HOUSE FINANCE COMMITTEE May 12, 1999 8:50 A.M. TAPE HFC 99 - 129, Side 1 TAPE HFC 99 - 129, Side 2 CALL TO ORDER Vice Chair Bunde called the House Finance Committee meeting to order at 8:50 a.m. PRESENT Co-Chair Mulder Representative Grussendorf Vice Chair Bunde Representative Kohring Representative Austerman Representative Moses Representative J. Davies Representative Williams Representative Foster Co-Chair Therriault and Representative G. Davis were absent from the meeting. ALSO PRESENT Representative Fred Dyson; Carl Rose, Executive Director, Alaska Association of School Boards, Juneau; Eddy Jeans, Manager, School Finance Section, Department of Education; Wes Keller, Staff, Representative Dyson; TESTIFIED VIA TELECONFERENCE Bob Shefchik, Fairbanks North Star Borough School District, Fairbanks; Royce Chapman, Fairbanks North Star Borough School District, Fairbanks; Carol Comeau, Anchorage School District, Anchorage; Kathi Gillespie, Anchorage School District, Anchorage; Greg Miller, Chair, Policy Committee, Aquarium Charter School, Anchorage; Debbie Rothermel, Academy Charter School, Matsu; Claire McConnell Academy Charter School, Matsu; Cheryl Turner, Matsu; Ann Riggs, Academy Charter School, Matsu; Barbara Gerard, Matsu; SUMMARY HB 191 "An Act relating to charter schools; and providing for an effective date." HOUSE BILL NO. 191 "An Act relating to charter schools; and providing for an effective date." SENATOR FRED DYSON, SPONSOR testified in support of HB 191. He provided members with a proposed committee substitute, 1- LS0598\M, 5/11/99(copy on file). Representative Dyson observed that legislation was passed authorizing charter schools (in 1995). House Bill 191 would aid charter schools in dealing with some of the difficulties they have experienced. The legislation extends the length of a charter school's contract. The current five-year contract has inhibited some schools from acquiring facility leases. The legislation also requires charter schools to implement exit exams, raise funds, and addresses funding levels. He observed that larger schools receive more money than smaller schools. He acknowledged that school financing is complex. The pupil funding level for children in school districts is $7,500 thousand dollars per child, while charter schools receive $3,500 per child. He observed the difficulty of acquiring start-up funding for charter schools. Representative Dyson noted that affordable space is another issue facing charter schools. The proposed committee substitute requires that school districts give charter schools some facilities funding on a pro rata basis equal to the cheapest facility cost in the district. There would be no associated cost to the state of Alaska. The only fiscal cost to the state would be the additional staff needed by the Department of Education. Federal grant money to implement charter schools is ending. The Department of Education needs to find a new funding source to replace federal money used to administer charter schools. He maintained that it is "unfair" to use the fiscal note on HB 191 as a funding source for administration. Representative Kohring MOVED to ADOPT proposed committee substitute, 1-LS0598\M, 5/11/99. There being NO OBJECTION, it was so ordered. In response to a question by Representative Austerman, Representative Dyson acknowledged that the facility charge would be an unfunded mandate to the school districts. He added that some schools would be able to utilize existing vacant buildings. He noted that it could delay the need for additional buildings. In response to a question by Representative Grussendorf, Representative Dyson reiterated that many charter school organizations have increased efforts to acquire accounting skills. Vice-Chair Bunde pointed out that PTA's raise money within school districts. He questioned if charter schools can also raise funding through PTA's. Representative Dyson responded that the section regarding fund raising was included at the request of the Department of Education. Representative J. Davies questioned how the legislation would handle a situation where the school district offers a charter school a facility that is not excepted. Representative Dyson responded that he felt that the school district "is absolutely in the driver's seat". WES KELLER, STAFF, REPRESENTATIVE DYSON added that the legislation is in the context of a contract between the charter school and the school district. The current restraints would remain. Vice-Chair Bunde questioned if the legislation would change the ratio of administrators to students achieved in SB 36. Representative Dyson did not think that the legislation would affect the student/administrator ratio. He pointed out that charter schools have flexibility in the teacher/student and administrator/teacher ratios. His experience was that charter schools have weighted these ratios toward classroom participation. Representative J. Davies expressed concern with a simple pro ration. He noted that charter school students could utilize gymnasium and other facilities at existing schools. Representative Dyson noted that these issues are negotiated in the context of the contract. Representative Dyson did not think that the legislation required funding of gymnasium facilities for charter schools. He pointed out that not all schools in school districts have gymnasiums. Mr. Keller explained that page 3, line 11 addresses the issue. Representative J. Davies argued that the language is open to interpretation. CARL ROSE, EXECUTIVE DIRECTOR, ALASKA ASSOCIATION OF SCHOOL BOARDS, JUNEAU provided information on HB 191. He recalled concerns regarding the original legislation, start-up costs, local determination, revocation, and equity. He referred to section 2. He noted that school districts might not want to grant a charter for any of the items in section 2. He expressed concern with the dollars generated in charter schools. He pointed out that regular instructional children generate the bulk of funding. However school districts must use this funding to support mandated special needs. He stressed that regular instructional students receive what is left after mandated expenses. He questioned how itemized accounting and cost of administration could be identified for purposes of funding charter school students should receive. Since 1986, funding for public education has remained relatively flat. There would be additional costs for charter schools that are not housed within a regular school. He maintained that charter schools would be funded from existing resources. There is already a tremendous amount of pressure for existing resources. He felt that school districts with charter schools would be adversely affected by the mandates to provide charter schools with some facilities funding on a pro rata basis equal to the cheapest facility cost in the district, to itemize costs and provide manners in the same manner as other students. CAROL COMEAU, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE testified via teleconference. She stressed the need to review the committee substitute. She maintained that the legislation would impact the Anchorage School District. She asserted that additional funding for charter schools would take away from their school district. The Anchorage School District has a space problem. There are already over 140 relocatable classrooms. The legislation is an unfunded mandate that would require reductions in the next year's budget. She questioned the intent of the legislation. BOB SHEFCHIK, FAIRBANKS NORTH STAR BOROUGH SCHOOL DISTRICT, FAIRBANKS testified via teleconference. He stated that the School District is in general support of charter schools. He acknowledged that charter school funding is insufficient. He disagreed with the method of solving the problem. He agreed with section 1. Mr. Shefchik discussed portions of the bill. He acknowledged that the Fairbanks North Star Borough School District could itemize costs. He noted that most charters do not have accountant expertise. He expressed concern with section 3. He noted that section 3 fails to recognize the difference in program costs. Costs range from well behave, easy to teach children to special needs. He noted that their school board currently treats charter schools differently based on their population. He expressed concerns with inclusion of special education funding, impact aid, targeted federal funds, contracts for operation of on base schools, tuition funding for special students and optional excess contribution. He questioned if the state can legally mandate how local option contributions are spent. Mr. Shefchik discussed subsection (2) in section 3, facilities cost. He pointed out that this section does not recognize that capital and operating funding are separate. School buildings are provided through bonds. Mr. Shefchik asked that the legislation be held and reviewed by legislative legal counsel. He acknowledged that the changes in SB 36 did not adequately address the needs of charter schools. He concluded that the legislation would help charter schools at the expense of other schools. Representative Dyson reviewed page 2, line 31. He noted that this allows per student, per school cost to take into consideration administrative or other services provided. He emphasized that the intent is that contracts allow for the level of service that the school takes or receives from the district or provides for themselves. He added that charters are at the discretion of the school district. Representative Kohring spoke in support of the legislation. He recounted experiences with charter schools. He observed that charter schools have been able to put together facilities at reduced costs through volunteer involvement. He noted that the Midnight Sun Charter School operates at $1,700 per student. (Tape Change, HFC 99 - 129, Side 2) DEBBIE ROTHERMEL, ACADEMY CHARTER SCHOOL, MATSU testified via teleconference in support of the legislation. She stressed that the intent is to receive an equal opportunity to flourish within the school system. She maintained that existing charter schools are doing a good job. She noted that the Academy Charter School spent $50 thousand dollars to improve their facilities in addition to volunteer effort. She urged the Committee to maintain its commitment to the charter school system. She noted that even matching funds for facilities would be helpful. KATHI GILLESPIE, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE testified via teleconference. She noted that the Anchorage School District has concerns with the legislation. She observed that they are concerned that the operating budget, as proposed, would prioritize charter school students above other students. She emphasized that the facility cost would be an unfunded mandate. Rental money would come out of the general fund. She noted that children housed in portables are not allowed the option of renting space. She asked for clarification on the fund raising issue and suggested that if it is a problem than the problem should be fixed for all students. She asked when does fund raising become tuition. She observed that there was no fiscal note with the original passage of the charter school legislation. She asked that the Department of Education and school districts provide fiscal notes. She stressed the need to discuss the legislation with staff, parents and other interested parties. GREG MILLER, POLICY COMMITTEE, CHAIR, AQUARIAN CHARTER SCHOOL, ANCHORAGE testified via teleconference. He discussed section 5. He felt that the existing administrative ratio of 4.31 percent is working. He stressed that charter schools can provide education at reduced costs. Mr. Miller discussed facility funding. He maintained that charter schools could provide facilities for less than school districts. The Aquarium Charter School is currently without a facility. They have been in portable classrooms. They have arranged to rent space for the next year at $500 dollars per student. The school district is not willing to help with this cost. He maintained that the issue is simple. Local money should be passed on or a facility provided. He stressed that every school needs a roof. He asserted that it is not an unfunded mandate. He stated that they are not asking for anything less then what other students receive. CLAIRE MCCONNELL, ACADEMY CHARTER SCHOOL MATSU testified via teleconference in support of the legislation. She stressed that the Academy Charter School does a lot with very little. Their students are in portable classrooms. Only two of their classrooms have bathrooms nearby. ROYCE CHAPMAN, FAIRBANKS NORTH STAR BOROUGH SCHOOL DISTRICT, FAIRBANKS testified via teleconference. He stressed that the School Board is supportive of charter schools, but expressed concern with the legislation. He stressed that the legislation imposes an idea as to what is best for the Fairbanks North Star Borough School District and its charter schools. He noted that the same problem does not exist in every school in every district. He acknowledged the intent, but did not support the solution. He stated that the best solution would be to allow affected communities to solve their own problems. He stressed the point is who decides what is spent. He maintained that the legislature is not the best place for the decision. CHERYL TURNER, MATSU testified via teleconference in support of HB 191. She expressed support for Representative Dyson. She expressed support for a changing the contract length from 5 to 10 years. ANN RIGGS, ACADEMY CHARTER SCHOOL, MATSU testified via teleconference in support of HB 191. She stressed that charter schools are a great addition to the school system. She emphasized the amount of parental involvement in the creation of charter schools. BARBARA GERARD, MATSU testified via teleconference in support of HB 191. She maintained that clarification and direction is needed to protect funding for charter schools. GLEN BIEGEL, ANCHORAGE testified via teleconference in support of HB 191. He noted that all charter schools are not equal. He emphasized that if there is no roof there is no school. HB 191 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 10:05 a.m. House Finance Committee 6 5/12/99 a.m.