Legislature(2003 - 2004)
05/18/2003 11:20 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 202(FIN) "An Act relating to school transportation; relating to the base student allocation used in the formula for state funding of public education; and providing for an effective date." SENATOR GARY WILKEN, SPONSOR, spoke in support of SB 202. The legislation raises the Base Student Allocation (BSA) and addresses pupil transportation through a grant system. He noted that learning opportunity grants that had accumulated over the last three years were converted into the student dollar, which added $2.2 million [to the BSA]. He provided members with a chart of pupil transportation costs from FY 97 to FY 04 (copy on file). Pupil transportation was funded at $32.8 million in FY97. The request for FY04 is $58.1 million. The cost of pupil transportation has increased 77 percent; the increase in student population, over the same time, has increased by 5 percent. The Anchorage Cost of Living has gone up 14 percent. Senator Wilken gave a brief history of attempts to address pupil transportation. In 2000, Senator Torgerson, while he was the Co-Chair of the Senate Finance Committee, proposed a grant program, which was not accepted by the Administration. A second approach was developed to split the increase, which was not agreed on by the school districts. So nothing was done. The next Administration issued cuts of 20 percent, which held. The current grant proposal is a response to those reductions. He maintained that the issue is one of managing money. He observed that school districts have been asked to manage pupil transportation costs, but maintained that because the school districts have not had their "toes held to the fire" that there was no motivation to reduce costs. Under the legislation, school districts would be asked to present their bills. The rates would be calculated based on their costs and the number of students. School districts would be able to keep any savings, which could be used for other district funding. EDDY JEANS, MANGER, SCHOOL FINANCE AND FACILITIES SECTION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT provided information on the legislation. He explained that the costs are being passed on to the state of Alaska under the current reimbursable system. Providers know that the state is holding the checkbook. He felt that contractors would be more disposed to bargain if they knew that school districts had a limited amount of funding. Vice-Chair Meyer asked how the formula would take into account special needs children. Mr. Jeans explained that districts are currently being reimbursed for these routes and maintained that they would continue to be reimbursed. Representative Berkowitz asked how the goods and services that go into cost increases would differ from the basket of group of goods and services that go into a consumer price index. Mr. Jeans observed that the Anchorage CPI is built into every transportation contract. Contracts are negotiated on a five-year cycle and contractors are aware that it is 100 percent reimbursable by the state. He pointed out that insurance and fuel costs were built into contracts over the five-year period. Representative Berkowitz noted that there was a 77 percent increase in costs, with only a 5 percent increase in students. Mr. Jeans responded that the five-year contracts contain a reimbursement for new buses, which were not offset later. CARL ROSE, ASSOCIATION OF ALASKA SCHOOL BOARDS, testified in support of the current version of the bill, as opposed to the March 6 Governor's proposal. He emphasized that adequacy was not enough, and stated that every school district was currently reducing programs and opportunities for children. He pointed to the No Child Left Behind Act and the Alaska Quality Initiative and urged legislators to support the educational system. He stressed that the future of Alaska's young citizens are at stake. JOHN ALCANTRA, NATIONAL EDUCATION ASSOCIATION OF ALASKA, spoke in support of the legislation. He noted that putting funding into the BSA allows districts stability of funding and helps them meet some of the requirements of state standards. He observed that NEA-Alaska has advocated for a BSA of $4,280 per student since July of last year. Mr. Alcantra maintained that $4,280 is a conservative estimate. It asks for one year of inflationary costs and one year of unmet needs as identified by business leaders such as Roger Con, Jim Palmer and Carl Marrs in a report published two years ago. These leaders asked for a BSA increase of about $365 per pupil over 5 years plus increases to deal with the erosion caused by inflation. He noted that NEA recognizes the budgetary situation of Alaska, but pointed out that there is a constitutional mandate to fund education. He concluded that the legislation is another step closer to the goal of adequately funding K-12 education for FY 04. Mr. Alcantra observed that the budget for FY 03 was based on $20.50/barrel oil and a CBR draw of approximately $950 million. Oil averaged over $28/barrel for the first 10 months of this Fiscal Year, which means the CBR draw will be about $400-450 million less than anticipated. He pointed out that K-12 education needs just $28 million or 6 percent of the CBR savings. Mr. Alcantra stressed that the increase in the Base Student Allocation is a short term, one-year fix. He noted that NEA- Alaska believes the education community should take the remainder of the school year to identify pupil needs under the state standards and the No Child Left Behind law. This data would be the basis for a long-term fix to education funding. He suggested an addition of $23 million to increase the pupil allocation. He suggested that the CBR draw had been decreased due to increased oil prices, and emphasized this might provide the short-term fix to the foundation formula. He summarized that the bill would add only about $2.2 million in new funding for K-12 education in FY 04 and observed that it would fall short of the needs of the next year. JIM FOSTER, ASSISTANT SUPERINTENDENT, GALENA CITY SCHOOL DISTRICT addressed the affects of the bill on his school district. The Galena City School District would lose $459 thousand [if the legislation were enacted without amendment]. There are twelve losers in under the proposal. The next largest loser is the Valdez School District, which loses $60 thousand. There were 41 "winners". He noted that learning opportunity grants in his district pay for a number of important programs. He requested a provision to hold districts that would stand to lose harmless. He maintained that a hold harmless provision would have a minimal cost to the state. Co-Chair Harris asked what would happen if student allocation were increased and the learning opportunity grants were eliminated in the next year. Mr. Foster stated that the problem would still exist. He noted that Galena had 3,600 children in the Correspondence Program, outside of the foundation formula. They would only receive 80 percent of this funding if it were rolled into the formula, which is a considerable loss, especially in view of the timing of the action. He noted that they were not informed about the change until May 14, after planning and contracts had been implemented. Co-Chair Williams stated that they would work on these provisions with Mr. Jeans. CSSB 202 (FIN) was HELD in Committee for further consideration.