolidation of division space for the Department of Health and Social Services. There are a number of leases that expire during the year 2000. Trying to locate together sections with similar functions. 1297 Mr. Gerken Pointed out that the leases are expiring. He noted that the intent is to decrease leasing space through consolidation. 1309 Ms. Hubbard Observed that they are aware that there is no new money for leasing. 1333 Co-Chair Therriault Asked terms of leases. 1345 Mr. Gerken They attempt to enter into 10-year leases. Stressed that they are more successful obtaining longer terms on large leases.. By statute, leases are limited to at least 4 years. 1381 Representative G. Davis In response to a question by Representative G. Davis, explained that white area in the handout's map represent space that is occupied by private tenants. 1403 Co-Chair Mulder ADJOURNMENT The meeting adjourned at 2:45 p.m. HOUSE FINANCE COMMITTEE LOG NOTES February 2, 1999 HFC 6 2/02/99