HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES STANDING COMMITTEE April 30, 1997 3:34 p.m. MEMBERS PRESENT Representative Con Bunde, Chairman Representative Joe Green, Vice Chairman Representative Brian Porter Representative Fred Dyson Representative J. Allen Kemplen Representative Tom Brice MEMBERS ABSENT Representative Al Vezey COMMITTEE CALENDAR SENATE BILL NO. 187 "An Act relating to disclosure of public records identifying a participant in the advance college tuition payment program; relating to the composition and assets of the Alaska advance college tuition payment fund; relating to administration of the advance college tuition payment program; relating to advance college tuition payment contracts; and providing for an effective date." - CHAIRMAN REQUESTED THAT SB 187 BE WAIVED HOUSE BILL NO. 193 "An Act relating to financial assistance for students attending certain graduate education programs; and providing for an effective date." - MOVED CSHB 193(HES) OUT OF COMMITTEE * HOUSE CONCURRENT RESOLUTION NO. 19 Relating to the Alaska Council of Deaf, Hard of Hearing, and Deaf/Blind. - MOVED HCR 19 OUT OF COMMITTEE * HOUSE BILL NO. 256 "An Act relating to regulation of postsecondary educational institutions; and providing for an effective date." - MOVED HB 256 OUT OF COMMITTEE SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 148 "An Act relating to the public school funding program; relating to the definition of a school district, to the transportation of students, to school district layoff plans, to the special education service agency, to the child care grant program, and to compulsory attendance in public schools; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: SB 187 SHORT TITLE: UNIVERSITY TUITION PAYMENT PROGRAM SPONSOR(S): SENATOR(S) WILKEN; REPRESENTATIVE(S) Ogan JRN-DATE JRN-PG ACTION 04/25/97 1483 (S) READ THE FIRST TIME - REFERRAL(S) 04/25/97 1484 (S) HES 04/28/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205 04/28/97 (S) MINUTE(HES) 04/28/97 1509 (S) HES RPT 5DP 04/28/97 1509 (S) DP: WILKEN, LEMAN, WARD, ELLIS, GREEN 04/28/97 1510 (S) ZERO FISCAL NOTE (UA) 04/29/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203 04/29/97 (S) MINUTE(RLS) 04/29/97 1543 (S) RULES TO CALENDAR 4/29/97 04/29/97 1549 (S) READ THE SECOND TIME 04/29/97 1549 (S) ADVANCED TO THIRD READING UNAN CONSENT 04/29/97 1549 (S) READ THE THIRD TIME SB 187 04/29/97 1550 (S) PASSED Y17 N- E3 04/29/97 1550 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 04/29/97 1557 (S) TRANSMITTED TO (H) 04/30/97 1394 (H) READ THE FIRST TIME - REFERRAL(S) 04/30/97 1394 (H) HES BILL: HB 193 SHORT TITLE: REPAY GRADUATE EDUCATION AID SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES JRN-DATE JRN-DATE ACTION 03/14/97 665 (H) READ THE FIRST TIME - REFERRAL(S) 03/14/97 665 (H) HES, FINANCE 03/27/97 (H) HES AT 3:00 PM CAPITOL 106 03/27/97 (H) MINUTE(HES) 03/27/97 (H) MINUTE(HES) 04/10/97 (H) HES AT 3:00 PM CAPITOL 106 04/10/97 (H) MINUTE(HES) 04/30/97 (H) HES AT 3:30 PM CAPITOL 106 BILL: HCR 19 SHORT TITLE: COUNCIL OF DEAF/HARD OF HEARING/DEAF/BLIND SPONSOR(S): REPRESENTATIVE(S) BUNDE, Brice, Berkowitz JRN-DATE JRN-DATE ACTION 04/18/97 1171 (H) READ THE FIRST TIME - REFERRAL(S) 04/18/97 1171 (H) HES 04/21/97 1225 (H) COSPONSOR(S): BERKOWITZ 04/30/97 (H) HES AT 3:30 PM CAPITOL 106 BILL: HB 256 SHORT TITLE: REGULATION OF POSTSECONDARY SCHOOLS SPONSOR(S): REPRESENTATIVE(S) DAVIS JRN-DATE JRN-DATE ACTION 04/21/97 1212 (H) READ THE FIRST TIME - REFERRAL(S) 04/21/97 1212 (H) HES 04/30/97 (H) HES AT 3:30 PM CAPITOL 106 BILL: HB 148 SHORT TITLE: SCHOOL FUNDING ETC./ CHILD CARE GRANTS SPONSOR(S): HEALTH, EDUCATION & SOCIAL SERVICES JRN-DATE JRN-DATE ACTION 02/18/97 382 (H) READ THE FIRST TIME - REFERRAL(S) 02/18/97 382 (H) HES, FINANCE 04/04/97 988 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 04/04/97 988 (H) READ THE FIRST TIME - REFERRAL(S) 04/04/97 989 (H) HES, FINANCE 04/08/97 (H) HES AT 3:00 PM CAPITOL 106 04/08/97 (H) MINUTE(HES) 04/24/97 (H) HES AT 3:00 PM CAPITOL 106 04/24/97 (H) MINUTE(HES) 04/28/97 (H) HES AT 3:30 PM CAPITOL 106 04/28/97 (H) MINUTE(HES) 04/30/97 (H) HES AT 3:30 PM CAPITOL 106 WITNESS REGISTER DIANE BARRANS, Executive Director Postsecondary Education Commission Department of Education 3030 Vintage Boulevard Juneau, Alaska 99801-7109 Telephone: (907) 465-6740 POSITION STATEMENT: Testified on CSHB 193(HES). DAN SADDLER, Legislative Secretary to Representative Bunde Alaska State Legislature Capitol Building, Room 104 Juneau, Alaska 99801 Telephone: (907) 465-4843 POSITION STATEMENT: Provided sponsor statement for HCR 19. MS. KAYA, Treasurer Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council 475 Hall Street Fairbanks, Alaska 99701 Telephone: (907) 456-5913 POSITION STATEMENT: Testified on HCR 19. ALAN CARTWRIGHT, President Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council 731 Gambell Street Anchorage, Alaska 99701 Telephone: (907) 276-3456 POSITION STATEMENT: Testified on HCR 19. DUANE MAYES, State Coordinator for the Deaf Division of Vocational Rehabilitation Department of Education 3600 Bragaw Road Anchorage, Alaska 99508 Telephone: (907) 261-8226 POSITION STATEMENT: Testified in support of HCR 19. DARRELL CAMPBELL, Member Governor's Council on Disabilities and Special Education P.O. Box 240249 Anchorage, Alaska 99514 Telephone: (907) 276-3456 POSITION STATEMENT: Testified in support of HCR 19. MARCIA BARNES, Member Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council 731 Gambell Street, Number 200 Anchorage, Alaska 99501 Telephone: (907) 276-3456 POSITION STATEMENT: Testified in support of HCR 19. DERRILL JOHNSON, Developmental Disabilities Division of Mental Health and Developmental Disabilities Department of Health and Social Services P.O. Box 110620 Juneau, Alaska 99811-0620 Telephone: (907) 465-3370 POSITION STATEMENT: Testified on HCR 19. REPRESENTATIVE GARY DAVIS Alaska State Legislature Capitol Building, Room 513 Juneau, Alaska 99801 Telephone: (907) 465-2693 POSITION STATEMENT: Sponsor of HB 256. DEBORAH CRAIG, Director Institutional Relations Postsecondary Education Commission Department of Education 3030 Vintage Boulevard Juneau, Alaska 99801-7109 Telephone: (907) 465-6740 POSITION STATEMENT: Testified on HB 256. JENNIFER DEITZ, Member Alaska Association of Private Career Educators Owner, Career Academy P.O. Box 671261 Chugiak, Alaska 99567 Telephone: (907) 688-6488 POSITION STATEMENT: Testified on HB 256. EDDY JEANS, Manager School Finance Section Department of Education 801 West Tenth Street, Suite 200 Juneau, Alaska 99801-1894 Telephone: (907) 465-2891 POSITION STATEMENT: Testified on HB 148. ACTION NARRATIVE TAPE 97-38, SIDE A Number 0000 CHAIRMAN CON BUNDE called the House Health, Education and Social Services Standing Committee meeting to order at 3:34 p.m. Members present at the call to order were Representatives Bunde, Green, Porter and Kemplen. Representative Dyson and Brice arrived at 3:38 p.m. and 4:05 p.m, respectively. Representative Vezey was absent. This meeting was teleconferenced to Anchorage and Fairbanks. SB 187 - UNIVERSITY TUITION PAYMENT PROGRAM Number 0095 CHAIRMAN BUNDE brought up SB 187, "An Act relating to disclosure of public records identifying a participant in the advance college tuition payment program; relating to the composition and assets of the Alaska advance college tuition payment fund; relating to administration of the advance college tuition payment program; relating to advance college tuition payment contracts; and providing for an effective date." CHAIRMAN BUNDE said this bill passed out of the Senate and was referred to the House Health, Education and Social Services Standing Committee. He asked the committee members to waive SB 187, as the committee had passed the House version of the bill, HB 254. REPRESENTATIVE JOE GREEN clarified that it was the same bill. HB 193 - REPAY GRADUATE EDUCATION AID Number 0147 CHAIRMAN BUNDE announced the next item on the agenda was HB 193, "An Act relating to financial assistance for students attending certain graduate education programs; and providing for an effective date." He referred to a committee substitute. Number 0159 REPRESENTATIVE BRIAN PORTER made a motion to adopt the proposed committee substitute for HB 193, dated April 24, 1997. There being no objection, CSHB 193(HES) was before the committee. Number 0163 CHAIRMAN BUNDE explained that CSHB 193(HES) addressed some of the questions raised by the Postsecondary Education Commission regarding consistency. He referred to a companion bill which is winding its way through the Senate. Two options were available to the committee, but he preferred to remain with the first calculation. He drew the committee's attention to page 3, which lists those calculations. The first calculation requires that the students repay the tuition differential for all four years. The second calculation would exempt them from having to pay for the first year and would only require that the tuition differential be repaid for the second, third and fourth year. Tuition would have to be repaid in both cases if the individual did not return to Alaska. He reiterated that he preferred to use the first calculation. Number 310 DIANE BARRANS, Executive Director, Postsecondary Education, Commission, Department of Education, said it was fair to say that the commission's concerns were addressed in CSHB 193(HES). Number 0351 REPRESENTATIVE PORTER made a motion to move CSHB 193(HES) with individual recommendations and attached fiscal notes. There being no objection, CSHB 193(HES) was moved from the House Health, Education and Social Services Standing Committee. HCR 19 - COUNCIL OF DEAF/HARD OF HEARING/DEAF/BLIND Number 0380 CHAIRMAN BUNDE announced the next item on the agenda was HCR 19, Relating to the Alaska Council of Deaf, Hard of Hearing, and Deaf/Blind. Number 0420 DAN SADDLER, Legislative Secretary to Representative Bunde, said HCR 19 was designed to offer recognition and encouragement to a volunteer, nonprofit organization that is dedicated to improving the quality of services available to assist Alaska's deaf, hard of hearing and deaf/blind citizens. The Alaska Council of Deaf, Hard of Hearing and Deaf/Blind has been operating for two years. Its members are drawn from several nonprofit organizations already operating in Southeast, Interior and Southcentral Alaska. Members are also drawn from representatives of state councils dealing with this community. MR. SADDLER explained that the council was established to address the need for a central clearinghouse of information on the services available and needed by the community of deaf, hard of hearing and deaf/blind Alaskans. The council is not so much a warehouse that provides services, but acts as a library and forum where information about these services is available for consumers and providers to share. While many individuals, agencies and institutions serving this community have good intentions, they are hampered sometimes by their isolation from the large body of knowledge on deaf, hard of hearing and deaf/blind issues available elsewhere. This community comprises a distinct linguistic and cultural minority which is different from the mainstream linguistic and cultural population. Resources for these Alaskans are limited and fragmented. Qualified professionals are rare and standards of performance don't exist for most people who are trying to provide human services to this group. Number 0532 MR. SADDLER stated that there are at least 6,000 Alaskans who have some type of hearing loss. This loss can be caused by the effects of snow machines, chain saws or industrial noise. Most times hearing loss is rooted in genetics or in the effects of childhood ear infections. At least 40 states have recognized councils, commissions or task forces related to the deaf. This resolution will provide the Alaska council an increased prominence in our state which should encourage various individuals, organizations and agencies to utilize their services. The resolution will also encourage other nonprofits to continue offering this council their financial and organizational support. MR. SADDLER said it is important to note several things this resolution does not do. It does not create any state council, agency or panel. It does not establish this council as the sole voice of Alaska's deaf, hard of hearing and deaf/blind community. It does not bar any other organization from providing services. It does not cost the state a penny. He encouraged the committee to support this resolution to recognize and encourage the Alaska Council of Deaf, Hard of Hearing, and Deaf/Blind in its work, sharing information and fostering understanding to improve the quality of services available to this group of Alaskans. Number 0625 REPRESENTATIVE PORTER cited a personal experience of hearing loss. He stated that there is a lot of misunderstanding and a lack of acceptance for the needs of people who are hard of hearing and deaf. He felt there was room for increased understanding and that the council was well positioned to accomplish this task. Number 0736 MS. KAYA, Treasurer, Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council, testified next via teleconference from Fairbanks. She said the council has been gathering information and becoming a resource for many communities. She travels to the rural areas of northern Alaska to work with these issues and collect data. She felt there were 60,000 people in Alaska who are deaf, hard of hearing and deaf/blind, not 6,000. The national average states that 8 percent of people have some type of hearing loss ranging from mild to severe. Alaska is known to have a much higher than this national average. If you take the Alaska population and multiply it by 8 percent, you will derive a figure somewhere near 60,000. Number 0848 CHAIRMAN BUNDE commented that 60,000 would fall into the category of hearing loss and perhaps the 6,000 referred to the profoundly deaf. Number 0855 REPRESENTATIVE GREEN asked why Alaska was significantly higher regarding hearing loss. Number 0873 MS. KAYA answered that there are a variety of theories: snow machine use, hunting, equipment and ear infections. Alaska has a much higher proportion of ear infections due to the weather and lack of medical care in the more rural areas. Number 0904 CHAIRMAN BUNDE mentioned that when he worked as a speech and hearing therapist, he worked with people who had bilateral losses. There were so many people with this type of loss that people weren't operated on unless they were severely impacted in both ears. Number 0940 ALAN CARTWRIGHT, President, Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council, testified next via teleconference from Anchorage. He said there are networking systems throughout the state which provide accurate information to those who need to decide policy and programs. These decisions will ensure a better quality of services for the state of Alaska. He strongly appreciated the legislative stand in HCR 19. Number 0938 DUANE MAYES, State Coordinator for the Deaf, Division of Vocational Rehabilitation, Department of Education, testified next via teleconference from Anchorage. The division supports this resolution. Number 1009 DARRELL CAMPBELL, Member, Governor's Council on Disabilities and Special Education, testified next via teleconference from Anchorage. The Governor's council is in favor of HCR 19 because the Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council represents organizations and agencies throughout the state. The council can assist the Governor's council to give advice on how to be better prepared and to provide quality services for the deaf, hard of hearing and deaf/blind. He appreciated the legislature's support of HCR 19. Number 1051 MARCIA BARNES, Member, Alaska Council on Deaf, Hard of Hearing and Deaf/Blind Council, testified next via teleconference from Anchorage. She has worked as a coordinator for deaf/blind services and explained that one of the difficulties was getting the proper information to correctly identify the population. There is a misconception that a hearing aid can solve all the problems for a hard of hearing person. This resolution will assist the council in promoting a better understanding of these types of issues. Number 1129 DERRILL JOHNSON, Developmental Disabilities, Division of Mental Health and Developmental Disabilities, Department of Health and Social Services, said the department wants to support HCR 19. They feel it provides a public endorsement of past efforts and they believe that this council can become an advocacy organization for the deaf and hard of hearing. The organization has created a role for themselves as an established clearinghouse for information which goes out into the community in a wide variety of means. This council has successfully acted as a referral agency for information to families who might just be starting to learn about this subject. This council can be a potential future provider of services, but they will also be able to work as a liaison with existing agencies. He felt this council has been very effective in bringing the needs of the deaf community to the planners for future funding and services. Number 1222 REPRESENTATIVE FRED DYSON made a motion to move HCR 19 with individual recommendations. There being no objection, HCR 19 was moved from the House Health, Education and Social Services Standing Committee. HB 256 - REGULATION OF POSTSECONDARY SCHOOLS Number 1244 CHAIRMAN BUNDE announced the next item on the agenda was HB 256, "An Act relating to regulation of postsecondary educational institutions; and providing for an effective date." Number 1253 REPRESENTATIVE GARY DAVIS, Sponsor of HB 256, explained that HB 256 provides language that agencies will cover their own cost of implementing regulations and statutes. The Alaska Commission on Postsecondary Education, through regulations, operates the numerous vocational and secondary education programs and schools throughout the state in order to protect students and the public. Currently the $100 fee for program authorization is inadequate. The section of the commission which authorizes and investigates these institutions has a one and a half person staff. Number 1377 REPRESENTATIVE DAVIS said the essence of the bill is located on page 2, Section 2, relating to the implementation of fees through regulation. This would not be fee specific, but a fee structure based on enrollment and the tuition generated from each institution. Research has found that Alaska has a low authorization fee. Number 1446 CHAIRMAN BUNDE cited an example where one of these institutions went bankrupt a month ago. He pointed to the need for these authorizations. Number 1465 REPRESENTATIVE DAVIS said this was a good example of why we need the staff to go in and investigate situations and staff to make sure that the institutions authorized by the license are properly screened. Number 1496 DEBORAH CRAIG, Director, Institutional Relations, Postsecondary Education Commission, Department of Education, stated that the purpose in institutional authorization is to set standards relating to the quality of education as it affects health, safety, fiscal responsibility, et cetera and to address rights and remedies available to the public. Organizationally, there has been a period of flux within her section and serious looks have been taken in regards to cost efficiencies and professionalism. This fee structure is something which was broached in the past. Number 1549 MS. CRAIG referred to an information packet located in the committee file. Research was done in 25 of 50 states, Alaska was at the low end of the spectrum. The fees from various states were set at a percentage of the total tuition and by tuition generated by the schools. The sample fee structure has been based on a percentage of tuition and fee revenue, setting a minimum and maximum. The minimum has been set at $500, recognizing that there is a minimum cost to the commission to authorize the institution. There was also a reluctance to burden schools, so the high end of the fees was capped at $2,500. Number 1616 MS. CRAIG explained that over 60 percent of the schools under this authorization have revenues over $80,000. These school would only pay $2,500. Only 17 percent of institutions have revenues under $17,000, the level at which the $500 fee is set. There are relatively few small schools who would be impacted by this fee schedule and a larger number of schools would benefit from capping the fee. The authorization is from one to five years, the cost varies based on the school's performance. This mechanism allows the commission to honor those schools who operate in an appropriate fashion. If authorized for a longer period of time, then the cost for authorization would be lessened than if it were calculated on a yearly basis. Conversely, those schools which require more time, based on their performance, would be held responsible by more frequent authorization fees. Number 1666 CHAIRMAN BUNDE stated that the current fee schedule is heavily subsidized. He asked if this subsidy came from general fund money or from the operating budget of the Postsecondary Education Commission which is bonded. Number 1679 MS. CRAIG answered that it came from corporate receipts. Number 1681 CHAIRMAN BUNDE explained that on a global view, the student loan program is funded by corporate receipts and it is challenging for those receipts to meet all the demands of the program. Currently, there are student loans which are subsidizing these businesses. Number 1702 REPRESENTATIVE GREEN referred to the minimum and maximum fees and asked if the amount charged would not be a fixed formula and not open to discretion, but a combination of both. Number 1727 MS. CRAIG said the sample fee structure is one that would be set in regulation. The fee schedule would be based on a percentage of tuition and fee revenue with a fixed minimum and maximum. The fees would be on a sliding scale between the $500 and $2,500. Number 1738 REPRESENTATIVE GREEN thought he heard a discussion about the use of discretion in determining the fees. Number 1745 MS. CRAIG answered that there is discretion in terms of the length of time that the commission would authorize a school to operate, based on their performance. REPRESENTATIVE GREEN clarified that it is the length of time and not the amount of the fee that is discretionary. Number 1755 REPRESENTATIVE PORTER stated that the normal regulatory process would be followed and instituted in these fees, the people impacted would have the ability to come forward and avoid situations which occurred in recent years. Number 1776 MS. CRAIG explained that she has only been made aware of those situations in retrospect. Number 1786 REPRESENTATIVE DAVIS said that when Ms. Craig came to him with the proposal he was reminded of the situation referred to by Representative Porter. As a result he questioned how the institutions felt about this fee change. The answer was that it had been discussed with these schools, it shouldn't be a surprise to them and they should know that something like this would be proposed. After investigating, he did not feel there was a collective opposition. Number 1827 MS. CRAIG added that her background is in administering vocational education programs. She understood what it takes to operate a "tight ship" and is sympathetic to a school's needs and the parameters under which they operate. The goal in this whole structure was to try to find a mechanism that was fair and equitable. She stated that as a former school administrator, she would testify that this would increase the cost of operating. She felt the commission was charged with finding a mechanism to make this fair and equitable for the state and the regulated public. Number 1865 CHAIRMAN BUNDE commented that those schools who would receive the capped fee would still be subsidized. Number 1875 MS. CRAIG clarified that the proposed fees would not cover the cost of the service. Over 60 percent of schools had revenues that if the calculation were based on a percentage basis would place them over the $2,500 fee. Number 1902 REPRESENTATIVE DAVIS mentioned a section in HB 256 which relates to investigations. This would assist the commission in recovering costs involved in investigations based on complaints. These costs do not specifically relate to the fees. Number 1943 MS. CRAIG explained that there are three components to the bill: the fee component, clarification of which schools are exempt from authorization, and allowing the commission to recoup some of their costs of investigation and adjudication of cases when schools have engaged in acts which clearly violate statute and regulation. The language clearly states that the school must clearly be in violation of statute and regulation for the commission to recoup some of these costs. These recouped costs are capped at $5,000. Recently, the state paid significant amounts of money to investigate and adjudicate a situation where the school was clearly out of compliance. Number 1990 JENNIFER DEITZ, Member, Alaska Association of Private Career Educators, Owner, Career Academy, testified next via teleconference from Anchorage. She spoke in favor of the commission's attempt to streamline the processes and procedures, rewriting the statute so that it was clearer. She spoke with Theresa Williams who helped her understand some of the nuances of the language. She expressed concern regarding the fee structure as it is ambiguous, specifically regarding the initial authorization and the application fee. As a new school entering the state of Alaska, a tremendous amount of the commission's time is spent evaluating the school's ability to be a school. She thought their fee should probably be higher than the fee for a school that has been doing business in the state and has a track record with the commission. Number 2044 MS. DEITZ explained that as a state association representing about 40 different types of institutions, some larger than others, she cautioned against overburdening small institutions who will be paying a higher cost per student. She referred to Ms. Craig's comment about the commission spending an inordinate amount of time investigating those smaller schools. As the owner of an accredited school, she felt that she was asked by every possible government body for fees and structures, eventually those costs are passed on to the students. She wanted to find some way for schools that are doing a good job and meeting or exceeding the standards of the commission to not suffer under all these fees. Number 2096 REPRESENTATIVE DYSON stated that his consulting firm is registered with the commission. Number 2132 REPRESENTATIVE PORTER made a motion to move HB 256 out of committee. There being no objection, HB 256 was moved from the House Health, Education and Social Services Standing Committee. TAPE 97-38, SIDE B HB 148 - SCHOOL FUNDING ETC./ CHILD CARE GRANTS CHAIRMAN BUNDE announced the next item on the agenda was HB 148, "An Act relating to the public school funding program; relating to the definition of a school district, to the transportation of students, to school district layoff plans, to the special education service agency, to the child care grant program, and to compulsory attendance in public schools; and providing for an effective date. Number 0069 EDDY JEANS, Manager, School Finance Section, Department of Education, referred to a handout titled, "HB 148 School Funding Formula, Overview." The first page outlined the process to determine a district's adjusted average daily membership (ADM). The equalization funding is set in Section 14.17.410(a)(1), starting on page two of the draft legislation, CSHB 148(HES). All adjustments are set in either statute or regulation and the only variable, collected from the school districts under this formula, is the ADM. Number 0159 MR. JEANS stated that the first item on the handout is the size adjustment. Each school district is divided into a funding community. This is the community which is being served with the exception of the larger communities who have high schools being fed by junior high and elementary schools. The next adjustment is the area cost factor which is assigned at the funding community level. In the draft legislation, there are seven different area cost differentials as opposed to current statute which has 23 different cost differentials assigned to each school district. MR. JEANS said the department will repeat steps one and two for a school district. They will look up the size adjustment based on the ADM for that community and the area cost factor which has been set for that funding community. If the process is only done one time because there is only one funding community in that district, then it is a single site school district. There is an additional adjustment for a school district serving less than 900 students. MR. JEANS explained that the next adjustment takes the result and multiplies it times the special needs factor which is 1.20. The next step is to determine the student transportation, as it will be set in regulation and assigned to school districts, located in Section 26. Once this process is completed for all the funding communities within the school district then they are totaled. This final amount is called the district's adjusted ADM. MR. JEANS stated that the intensive funding is taken into consideration. This adjustment involves those students who are severely handicapped and have high costs associated with their education. The draft legislation calls for an allocation of $22,500 for each one of these students, adjusted by the area cost differential for that community. Currently, the state of Alaska has approximately 1,200 of these students. MR. JEANS said that the adjusted ADM is multiplied by the base student allocation. Then the intensive funding is added to determine what is called the district need. The basic formula to determine district need takes the ADM multiplied by the size adjustment multiplied by the area cost factor multiplied by the single site adjustment multiplied by the special needs adjustment multiplied by the transportation adjustment plus the intensive funding allocation. MR. JEANS explained the process to determine state aid. They start with the district's need, subtract the required local effort and end up with the amount of state aid. Number 0350 CHAIRMAN BUNDE asked how many localities have no required local contribution. Number 0362 MR. JEANS answered that there are 19 out of the 53 school districts which do not currently have a required local contribution. Number 0375 REPRESENTATIVE GREEN said the special needs multiplier would tend to increase the differences between a large school and a smaller school as it multiples on a scale greater than one. He asked if the purpose was to help smaller schools and if this same thing could be accomplished by adjusting the funding community size factor. Number 0406 MR. JEANS answered that it could be achieved by adjusting the size factor. The purpose behind the 20 percent allocation for special needs is to identify a pool of money that is available for districts to address special education needs, bilingual needs and the vocational needs for that district. This multiplier creates a pool of resources without one particular name attached to it. Number 0433 REPRESENTATIVE GREEN verified that everyone gets the 1.2 multiplier. MR. JEANS referred to page two of the handout. Number 0439 CHAIRMAN BUNDE wanted to clarify that CSHB 148(HES) also calls for a study of the area cost differential. There are those who feel that the world has changed since that the area cost differential was last calculated. The study would determine how much this area cost differential would be and who would qualify. Number 0467 MR. JEANS stated that the area cost differentials, in current statute, are assigned at a school district level and are based on the 1985 state employee wage differentials with some recommended adjustments by Dr. Nat Cole (Ph.) The Department of Education (DOE) has believed, for a number of years, that the area cost differentials need to be moved down to a funding community level. This addresses concerns expressed by municipalities such as Kenai. Kenai has both large and smaller, remote communities. Currently the city of Kenai has an area cost differential of 1.0 as does that smaller, remote community across the inlet. Number 0516 CHAIRMAN BUNDE explained that not only would the study talk about the amount of the multiplier, but it who would get the specific amount. It would change from the school district to the school. Number 0525 MR. JEANS commented that the DOE wants to study the cost of operating a school, not the cost of living in that district. MR. JEANS said that page two goes through some calculations. They picked the Kashunamiut School District, a single site school district serving the community of Chevak. The ADM for fiscal year 1998 projected 269 students. Referring back to a chart on page one the funding community has a size factor of 1.40. The area cost factor has been determined to be 1.32 for this community. This factor generates $497.11. The base ADM determines the single site adjustment, in this case 1.08. All districts receive the adjustment of 1.20 for special needs. Chevak does have some transportation services, but they are very minimal. When this was taken in consideration of their total budget, it was not measurable. As a result their transportation adjustment was 1.0. MR. JEANS stated that you go through and multiply each one of these and you arrive at the district's adjusted ADM which is the $644.26. The first year of this bill would see a student allotment of $3,400 per student. There are some student transition allocations. Number 0629 REPRESENTATIVE PORTER asked what computation was used to determine the $3,400. Number 0634 MR. JEANS explained that the task is to keep the total money appropriated for education the same, not to increase it. A formula is developed and then the result is backed into the student allocation which keeps the Governor's request of $659 million for the foundation program in fiscal year 1998. Number 0661 REPRESENTATIVE GREEN clarified that the amount was just a portion of that total. Number 0667 REPRESENTATIVE PORTER asked if it was a function of the $644.26. Number 0676 MR. JEANS answered that it is a function of all the adjusted ADMs statewide. The intensive funding had to be backed out of the total amount to arrive at the student allocation. The intent was to keep the same level of funding, to not increase or decrease funding for education. Number 0696 MR. JEANS said Chevak has projected that three students will require intensive services. This intensive service allocation is multiplied times the area cost differential to come up with the figure of 3.96. The intensive allocation is set in the draft legislation at $22,500 so their intensive funding would be $89,100. When this amount is added to the base funding, the district need is $2,279,584. MR. JEANS stated the next thing is a determination of whether or not this district has a required local contribution. There are two ways to measure the required local contribution in the draft statute: 35 percent of the district's need or the equivalent of a 3 mill tax levy on the full and true value as established by the Department of Community and Regional Affairs (DCRA). The lesser of the two is the local contribution. He said 35 percent of Chevak's need would be $797,854, but they do not have a full value determination as established by the DCRA. Therefore, Chevak's required local effort is zero. Zero is subtracted from their need and the state aid is determined to be $2,279,584. Number 0767 REPRESENTATIVE PORTER asked why Chevak did not have full value determination as established by the DCRA. Number 0775 MR. JEANS explained that DCRA provides the full value determination, which is the real and personal property of those communities which have taxing authority. Those are the first class and organized municipalities or boroughs. Chevak is in the category of "unorganized borough." Therefore, they don't have a property value. REPRESENTATIVE PORTER clarified that it is not a matter of the state assessment, but a matter of them being organized and doing their own assessment. Number 0804 MR. JEANS explained that CSHB 148(HES) does have a hold harmless provision to protect districts from dramatic changes due to the change in the formula. The legislation states that in the first year the district will not receive less than 100 percent of what they would have received under the previous formula through their allocation under the single site and through their allocation of transportation. CHAIRMAN BUNDE announced that this meeting would end so that the committee could hold an informal work session. He indicated it would be off the record. TAPE 97-39 [THE WORK SESSION WAS RECORDED BUT NO LOG NOTES WERE TAKEN. A COPY OF TAPE 97-39 MAY BE OBTAINED BY CONTACTING THE HOUSE RECORDS OFFICE AT 130 SEWARD STREET, SUITE 211, JUNEAU, ALASKA 99801-1182, (907) 465-2214, AND AFTER ADJOURNMENT OF THE SECOND SESSION OF THE TWENTIETH ALASKA STATE LEGISLATURE, IN THE LEGISLATIVE REFERENCE LIBRARY.] ADJOURNMENT CHAIRMAN BUNDE adjourned the meeting of the House Health, Education and Social Services Standing Committee at 4:45 p.m.