TOWN MEETING ON SCHOOL FUNDING REFORM SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE SENATE FINANCE COMMITTEE West High School Library Anchorage AK November 13, 1997 5:00 P.M. SENATE HESS MEMBERS PRESENT Senator Gary Wilken, Chairman Senator Loren Leman Senator Jerry Ward SENATE HESS MEMBERS ABSENT Senator Lyda Green Senator Johnny Ellis SENATE FINANCE MEMBERS PRESENT Senator Randy Phillips SENATE FINANCE MEMBERS ABSENT Senator Drue Pearce, Co-Chairman Senator Bert Sharp, Co-Chairman Senator Dave Donley Senator Sean Parnell Senator John Torgerson Senator Al Adams ALSO IN ATTENDANCE Senator Dave Donley Representative Terry Martin Representative Eric Croft COMMITTEE CALENDAR TOWN MEETING ON PUBLIC SCHOOL FUNDING OTHER TOWN MEETINGS ON PUBLIC SCHOOL FUNDING REFORM Ketchikan - 11/12/97 WITNESS REGISTER Mr. Robert Gottstein KTUA Radio Anchorage AK Mr. Tom Obermeyer 3000 Dartmouth Anchorage AK 99509-4413 Mr. Carl Rose, Executive Director Alaska Association of School Boards 316 W 11th St Juneau AK 99801 Mr. Jeff Lipscomb 9921 Main Ave. Anchorage AK 99516 Ms. Lael Marlow 7230 E. Chester Hts. Anchorage AK 99504 ACTION NARRATIVE TAPE 97-52, SIDE A CHAIRMAN WILKEN called the meeting to order and announced they would discuss school funding reform. [DUE TO POOR TAPING QUALITY THE OPENING REMARKS WERE NOT TRANSCRIBED.] TAPE 97-52, SIDE B REPRESENTATIVE TERRY MARTIN asked that they consider three things regarding school funding: Putting a cap on school administration, consolidating small numbers of children, and a hold-harmless clause for small districts of students. He was also concerned that some school districts were being paid for kids they weren't teaching. MR. ROBERT GOTTSTEIN said he serves on the State Board of Education and has spent most of the last 10 years trying to help the State and this community to figure out what to do with education and how to fund it. He agreed that the current foundation formula is not working and that fairness is an important element in the formula. He said they need to have a goal which is to educate every child in the State of Alaska and then pursue the best practices possible to maximize that in an equitable way. He thought it was important to set high standards for teachers, schools, and districts as well as students and to have a way of assessing them. He thought the people who made those decisions should be parents and teachers. He would decentralize academic authority and centralize the business functions of schools like transportation, the legal departments, food services, etc. and attract the experts in those areas. TAPE 97-53, SIDE A MR. GOTTSTEIN informed them that there is a 20% failure rate in reading at the 4th and 5th grade levels in Alaska. We really have to think in terms of creating success for every child and we have an opportunity to do that, he said. The funding formula should be fashioned to achieve success in an equitable fashion. He suggested a 90 degree turn from where they are going and advocated more local control. He supported an area cost differential, but he had no confidence that the one that's being contracted is going to give us what we want, because it doesn't deal with all the important issues. He stated that we need an area and product cost differential that take into account cyber schools, boarding schools, correspondence schools, etc. And we only have enough money to deliver what is reasonable, not the maximum. What's reasonable needs to give a parent a choice about what environment their children will go to. He suggested block granting to school districts giving them a good deal of local control, but not absolute control. MR. MARTIN stated the legislature should not distinguish between transportation and food service. The State should provide a reasonable amount of money and let the community decide what's most important and be given the opportunity the execute their decision. He supported an endowment to be used in lieu of State bonding in perpetuity. This would give every community in the State the ability to bond and take some of the resources that the legislature decided are reasonable. He didn't think it would take a whole lot more money than what is already appropriated. MR. GOTTSTEIN said the school district had been paying off debt, but the savings hasn't been reinvested in the schools. He thought the State should spend more on transportation. He said the legislature didn't need to take from one district to give to another and that there were already enough divisive forces here. SENATOR PHILLIPS asked if Gottstein thought the Governor's Task Force on School Funding failed to give his recommendations to the legislature on education. MR. GOTTSTEIN replied that the Governor's bill last year was substantially what the Board had done in their task force meetings. He supported the per-student formula, as any formula should be understandable by more than 25 people in the State. He thought that equity was of paramount importance and that Alaska did not need more divisiveness. Alaska has such financial and human resources and an appetite for education that we should be able to produce good results. SENATOR WARD said that kids in Anchorage had been treated differently for over a decade and just because they have done it doesn't make it any more right. He asked how do we make the corrections. MR. GOTTSTEIN said his interpretation of the disparity is different than what has been described. Eighty percent of the students live in urban Alaska and get 70% of the dollars. Twenty percent live in rural Alaska and get 30% of the dollars. If you're talking input, no one disagrees that it costs more to deliver education in the bush than in Anchorage. The issue is how much. The student/teacher ratio is better in rural Alaska, but the schools are deplorable. The performance of students is worse there. So taking 5% away from rural Alaska and putting it into the rest of the State might divert people into believing that will solve the problems. He thought the area cost differential was the key. SENATOR WARD asked him if he read the recent response of the group evaluating the area cost differential. MR. GOTTSTEIN said he read the proposal and it appears to be an update of the last study which is substantially fallible. He encouraged the McDowell Group to get more folks involved with the study to make sure they are satisfied. At his suggestion the Governor asked Ken Thompson of ARCO to put together the best business practices on transportation and food service and unless the McDowell Group pulls that into the area cost differential, they are not dealing with a whole component of funding education. This is not in the proposal. MR. GOTTSTEIN said that the new formula is flawed, because using it would give Anchorage a disproportionate amount of funding. You don't have to take away from others; you give them more responsibility for building schools and transportation, etc. He said the study did not get to the detail that is needed to get education to the best business practices. MR. TOM OBERMEYER said he has lived here for 20 years and has four children in the Anchorage school district. He is concerned with the teacher/student ratio and said if the district could get the class size down to about 20 students per teacher, they would have succeeded with the education mandate. He figured with 50,000 kids in the school district and 20 students per teacher that would equal a need for 2,500 teachers. He understands that there are 2800 - 2900 teachers in Anchorage and he wanted to know why they couldn't get 20 students per child with that number of teachers. He agreed that the formula is crazy, but he thought the student/teacher ratio was most important. He thought it was the principal's job to have standards for the teachers. SENATOR LEMAN commented that he thought they should support all the alternatives that parents want and facilitate that change. MR. OBERMEYER said he went to an excellent public school system and thought people are flocking to alternatives because public education is doing a disgraceful job. He did not think they should be taking public money to fund private institutions. MR. CARL ROSE, Executive Director, Alaska Association of School Boards, said the legislature needs to decide if they want to provide a quality education for kids. As a result of inflation he disagrees with some of the numbers that have been suggested. As an example, he said, you could buy a pick up truck in 1987 for $19,000; in 1995 the same truck for $30,000. That represents a 61% increase. Although he is not suggesting that the legislature adjust the instructional unit that way, the instructional unit in 1987 was ($60,000 divided by 17 students) $3,529. In 1997 the instructional unit was ($61,000 divided by 17) $3,588 - a net increase of $58.83. He noted that Senator Wilken has brought them a lot closer to more of the important things than they were last year, but many of his colleagues are hesitant to move away from the instructional unit because they understand it. Dealing with education with a $0 budget is wrong because it leaves us with no options in five years. He asked them to look at how they are going to generate revenues to meet the five-year gap. He seriously questioned the exit exam in HB 146 asking if it was a valid assessment. Was the test accurate, was it biased, was it fair, he asked. Objections were raised by many people, he said, asking if there were standards, would they be willing to provide the curriculum and would the teachers be prepared to deliver it. Would everyone across the State have a chance to pass that test, because if they didn't, there would be litigation. He concluded saying that he was not here to hamper discussions, but to try to help find a solution. MR. JEFF LIPSCOMB said he thought they needed more school districts, because he thought urban parents would be able to have more input with smaller districts. He noted that at the State PTA meeting Senator Wilken's figure for the State's contribution to education was 51% on his chart, but on a constant dollar basis it was actually 8% less than it was in 1986. If you combine that with a 26% increase in students since 1986, that is a 30% decrease on a per-student basis. MR. LIPSCOMB commented that Representative Martin discussed the dollars going to the classroom at Service High School which has the largest student population in the State totaling 2295 kids. The Anchorage School District has seen its instructional dollars (money spent on teachers) go from 52% in 1995 to 45% in 1997. As a percentage funding is going down and in a total gross dollar it's going down. It takes money to provide education services, he said. SENATOR WARD said that he helped establish the old funding formula when they took dollars away from the railbelt and gave them to other areas. He didn't understand the formula then, but he like the results at the time. He now sees the importance of understanding the formula. SENATOR WARD urged people to understand the formula before the legislature votes on the bill. MR. LIPSCOMB said AS14.17.220 talks about equal education opportunities in the State and that's what they need to focus on. He noted that everyone gets a permanent fund dividend check with the same number on it. There wasn't too much time spent adjusting it for cost of living differences. He thought the legislature needs to keep everything in perspective. He suggested talking about differentials within a school district like Anchorage and resolving some of the differences there. A lot of times they talk about equal outcome, but the law says equal education opportunities. If they were looking at an equal outcome, the amount of money on the dividend check would be different. An UNIDENTIFIED PARENT from the North Slope Borough said the North Slope Borough wasn't the problem. They only get about 1/2% of the foundation funding. He invited the committee to the North Slope. SENATOR WARD said there was an inequity when people are paying in his district to go to school and people on the North Slope aren't paying anything. AN UNIDENTIFIED PERSON from the North Slope took exception to the comment that the North Slope didn't pay anything. He said the North Slope Borough paid about 59% of its school budget whereas Anchorage and Fairbanks paid 26%. TAPE 97-53, SIDE B MS. LAEL MARLOW said she is a health educator and works with the PTA. She said these organizations are investing in our future and the health of our State and communities. She didn't think we were spending too much on education statewide, but she thought the money needed to be reallocated. She thought the teacher/student ratio needed to be addressed in all schools, but particularly in large urban areas. She questioned whether the funding money traveled with children from one school to another. She would like to see adequate funding at a Statewide level and hold school districts accountable for the education that's provided. She supports the quality standard initiative that has been proposed with some changes. We need fewer districts statewide, but Anchorage is one of the biggest school districts in the country and it's too large to meet the needs of changing and diverse areas. The neighborhoods are not the same two miles apart, let alone from one side of the State to the other. MS MARLOW also supported an educational endowment because we have to think of the future for funding. An unidentified speaker said that some of their military families have said that all of their schools are extremely crowded, at 146% capacity at her school for a number of years. There is also an issue of military transfers in the middle of the year. SENATOR LEMAN said that he has talked to folks in the Anchorage school district about that over the years and is looking for a solution. He supported moving the date back. An unidentified speaker said her district felt there needed to be increased funding statewide. They also believe there should be some sort of peer audit and an inflation provision. She said there are special needs students and bi-lingual students that have costs that need to be recognized. She said that Anchorage has seen an increase in the cost of education. For example, a math book in 1987 cost $15 and today it costs $32. Schools are also incurring additional costs related to children and drugs, divorced families, etc. They support having transportation as a separate funding outside of the education formula, but that Anchorage should be treated equitably. They support an area cost differential study that looks not only at the common market basket, but looks at the rural and urban differences. In a simplified formula they would like to see provisions that allow for the exception. In Anchorage, for instance, the growth rate for special needs and bi-lingual students is not the same as for regular students. SENATOR DONLEY said that Anchorage is badly discriminated against by the executive branch and how they administer the transportation between school districts. They are the only district that doesn't receive the full reimbursement of pupil transportation costs. They only get reimbursed for 66% and everybody else gets reimbursed 100%. This equals $1 - $2 million per year that Anchorage gets denied in this process. He thought people should call the Governor about it. CHAIRMAN WILKEN thanked everyone for their participation and adjourned the meeting.