Legislature(2009 - 2010)HOUSE FINANCE 519
04/14/2010 08:30 AM House FINANCE
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HOUSE BILL NO. 317 "An Act increasing the special needs funding and base student allocation for public schools, and extending the adjustment for student transportation funding; and providing for an effective date." 11:21:11 AM Co-Chair Hawker MOVED to ADOPT Work Draft CSHB 317(FIN) (Version 26-LS1378\P, Mischel, 4/13/10) as a working document before the committee. There being NO OBJECTION, it was so ordered. KATIE KOESTER, STAFF, REPRESENTATIVE PAUL SEATON, explained that the committee substitute would first increase the base student allocation (BSA) by $125 per year for FY 12 and FY 13 and second increase the block funding for special education gifted and talented vocational and bilingual education by 1.5 percent for FY 12 and FY 13. The intent was to have the money spent on vocational education, as stated in the Letter of Intent by the Education Committee (copy on file). Ms. Koester noted that the CS deletes Section 1, which had extended inflation adjustment for pupil transportation and correlated to the adjustment to increases in the consumer price index (CPI). Representative Gara questioned whether deleting the inflation adjustment would allow for cost increases. Ms. Koester replied that the deletion would remove changes in the CPI. She believed there might not be much inflation in some years. She pointed out that Section 1 was put in place in 2008 as a recommendation of the Joint Legislative Education Funding Task Force. Vice-Chair Thomas commented that the increases should be adjusted to graduation rates rather than to inflation. He thought the goal of the Education Committee was success; he did not think increasing the BSA had resulted in success. Co-Chair Stoltze acknowledged concern related to improving graduation rates. 11:26:06 AM EDDY JEANS, DIRECTOR, SCHOOL FINANCES AND FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, remarked that most pupil transportation contracts in the state have an automatic inflationary adjustment built in. He noted that the contracts are increased each year by the Anchorage CPI. He pointed out that the previous version of HB 317 repealed a sunset clause on applying the Anchorage CPI to the pupil transportation contracts; the new version removed the adjustment to transportation except related to student population. Representative Gara opined that as costs for pupil transportation go up, districts will have to decrease staff and supply funding if the legislature does not increase the increment. He liked the pupil transportation inflation adjustment and did not like betting on inflation in coming years. He suggested putting Section 1 back in the bill. 11:29:30 AM AT EASE 11:39:59 AM RECONVENED Co-Chair Stoltze MOVED Conceptual Amendment 3: Page 2, following line 24 Insert: Sec. 7. Section 11, ch. 9, SLA 2008, is amended to read: Sec. 11 AS 14.09.010©, added by sec. 2, ch.9, SLA 2008 [OF THIS ACT] is repealed June 30, 2013 . Co-Chair Hawker OBJECTED for discussion. Co-Chair Stoltze detailed that Conceptual Amendment 3 corrects a mistake that removed the sunset extension; without the extension, the program would sunset. The amendment would give the program an additional two years before considering the policy measure. Co-Chair Hawker noted that the amendment restores language that was in the Education Committee version of the bill. Co-Chair Hawker WITHDREW his OBJECTION. There being no further objection, Conceptual Amendment 3 was ADOPTED. Representative Gara MOVED new Amendment 2: Page 2, line 17: Delete "$5,805" Insert "5,830" Page 2, lines 21-22: Delete "5,930 [$5,805]" Insert "5,980 [$5,830]" Co-Chair Stoltze OBJECTED for discussion. Representative Gara explained the amendment. Currently, the proposal is for the BSA for the next two years to go up by $125 per year. He was concerned that the BSA has gone up $100 over the last two years, slightly behind inflation. Over the next three years the BSA should lag behind inflation at $125 per year. The $125 increase on the $5,800 BSA is less than 2 percent. He stressed that since the actual inflation rate is unknown, he was concerned about setting the rate for three years out. Representative Gara stated concerns about other reductions that would become necessary if the BSA does not keep up with inflation. The Department of Education and Early Development normally uses the previous three years to establish an average inflation rate for Anchorage projections; for the past three years the average has been 2.7 percent. He pointed to a chart on page 2 and asserted that a 2.7 increase over the next three years would come to $151 to $155 BSA increase. He noted that the incremental cost of increasing the BSA from $125 to $150 would be approximately $6 million per year. Representative Gara believed the Education Task Force had done an important thing when they added funding for special needs and the area cost differential. He did not believe the additional funds were intended to be lost to inflation increases. 11:44:24 AM Co-Chair Hawker MAINTAINED his OBJECTION. He believed the topic had been thoroughly discussed by committed people and he wanted to respect their determination. Co-Chair Stoltze also objected to the amendment. He did not want to bind any future legislature to an amount in statute. He observed that education funding only went up, not down, except an administrative formula decrease in FY 97. Mr. Jeans agreed that the only time the foundation program was reduced was in 1987 under Governor Sheffield. 11:48:26 AM A roll call vote was taken on the motion. IN FAVOR: Foster, Gara, Doogan OPPOSED: Kelly, Salmon, Thomas, Austerman, Fairclough, Hawker, Stoltze Absent from the vote: Joule The MOTION FAILED (7-3). Representative Thomas emphasized that his vote against the amendment was not a vote against education. Co-Chair Hawker explained the fiscal notes. Co-Chair Hawker MOVED to ADOPT the Letter of Intent [from the House Education Committee] dated February 10, 2010. There being no OBJECTION, it was so ordered. Co-Chair Hawker MOVED to report CSHB 317(FIN) out of Committee with individual recommendations, the Letter of Intent, and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 317(FIN) was REPORTED out of Committee with no recommendation, with a Letter of Intent by the Education Committee, and with previously published fiscal notes: FN1 (EED), FN2 (EED).