Legislature(2003 - 2004)

05/18/2003 11:20 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                                                                  

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