Legislature(2017 - 2018)BUTROVICH 205

03/28/2018 08:00 AM Senate EDUCATION

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07:58:24 AM Start
07:58:45 AM SB216
08:32:28 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Testimony <Invited and Public> --
Moved SB 216 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
         SB 216-SCHOOL FUNDING FOR CONSOLIDATED SCHOOLS                                                                     
7:58:45 AM                                                                                                                    
CHAIR STEVENS announced the consideration of SB 216.                                                                            
7:59:11 AM                                                                                                                    
JONATHAN KING, Staff, Senator Natasha von Imhof, Alaska State                                                                   
Legislature, presented the sectional analysis for SB 216. He                                                                    
said SB 216 is a bill that encourages the efficient use of                                                                      
facilities through consolidation in urban areas and by                                                                          
encouraging rural areas to maximize the use of available                                                                        
     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:                                                                                             
              Consolidation Years 1 & 2: The district will                                                                      
                                          receive the same                                                                      
                                          funding as if the                                                                     
                                          school was still                                                                      
                                          separate schools.                                                                     
              Consolidation Year 3:       The district will                                                                     
                                          receive 66% of the                                                                    
                                          difference between                                                                    
                                          funding from                                                                          
                                          and post-                                                                             
              Consolidation Year 4:       The district will                                                                     
                                          receive 33% of the                                                                    
                                          difference between                                                                    
                                          funding from pre-                                                                     
                                          consolidation and                                                                     
8:01:21 AM                                                                                                                    
         Subsections (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.                                                                            
8:03:53 AM                                                                                                                    
Mr. King said subsection N defines "community" as an organized                                                                  
municipality or an unincorporated area with a population of less                                                                
than 2,000 to clarify which schools can be consolidated. He                                                                     
mentioned that committee members were notified yesterday that                                                                   
Department of Education and Early Development (DEED)and school                                                                  
districts have asked them to remove this subparagraph because                                                                   
they have their own definition of community.                                                                                    
8:04:27 AM                                                                                                                    
     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.                                                                                                 
8:05:05 AM                                                                                                                    
     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.                                                                                                            
8:05:20 AM                                                                                                                    
CHAIR STEVENS said he did a great job explaining fiscal issues,                                                                 
but equally important is how this improves the educational                                                                      
experience for students. He asked how students are better off                                                                   
attending a school of 1,500 instead of a school of 750. He wants                                                                
on record the value it brings to the student experience.                                                                        
8:05:55 AM                                                                                                                    
MR. KING said that in this cash-strapped time, school districts                                                                 
are spread thin. School districts lack support staff. They lack                                                                 
the ability to spread services across schools. Consolidating                                                                    
schools concentrates resources to improve the experiences of                                                                    
students. Staff do not have to shuttle back and forth between                                                                   
buildings. For example, a music teacher split between multiple                                                                  
schools can be stationed at a school full time and be a resource                                                                
in the building.                                                                                                                
8:07:31 AM                                                                                                                    
SENATOR GIESSEL referenced Mr. King's statement that DEED has                                                                   
its own definition for community. She asked what that definition                                                                
is and why it is so radically different.                                                                                        
8:08:02 AM                                                                                                                    
MR. KING responded that DEED initially asked them to use the                                                                    
word "community." He went back to Legislative Legal and said                                                                    
they needed to use the word "community," in part to not create                                                                  
an incentive in very rural areas for districts to close schools                                                                 
in single school communities. Schools are the lifeblood of these                                                                
communities. They didn't want to see consolidation just for the                                                                 
purpose of saving money that could have such a drastic impact.                                                                  
They included this definition of "community." It turns out that                                                                 
the definition they selected does not serve that purpose and the                                                                
language about an organized municipality makes it difficult for                                                                 
school districts to do the consolidation because there are                                                                      
school districts that cover multiple municipalities, such as the                                                                
Kenai Peninsula Borough School District. DEED suggests that the                                                                 
fix is to use its definition of community. He said DEED's                                                                       
representatives could explain it further.                                                                                       
8:09:50 AM                                                                                                                    
SENATOR BEGICH noted that Mr. King had mentioned a mistake in                                                                   
the sectional about five years vs seven years. He sees that on                                                                  
page five, line 20 of the bill it says seven years in subsection                                                                
L. He asked if there was a reason for the change.                                                                               
8:10:11 AM                                                                                                                    
MR. KING responded that originally it was five years. Then it                                                                   
was suggested that it might be good to have a length of time                                                                    
that extended beyond the transition cycle. The transition cycle                                                                 
from pre-consolidation to post-consolidation is five years.                                                                     
Seven years provides stability so that schools do not                                                                           
continually go through the consolidation cycle.                                                                                 
8:10:46 AM                                                                                                                    
SENATOR BEGICH said, in reference to the impact on education, in                                                                
rural areas so much cost is consumed by energy. In the past,                                                                    
when schools had to spend 70 percent of funds on instruction,                                                                   
districts appealed that because so much was consumed by energy                                                                  
costs. The money was taken from teachers for energy. This allows                                                                
more money in teaching instead of consuming and paying for                                                                      
energy in two different plants. He asked if that is another way                                                                 
the bill would benefit education.                                                                                               
8:11:34 AM                                                                                                                    
MR. KING said that with Section 2, by reducing the incentive to                                                                 
build a new school once enrollment is above 425, it does exactly                                                                
what he is saying. If districts continue using schools that have                                                                
capacity above 425, it doesn't cost more to heat those schools.                                                                 
The more they can use that physical plant efficiently and have                                                                  
economies of scale, the more there will be money for teaching                                                                   
8:12:27 AM                                                                                                                    
SENATOR HUGHES said with consolidation of urban high schools,                                                                   
high schools can offer more foreign languages. Course offerings                                                                 
for students might expand through consolidation.                                                                                
CHAIR STEVENS said he understands a school cannot be reopened                                                                   
after consolidation until five years later. He asked if that                                                                    
will be a problem if a sudden increase in enrollment occurs.                                                                    
MR. KING said the bill says a district may not reopen and                                                                       
reconsolidate a school. There is an "and" in there. A district                                                                  
can reopen a school. A district cannot reconsolidate it and take                                                                
advantage of Section H for the purpose of increasing funding.                                                                   
Nothing prevents a district from reopening a school.                                                                            
8:14:21 AM                                                                                                                    
HEIDI  TESHNER, Administrative  Services Director,  Department of                                                               
Education and Early Development (DEED),  testified on SB 216. She                                                               
said  the  definition  of  "community" is  in  regulation  4  AAC                                                               
09.990(a)2:  "community" means  an incorporated  city; a  unified                                                               
municipality; or a place that is  not incorporated as a city or a                                                               
unified  municipality and  that  has a  school  enrollment of  at                                                               
least 10  full-time equivalent students. This  definition is used                                                               
for the full foundation formula; it  doesn't make sense to have a                                                               
separate  definition of  community.  Furthermore, the  definition                                                               
that was chosen for the bill  speaks to a population of less than                                                               
2,000  people. That  negates Anchorage,  for example,  from being                                                               
able  to consolidate  because it  has a  population of  more than                                                               
8:16:12 AM                                                                                                                    
SENATOR HUGHES asked about the reopening and reconsolidating                                                                    
issue. Two schools consolidate. By year five the district is                                                                    
receiving less money than operating as two schools. She asked                                                                   
what safeguards against a district reopening a school again for                                                                 
more money but not to reconsolidate.                                                                                            
8:17:32 AM                                                                                                                    
SENATOR VON IMHOF, Bill Sponsor, Alaska State Legislature,                                                                      
testified on SB 216. She said the bill as is can be interpreted                                                                 
that in seven years a school district may have the option to do                                                                 
that.  They tried to avoid that with the seven-year clause; a                                                                   
school cannot just be reopened to receive the higher funding.                                                                   
Population influx can be a game changer and a district might ask                                                                
for extenuating circumstances, but the purpose of the bill is                                                                   
not to allow that behavior.                                                                                                     
8:18:47 AM                                                                                                                    
SENATOR HUGHES asked if a requirement that a school cannot                                                                      
reopen unless enrollment has increased should be added to the                                                                   
SENATOR VON IMHOF said the bill language has safeguarded against                                                                
it, but she cannot speak with absolutely certainty. She will ask                                                                
and get back with a more definitive answer.                                                                                     
8:19:39 AM                                                                                                                    
BRITTNAY HARTMAN, Staff, Senator Anna MacKinnon, Alaska State                                                                   
Legislature, testified on SB 216. She said to safeguard against                                                                 
Senator Hughes' concern, if a district consolidates two schools                                                                 
into one, they receive the previous state aid for two years.                                                                    
And then for seven years districts cannot reopen and                                                                            
reconsolidate. The intent and language of bill prevents that                                                                    
from happening. They could consider going beyond seven years,                                                                   
but the bill has multiple safeguards to prevent that from                                                                       
8:20:56 AM                                                                                                                    
SENATOR HUGHES said she doesn't see how it protects against just                                                                
the reopening, whether it be in year five, six, seven, eight, or                                                                
nine. She did not think they would want a school to reopen if                                                                   
student enrollment has not gone up. Perhaps Senate Finance could                                                                
consider a safeguard related to student enrollment.                                                                             
8:21:40 AM                                                                                                                    
SENATOR VON IMHOF said that in the next committee of referral                                                                   
they will look at those provisions closely and have appropriate                                                                 
8:21:58 AM                                                                                                                    
SENATOR BEGICH said a district wouldn't even consider                                                                           
consolidation unless it was to the long-term benefit of the                                                                     
school district. A superintendent wouldn't consider it if no                                                                    
money would be saved at the end of the road. There is no                                                                        
incentive to reopen a school without a dramatic change in the                                                                   
8:22:42 AM                                                                                                                    
SENATOR VON IMHOF said that is correct. Keep in mind that in                                                                    
year four they are only getting 33 percent of the average daily                                                                 
membership calculation. In years five, six, seven, three full                                                                   
years, they are receiving the larger school population but lower                                                                
average daily membership calculation. Since a school cannot open                                                                
a school for three years, school districts must plan seven years                                                                
out. If the population does change, that's a different set of                                                                   
circumstances. If the population does not change, she does not                                                                  
think the bill allows them to do that.                                                                                          
8:23:31 AM                                                                                                                    
SENATOR BEGICH said a superintendent has a capital plant that is                                                                
costing this much money and wants to reduce capital plant costs.                                                                
This is a tool to reduce capital costs with incentives instead                                                                  
of disincentives. The superintendent is willing to take the                                                                     
lower average daily membership down the road because the overall                                                                
savings to the school district are considerable. This bill makes                                                                
sense because of the built-in protocols that prohibits someone                                                                  
from being a bad actor. He asked if that is accurate.                                                                           
8:24:17 AM                                                                                                                    
MS. HARTMAN responded that he is correct. The bill removes                                                                      
disincentives to consolidate because districts would be losing                                                                  
so much money. The bill provides a glide path. Instead of losing                                                                
hundreds of thousands of dollars instantly when going from two                                                                  
schools to one, they ease into it, so they can figure out how to                                                                
make it effective.                                                                                                              
8:25:19 AM                                                                                                                    
Rob Picou, Ph.D., Superintendent, Lower Yukon School District,                                                                  
supported SB 216. He said Hooper Bay is a growing community with                                                                
1,275 residents and 449 students. Scammon Bay, Hooper Bay, and                                                                  
Chevak are almost like three suburbs. Kids go back and forth                                                                    
between those communities. Enrollment in Hooper Bay tends to be                                                                 
quite high. It's a large school in rural Alaska. Every school in                                                                
Alaska gets funded by average daily membership. Hooper Bay is                                                                   
the only school that gets penalized for growth under current                                                                    
statute. That's not right for the Lower Yukon School District                                                                   
community. The loss in revenue of $1,000,000 would have a very                                                                  
negative impact on the school district. This bill would hold                                                                    
them harmless for the unintended consequence of the legislation                                                                 
written in 2001. Back in 2001, they recognized the potential                                                                    
impact of the language on Hooper Bay, which was mentioned in                                                                    
that 2001 bill. They are being asked to solve a problem that has                                                                
been sitting there since 2001.                                                                                                  
8:28:17 AM                                                                                                                    
DEENA BISHOP, Ph.D., Superintendent, Anchorage School District,                                                                 
supported SB 216. She wanted to address the question of whether                                                                 
the system can be gamed to gain money for the district. There is                                                                
no money to be gained where they are sitting today. Frankly, how                                                                
they utilize the buildings today maximizes their state and local                                                                
revenue. They are in support of a bill that would reduce the                                                                    
state and local share to the Anchorage School District to build                                                                 
efficiencies while keeping quality of education at a high                                                                       
standard. The simple ask is to allow the transition from the                                                                    
present revenue structure to a new revenue structure. Keeping                                                                   
all buildings open maximizes funding through the base student                                                                   
allocation and average daily membership. The board,                                                                             
administration, and community are looking at facilities,                                                                        
understanding the capital costs that go into them, and balancing                                                                
the differences in loss of students over time. They literally                                                                   
get the most money by keeping buildings open. With SB 216, they                                                                 
are operating smartly. Their community and the state of Alaska                                                                  
have asked them to look for efficiencies. This is no revolving                                                                  
door. It is quite a bit of work to consolidate. It is not an                                                                    
easy task. Leaving it alone is not the best thing for the future                                                                
of Alaska. This is a good thing for the state and students and                                                                  
schools and local taxpayers.                                                                                                    
8:32:01 AM                                                                                                                    
CHAIR STEVENS closed public hearing.                                                                                            
8:32:13 AM                                                                                                                    
SENATOR COGHILL moved SB 216, Version 30-LS1483\R, from                                                                         
committee with attached fiscal note.                                                                                            
8:32:20 AM                                                                                                                    
CHAIR STEVENS found no objection and SB 216 moved from the                                                                      
Senate Education Standing Committee.                                                                                            

Document Name Date/Time Subjects
SB216_SchoolConsolidation_FN1_DEED_Foundation.pdf SEDC 3/28/2018 8:00:00 AM
SB 216
SB216_SchoolConsolidation_FN2_DEED_Capitalization.pdf SEDC 3/28/2018 8:00:00 AM
SB 216