Legislature(2017 - 2018)ADAMS ROOM 519
04/18/2018 09:00 AM House FINANCE
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CS FOR SENATE BILL NO. 216(FIN) "An Act relating to the calculation of state aid for schools that consolidate; relating to the determination of the number of schools in a district; and providing for an effective date." 9:39:42 AM SENATOR NATASHA VON IMHOF, SPONSOR, thanked members for hearing the bill and the House for working on HB 406, the companion bill. She indicated that the request was brought forward to the legislature by several of the large urban school districts in Alaska who were facing the challenge of student migration out of their districts, leaving under- utilized school buildings with excess capacity. Current state law inadvertently discouraged school consolidation. Analysis showed that districts that might want to consolidate schools found that any savings experienced through reduced labor and operating costs were detrimentally offset through the reduced income received by the district when students were absorbed into a larger school. Senator von Imhof explained that currently the school size cost factor contained in AS 14.17.450 was an adjustment factor applied to the base student allocation (BSA) which gave smaller schools more money per student and larger schools less money per student under the theory that small schools were less efficient with higher operating costs per student. For districts that might like to consolidate schools, the fact that they were effectively punished via the state funding formula for school consolidation meant that many were unwilling to even have a conversation about consolidation. Senate Bill 216 addressed the issue. The bill provided a 4-year consolidation transition that allowed a school district to gradually move from their current state aid amount to a lower state aid amount after the consolidation of schools. It was voluntary and simply another tool for districts to use if they chose to. The purpose of the bill was to encourage and incentivize districts to look for excess capacity within their districts through potentially consolidating schools by holding harmless the state revenue received for 2 years followed by a step down in revenue in years 3 and 4 so the district had time to repurpose the asset and reabsorb the associated operating costs. She had relayed the essence of the bill and indicated her staff would continue with an explanation and a review of the PowerPoint. 9:42:44 AM JONATHAN KING, STAFF, SENATOR VON IMHOF, introduced the PowerPoint presentation: "SB 216: School Consolidation Transition." He was also available to walk through the sectional analysis after the presentation if needed. Mr. King began with the school size adjustment chart on slide 2: "Alaska's School Size Factor Adjustment AS 14.17.450(a)." He indicated that the figure showed Alaska's school size factor adjustment in AS 14.17.450(a). It was part of the school funding formula used to provide smaller schools with slightly more money than the state provided to larger schools. He explained that for each individual school the state counted the number of students, the unadjusted average daily membership (ADM). For the individual school the state located where they sat on the curve. The curve provided the multiplier used inside the school funding adjusted. He noted that the shape of the curve went up on the left-hand side and went down on the right-hand side. In terms of funding, in a smaller school kids counted for more than kids in larger schools. 9:44:06 AM Mr. King moved to the graph on slide 3: "Effect of the School Size Factor on Consolidation: Example 1." The problem the bill tried to address could be seen on the slide. The curve followed exactly the same curve on the prior slide. However, it showed the distribution of schools inside the Anchorage School District. The district was large enough to provide a large range of schools and the same shaped curve as before. He highlighted the 2 green dots on the page. He presumed that the 2 schools represented by the green dots wanted to consolidate and that the space in one of the existing facilities was large enough to bring the kids from the other school over. Currently, there were 2 schools; one with 755 students and one with 798 students. Their school size factor adjustment, according to statute, was equal to 1.06 and 1.05 - the multipliers that their ADM received in the state funding formula prior to consolidation. In combining the two schools, they became the red dot further to the right of the curve marked by the numbers 0.95 (the new multiplier) and 1553 (the new number of students). Before consolidation, the 2 schools would have received $11.8 million in state aid. After consolidation with the drop down to the curve to the right, they received $10.6 million in state aid. There was a difference of $1.2 million. At the same time, they ended up with a drop in local funding because the maximum amount of funding a school could receive was a function of the total basic need calculation for the state. The schools lost an additional $250,000 in local funding. The hurdle for the school district was whether it would save more than $1.5 million. The funding the school would receive from state and local sources by combining the 2 schools was $1.5 million. The question was whether the school would save $1.5 million. If not, there would be a net loss to the school district. He suggested that when school districts did the calculations, they found that their drop in funding was greater than their estimated savings, at least in the short run. 9:47:03 AM Mr. King continued to slide 4: "What the Bill Does: Section 1." He relayed that Section 1 removed the disincentive by providing a 4-year transition period for consolidating schools. In years 1 and 2, the school would preserve 100 percent of the pre-consolidation per student funding. In the prior example where the two schools were combined, for the first 2 years after consolidation their school size adjustment factor would be held stable at 1.06 and 1.05 on the prior slide. In year 3, the consolidated schools would start transitioning to the post-consolidation funding amount. They would receive the post consolidation amount plus 66 percent of the difference between pre and post consolidation. In year 4 they would receive 33 percent of the difference plus the base amount. After year 4 the school would receive standard funding as provided for in AS 14.17.410. Mr. King reviewed slide 5: "What the Bill Does Not Do: Section 1." The bill did not change the school size funding formula in AS 14.17.450. The curve would not be affected and would not change anything for those schools that did not consolidate. For example, if Fairbanks had a consolidation and Mat-Su did not, there would be no funding effect to Mat-Su. It would only affect Fairbanks. Even within Fairbanks, it would only affect the portion of funding that was associated with the schools involved in the consolidation. The calculations associated with schools that were untouched by consolidation and did not have boundary issues would not be included. The legislation did not encourage districts to build new schools for the purposes of consolidating existing schools. He noted there was a prohibition within SB 216 to use a new facility. An existing facility had to be used. It did not allow schools to reopen or reconsolidate in order to take inappropriate advantage of the consolidation transition. In other words, there were limits on going back and forth. One thing heard in public testimony was that there was no better way for the school districts to get more money than by staying at the status quo. Under the status quo, school districts had the incentive to have the smallest schools possible because they received the most funding associated with the curve. The goal was to move away from the status quo, change the thinking about the status quo, and make consolidation potentially more attractive. The tool was available to school districts who wanted to use it. Senator von Imhof added that in Section 1 the bill was not costing the state any additional funds. In fact, she pointed out that there should be savings in year 3 and year 4 when the state began to drop down the revenue calculation. In year 5, the state would be paying a new revenue calculation which would be much less that it was currently. She emphasized that consolidation was voluntary. The goal was for schools to have 4 years to figure out a way to repurpose the school. The bill did not address how to repurpose the school. It was entirely up to the district and the board to determine each specific property and how they wanted to handle it. She had found, that for a typical elementary school in the Anchorage School District the savings would eventually be about $600,000. She suggested that if a high school were to theoretically close or be consolidated, the savings would be about $1 million per school in the Anchorage School District. The goal was to use existing infrastructure more efficiently rather than constructing new buildings. Mr. King noted that the savings numbers were per school per year rather than in total. 9:52:24 AM Mr. King advanced to slide 6: "What the Bill Does: Section 2." He reported that Section 2 provided single school communities to fully utilize the capacity of the existing K-12 buildings that they had. There was a provision in AS 14.17.905 that stated that in communities where there was a single K-12 school, they would lose funding when their ADM exceeded 425 students. Currently, under AS 14.17.905, the funding formula for a rural community with 1 K-12 school with 1 to 425 students stated that they would be treated as if there were 2 schools. In other words, the number of students, 425, would be divided in 2 to equal 2 schools of about 212 students each. The result would be that the schools moved up the curve from slide 2 which provided more funding. When going from 425 students to 426 the school would be treated as 1 school. He suggested that the movement down the curve from 212 to 426 was a loss of hundreds of thousands of dollars to that school district, an unintended consequence of hard coding the 425 number. Section 2 changed it so that when the schools reached above 425 ADM they would continue to be treated as 2 schools. He wondered why the state would want to do that. He suggested that under the current situation, when the student count went from 425 to 426, all of a sudden, maintaining the K-12 school became less desirable. It also increased the incentive to build a new school in order to have 2 brick and mortar schools to maximize funding under the existing state statute. It was much less expensive for the state to remove the artificial barrier of 425 students keeping districts in schools with capacity greater than 25, than it was to build a new school for tens of millions of dollars. Senator von Imhof explained that the provision came about when exploring the legislation for larger school districts. The particular issue was brought to her attention and was the reason for Section 2. She noted that it was for communities with a single K-12 school. It was specific to the type of school as well as a specific size of the community. The definition of "Community" was in the bill. It was for communities that meet the criteria. Currently, only one community qualified. She did not want the state to pay for another new school costing tens of millions of dollars when an existing building had excess capacity and was working fine for the community. Mr. King indicated there was another example, but it was up to the will of the committee if members wanted to see a more detailed example. Co-Chair Foster thought that the committee was okay without the more detailed example. Mr. King offered to walk through the sectional analysis. Co-Chair Foster encouraged him to do so. 9:57:21 AM Mr. King read the sectional analysis for SB 216: Section 1: AS 14.17.410(b) Adds new language to AS 14.17.410(b)(1) to provide a "consolidation transition" that allows a school district to gradually move from their current state aid amount to a lower state aid amount after consolidation of schools and describes how and when the consolidation transition can be used. (H) Specifies how state aide during the transition period will be calculated. The "pre- consolidation" and "post-consolidation" formula remains the same; the bill will only change how quickly the "post consolidation" amount is instituted: (H)(i) Consolidation Years 1 & 2: The district will receive the same funding as if the consolidated school was still separate schools. (H)(ii) Consolidation Year 3: The district will receive 66% of the difference between funding from pre- consolidation and post-consolidation. (H)(iii) Consolidation Year 4: The district will receive 33% of the difference between funding from pre- consolidation and post-consolidation. Sections (I) (L) specify conditions where the "consolidation transition" may not be used. (I) When the "transitional" state aid amount would result in lower funding than under the traditional funding formula. (J) When a school district is already receiving additional state aid due to the Hold Harmless Clause in AS 14.17.410(b)(1)(E). (K) If a new facility was constructed in order to consolidate schools. (L) If the school was reopened and reconsolidated within the past seven years. (M) Requires the district to provide the necessary information and calculations for the Department of Education and Early Development for verification, including a student count by school for the schools involved in the consolidation. Section 2: AS 14.17.905 Adds a new subsection that allows a school that services grades K-12 in a single building and has an average daily membership (ADM) greater than 425 to be considered two separate schools for calculating state aid. Section 3: AS 14.17.410(b) Makes this Act applicable to schools which consolidate on or after the effective date of this bill. Section 4: Effective Date Provides for an immediate effective date. Mr. King was available for questions. Co-Chair Foster reviewed the list of available testifiers. 10:01:18 AM Co-Chair Seaton referred to Section L regarding a school being reopened and reconsolidated within the past seven years. He asked if the language meant just under the proposed program. Mr. King responded only if the school received the funding transition under the proposed program. Co-Chair Seaton presented a hypothetical scenario in which a school was currently closed and was reopened. He though the school could qualify for the change for reconsolidation for the following year. Mr. King replied that he was correct. If there was a school that was currently closed, reopened, reconsolidated, and closed again, it could qualify under the section. He had heard from the district that it took about 2 years to reopen a school and 2 years to close a school. It was a painful process for districts and for families involved. Families got very attached to schools, particularly with schools that had been opened for a while. Although the bill was creating an additional tool, it did not mean that consolidation was a done deal. It was something for districts to consider, but there was a political process to go through to do so. There would be significant costs associated with reopening a school. He thought it was important to consider the pragmatic hurdles. 10:04:13 AM Co-Chair Seaton asked for a breakdown of cost savings. He asked for information about the savings associated with the closing of a school and repurposing it. Mr. King referred to slide 8 which presented an example of 5 schools shrinking down to 4. The example was of the Anchorage School District. He noted the district cost factor in the yellow box of 1.00. In the very lower box, if the Anchorage School District was to take 5 elementary schools and consolidate them down to 4, their loss in funding would be about $800,000. He thought Representative Seaton was asking what the savings would be to the districts. He had the information in his office. It showed that a district would lose a principle, operating costs for the building, and custodial support staff. The cost savings would be about $500,000 to $600,000. The district would be in the hole $200,000 even accounting for closing. He highlighted the issue of transportation costs. There had been questions in other committees about having fewer schools and larger boundary areas resulting in more time on the bus for students. There was a question about elementary students spending 40 minutes per day each way on the bus. The Anchorage School District had testified that it was committed to making sure kindergarteners were on the bus for an age appropriate amount of time, which meant adding additional transportation costs. In this particular example, based on what was provided to Senator von Imhof's office, the additional transportation costs would be $400,000. He conveyed that the school district would be out at total of $500,000 to $600,000. The Anchorage School District had been very willing to show its modeling as to its decision-making process. Co-Chair Seaton asked Mr. King to provide the information. Co-Chair Foster asked, "That was who again?" Mr. King responded that it was the Anchorage School District. Dr. Bishop, who was online, and her staff would be able to testify on the issue when they testified. 10:08:40 AM DR. DEENA BISHOP, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE (via teleconference), was happy to answer any questions. She had sent in her written testimony. She indicated that the key was the operational side. She spoke of Anchorage recently passing a bond initiative. She was aware that the bond debt reimbursement program at the state was on hiatus until 2020. She suggested that while the bill was addressing the operational costs of a school and the movement to close it, Anchorage had a number of facilities that were built in the 1950s, 1960s, and 1970s. She reported that about 44 to 45 percent of the district's facilities were built prior to the 1970s. The district was finding buildings that were used for life and had to put money into them. The district was happy to put money into them which the community supported. However, the district wanted to be responsible. If and when the state bond debt reimbursement came on, the district would ask the state for support in making its public schools more efficient. Dr. Bishop continued with her testimony relaying some of the questions the district received in prior testimony. Many questions were about how to gain in the system and whether school districts would participate. She felt the district was taking the hard road to be responsive to the community. People loved their schools. She was aware of how the city had grown in different areas and where the new buildout would be. There might be new investment needed in other areas and some reduction in other parts. Presently, there was a report about the district being able to find efficiencies in a couple of schools. The bill would assist the school district in the type of transition that would be a 2-year process. The district wanted kids to be able to matriculate out, while at the same time having high quality education. The district would never receive more money that it received presently. In the end, it would always be less. She reported that it was difficult to convince a community to do it to itself. She reported that the district had been modeling the issue out to many schools within the district. The models found the district with less money in the end. In terms of the district's accountability and responsibility to the state about capital, she thought the district needed to start thinking bigger. Having acknowledgement through legislation would help to make the transitions good places to be for teachers, parents, and students. 10:12:20 AM Representative Guttenberg asked Dr. Bishop how she responded to the criticism that the school district had decided to move to smaller schools because of more money coming in per student. He indicated she had taken a gamble that failed. He had heard it was a bail out. Ms. Bishop responded that she could continue to keep small schools. She testified that Anchorage's schools were neighborhood schools. The district had grown substantially. The district was putting up schools because in the 1970s and 1980s it was growing so much. Anchorage was larger and more spread out, but there was not a gamble to build small schools. They were schools with 400 kids. They were large schools, as Anchorage was an urban district. The argument was about making good decisions because enrollment was declining. She could keep schools at 50 percent capacity and the funding would continue to come from the state. However, she did not feel it was right. She was willing to stand up and say the district believed in education and wanted education for the twenty-first century. The district did not want to ask tax payers to put revenue into taking care of a building the district did not need. She suggested that the district was looking at sharing resources and pulling staff together to bring more opportunities to kids. She was looking at the situation as a cup half full. She would love to speak to anyone that thought it was a failure. She argued that if things were left alone the state would not be keeping account of its own resources. She relayed that in Anchorage the state was paying 60 percent of the district's bill. Co-Chair Foster recognized Representative Tilton and Representative Thompson at the table and Representative Harriet Drummond in the audience. 10:15:25 AM Vice-Chair Gara thanked Dr. Bishop for being so vocal on behalf of Alaska's students. He thought the bill made sense for the reasons that were stated. However, he wondered how the legislature could pass a bill which benefited some school districts but not others. His district would benefit but, for example, Lake and Peninsula School District would not. It was not the fault of the bill, as it was trying to create a problem in the foundation formula. He asked if Dr. Bishop preferred to have the bill content be part of a package that perhaps included an increase to the base student allocation or an upgrade to the pupil transportation formula. He wondered about the best way to provide equity to schools across the state and a quality education. He wondered if it would be better to have it as part of a package with other things included as well. Ms. Bishop responded that school districts around the state would benefit from an education omnibus bill that included smart thinking about investment in education whether it be transportation or the BSA. The Anchorage School District subsidized transportation in the amount of about $2.5 million per year to provide the bussing system in Anchorage. In addition, looking at investing in education overall with an increase in the BSA and a full package of education would be favored. She advocated for a curriculum bill as well. She did not think the bill did any harm to districts such as the Lake and Peninsula School District. She was aware that the Lower Yukon School District favored the bill. She was happy to have a conversation about supporting school districts in many different ways. Vice-Chair Gara thought the points in the bill made sense. However, even with the bill, unless there were other changes, Anchorage faced about 100 additional staff losses. He asked if he was correct. Ms. Bishop responded that the school district had over 90 reductions in the current year. She elaborated that 50 of the reductions were certified staff including principle, teachers, and counselors. She opined that it took more money to do business in Alaska. She believed the state should invest in education, as it was the cornerstone of democracy. She could not speak enough about investment in education. The operations and the BSA were key paramount programs. Vice-Chair Gara agreed that the legislation was a piece of the puzzle and understood the inequity the bill attempted to correct. He appreciated Ms. Bishop's testimony. 10:20:29 AM Representative Pruitt thought the bill was very important. He asked Ms. Bishop if she expected a savings of about $647,000 with the reduction of one school. Ms. Bishop responded, "Absolutely." She indicated the district had done some scaling out of numbers and elementary was about a $600 savings in the long run looking out 5 years. Middle schools ranged between $800 and $1000. She indicated that the savings was a moving target because of the ADM and the formula. She suggested that if the school district was to look at bringing a building offline, there would be an initial input of funds to be able to move furniture or repurpose another area. The district would have to upgrade a space to an acceptable condition for classroom use. She also mentioned not wanting to give up long-term maintenance for a school not in use, because it was still responsible for maintaining the space. In Anchorage, the school buildings were owned by the city. She suggested that future bonds might help with re-use. The school district was also considering moving some of the charter schools that were renting facilities into other school facilities not in use. She thought another piece of legislation offered first use of a facility for another purpose. The school district was exploring using some of the facilities for other purposes such as preschools. The district was looking at how to utilize facilities to support education in the entire city. She concluded that as part of a long-term plan, it would be best not to have to immediately put revenue into a building for capital. Instead, the district could work out the operational costs over time. She thought the district would try to provide a 2-year buffer to matriculate kids out of primary, secondary, and middle school. The district would want to work with the city, parents, teachers, and students on the issue. She believed the district could find savings in the long-term. The school district's model was built off of a long-term plan. Co-Chair Foster indicated that floor session would begin momentarily. The committee would resume later in the day. He recessed the meeting to a call of the chair. 10:25:10 AM RECESSED 1:36:37 PM RECONVENED Representative Grenn stated there had been spurts of building elementary schools. He asked when the last batch had been built. Ms. Bishop answered it had been over 10 years. Co-Chair Foster OPENED public testimony. DR. LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF SCHOOL ADMINISTRATORS, spoke in support of the bill. She relayed that although the bill impacted the Anchorage School District and the Lower Yukon School District, there were potentially other school districts that would use the legislation as a tool and had indicated interest. The reason her entity supported the bill was because it was voluntary. She appreciated Dr. Bishop and Dr. Picou looking at efficiencies in their districts and what they need to be doing to support their local communities. She hoped the committee would consider the bill as another flexibility tool to provide for school districts if they deemed it necessary for their communities. Vice-Chair Gara thanked Dr. Parady for her work in education. Since she represented many different officials across the state and because she was testifying on behalf of the bill, he assumed that the officials from areas that would not benefit from the bill believed in lifting other boats up. He asked if he was correct. Ms. Parady replied that across the state the council recognized that each district was doing whatever possible to look at their efficiencies and what they needed to do in support of their students. There was a general amount of support for school districts across the state. The districts were supportive of doing what was best for their local communities. The recognition of local control, which was held dearly, was true with the current legislation. If the bill was mandatory she would feel differently. She continued that the fact that the bill benefited the Anchorage School District and potentially other districts and did not cause harm to other districts, the districts supported each other. She added that the bill had been well thought out by the districts seeking the bill. 1:42:29 PM Representative Guttenberg asked about what a school district could do in a situation where inefficiency existed for a long time and where reorganization into a consolidation program should be applied. He did not believe the state had any tools to address a situation where even though a school fell below a certain level or a certain attendance record, it was still more cost effective to remain as-is, even with inefficiencies. Ms. Parady would have to think about the response; she was not prepared to make a recommendation presently. Co-Chair Seaton was concerned about unintended consequences or uses. He had mentioned subsection l under Section 1 of the bill. The section indicated that if the school was reopened and reconsolidated in the previous 7 years, it would not be able to use the tool. He wondered if any flex schools or magnet schools had closed, reopened, and reconsolidated. He asked if Ms. Parady was aware of any circumstances where his example would be the case. The last thing he wanted to do was create legislation in which people could take advantage of a system for something other than what it was intended. Ms. Parady thanked Co-Chair Seaton for considering unintended consequences. She was not aware of any unintended consequences with SB 216. She believed Mr. King, in his work with the districts, had considered the different consequences. She reiterated that the safeguard was that the bill was voluntary. She added that regarding subsection L, she was not aware of any specific situation that currently applied. She offered to follow-up. Co-Chair Seaton appreciated Ms. Parady following-up with an answer to his question. He wanted the intent of the bill to be clearly stated. He was not opposed to tweaking the language of the bill to ensure it was as clean and effective as possible. 1:47:27 PM Representative Ortiz asked if there was any potential impact particularly in rural areas where school choice issues were a concern. He asked if the bill had been vetted by members of the association and whether they had expressed any concerns. Ms. Parady replied that she was not sure there would be the capacity to use the bill in rural areas. She was unaware of any situations that would impact the rural areas. In meetings with superintendents recently, she reviewed the bills that were moving in the legislative session and did not hear any concerns expressed about the bill. She reiterated that Dr. Bishop had done considerable work and had a very good understanding of her district. She had advocated that for the Anchorage School District, the legislation was appropriate. There were other districts that saw the legislation as a potential tool but would not be mandated. Currently, the bill would support a couple of the school districts represented by the council. There were also other districts that thought the bill provided a new tool. She did not see any negative impact to rural Alaska. The bill was a flexible tool. The school districts needed many tools. Representative Kawasaki spoke about a decline in school enrollment in Fairbanks in recent years. The city was now expecting a ramp up in enrollment. He asked if there had been consideration of the cyclical nature of enrollment. Ms. Parady deferred to Dr. Karen Gaborik regarding Representative Kawasaki's question about Fairbanks and rolling enrollment. She also deferred to Mr. King on specifics. Mr. King replied that the school districts had to be looking forward. In the case of the Anchorage School District and the Mat-Su School District, they conducted forward-looking projections of their expected enrollment. Kids did not show up instantaneously. They had to be born first. The state had birth records and records of Permanent Fund Dividend (PFD) enrollments. The state could see what was coming. He noted that twice per year the Anchorage School District looked ahead 6 years. He relayed that the professionals managing the systems were aware of the issues. He reiterated that it took 2 years to open a school and 2 years to close a school. He believed long-range thinking was required and reminded members that districts had to go through a public process. He thought it wise for a school district to consult with its citizens. The process lent itself to long-range thinking. The bill contained provisions that did not allow a school to reopen and reconsolidate a school earlier than 7 years. However, a significant portion of the timeframe was just what was needed to start the planning. He did not think the districts would be switching schools on and off like a light because of the tool provided in the bill. 1:53:50 PM Representative Guttenberg provided an example, Rampart School. Rampart, Alaska was forced to close their school because of going below the student minimum. Young leadership came in and brought people back. They reopened the school and the community was vibrant again. He wondered if there were traditional dollars available for shutting down and then reopening again. He asked how it worked in a case such as his example. HEIDI TESHNER, DIRECTOR OF SCHOOL FINANCE, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, reiterated Representative Guttenberg's question that if Rampart was closed and then reopened because they had enough students, would they come to the department requesting permission to reopen and have it counted on the attendance list in October. A minimum of 10 students would be required to open the school. Representative Guttenberg asked if transitional support was available after shutting down a school then reopening it. He relayed a number of things were needed to reopen a school. He asked if transitional funds were available following a forced shutdown in order to reopen. Ms. Teshner replied that typically the school district would go through a process of determining whether to reopen a school. They would go through the process of finding funding and hiring teachers. The state did not have anything in the way of statutes or the transitional funding. They would have to find money through revenues. Representative Guttenberg surmised that there was no support. One day they were open and one day they were closed. Ms. Teshner answered in the affirmative. Co-Chair Seaton acknowledged Representative Gary Knopp in the audience. Vice-Chair Gara stated there was a four-year step down. If a district consolidated a school, it might suffer a penalty by receiving less funding under the foundation formula. He understood the committee was trying to resolve the loss of funds for some of the school districts, He did not believe the 4-year step down magically indicated the school would find the exact amount of efficiencies to make up for the loss. He thought that at worst, it was a way for schools to figure out how to adjust their finances over the 4-year timeframe. It was unclear how much efficiency would be made up in 4 years. At worst, it was a way for schools to figure out how to adjust their finances: At best, they would find efficiencies. He was not sure the district would be able to find the exact amount of efficiencies in 4 years with a step down. He asked if he understood correctly. Mr. King replied in the affirmative. There was nothing to say that 4 years was the perfect number. He had not heard any negative testimony about a 4-year period. It seemed like 4 years was a reasonable number. It was another tool in the tool box. The bill was voluntary and gave districts the opportunity to go through the process as they saw fit. Vice-Chair Gara thought it would be impossible to hold someone to modeling more precisely. 1:59:09 PM ANDREW LEAVITT, LOWER YUKON SCHOOL DISTRICT, MOUNTAIN VILLAGE (via teleconference), read a letter from the school superintendent: Dear Senate Education Committee Members, I have been a teacher, a principal, and a superintendent in both rural and urban Alaska for the past twenty years. On behalf of the Regional School Board, the families of the Lower Yukon School District, and the staff of the Lower Yukon School District, this testimony is in support of Senate Bill 216: SCHOOL FUNDING FOR CONSOLIDATED SCHOOLS. We are in support of Senate Bill 216 for the following reasons: 1. Hooper Bay is a growing community with a population of 1275. The Hooper Bay School is the largest school in LYSD. The current enrollment is at 449, well beyond the 425 specified in AS 14.17.905. 2. Every school in Alaska is funded proportionately according to its ADM during a twenty-day count period. According to the current language of AS 14.17.905, Hooper Bay School is the only school in Alaska that actually gets penalized for an increase in student enrollment. 3. In current form, the provision in AS14.17.905 that calculates funding for a school with an ADM over 425 as one school instead of two schools would equate to a reduction in revenue of $1 M. A reduction in school funding of this size would have a very detrimental impact on children in the Lower Yukon School District. 4. The Senate Bill 216 provision correction of AS 14.17.905 in Sec 2 would hold the children of LYSD harmless from the unintended consequences of legislation that was written in 2001. In the original language of AS 14.17.905, this unintended consequence was anticipated, and Hooper Bay was specifically mentioned in deliberation. For these reasons and many more the Lower Yukon School District supports Senate Bill 216 and thanks you for elevating the unintended consequences of AS 14.17.905 that would have the delirious impact on the quality of education offered to the children of the Lower Yukon School District. Sincerely, Dr. Rob Picou Co-Chair Foster asked Mr. Leavitt to pass on regards to Dr. Picou. He was aware the doctor had been online earlier in the day. 2:01:49 PM AT EASE 2:02:04 PM RECONVENED REPRESENTATIVE HARRIETT DRUMMOND, CHAIR, HOUSE EDUCATION COMMITTEE (via teleconference), relayed that the House Education Committee passed the House companion bill HB 406 sometime previously. She thought some of the questions posed in the meeting had been interesting. She spoke about her past experience as a school board member. She relayed that in the nine-year period she served on the board the Anchorage School District's population grew from 40,000 students to about 50,000 students. In that 9-year period, the Anchorage School District built nearly $500 million worth of school buildings including new school buildings, expansions, renovations, and additions. Representative Drummond reported that she participated as a school Board Member in 2 district-wide boundary changes; the middle schools and the high schools. It had been one of the most tumultuous periods for the Anchorage School District. The district built 2 new middle schools, Mirror Lake Middle School and Goldenview Middle School, with a bond issue that passed in 1994. The boundary change for middle schools was not as difficult because some of the middle schoolers had new schools to go to. However, the high school boundaries had to change because many of them were overcrowded and some had space. The district had not built new high schools in the 9-year period. The process was terrible because the district was moving kids around to even out the population between schools. She expressed sympathy for Dr. Bishop in having to make similar transitions like the proposed consolidation of 5 elementary schools to 4. Often parents purchased their homes to be close to a particular school. It was difficult for the district to have to tell those parents that it was going to close that school and their children would have to get on a bus to go to school a couple of neighborhoods away. She opined that it was disconcerting and a problem in communities. She understood Dr. Bishop's wish to take the transition slowly. Representative Drummond continued to elaborate that teachers traveled with their students. The school's administration positions went away once the transition process of a consolidation was complete. She noted that the Anchorage School District had the largest square footage of real estate in the state of any single institution. There were over 90 schools and several facilities and support. She advised proceeding very carefully with seeking to make large changes. JIM ANDERSON, CHIEF FINANCIAL OFFICER, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE (via teleconference), clarified areas of concern that had been expressed. There was a perception that Anchorage had done some poor planning in the past and was the reason the district was looking at consolidating schools. However, it had more to do with changing demographics and a declining student population. Anchorage had lost more than 2,200 students. The schools were originally built based on the population needs at the time. The district had not opened up a new elementary school in about 20 years or a new high school in about 10 years. He also noted the topic of whether Anchorage would attempt to close a school, open it back up in 2 years, close it, and reopen it in 2 years. He conveyed that the amount of time, effort, and energy to get ready to close a school was incredibly time consuming. He could not imagine a scenario where it would occur. 2:07:42 PM Co-Chair Foster CLOSED public testimony. CSSB 216(FIN) was HEARD and HELD in committee for further consideration.