Legislature(2003 - 2004)

05/14/2003 09:40 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                                                                                                                                
     SENATE BILL NO. 202                                                                                                        
     "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."                                                                 
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this  bill, "revises  the  method in  which                                                            
local  school  districts are  reimbursed  for  pupil transportation                                                             
costs.  Under this  bill, a pupil  transportation  grant program  is                                                            
established. In  addition it raises the student dollar;  an increase                                                            
of $159,  which is the  conversion from  LOGs [Learning Opportunity                                                             
Grants] to student dollars."                                                                                                    
                                                                                                                                
JENNIE HAMMOND,  resident of Nikiski,  testified via teleconference                                                             
from Kenai  in opposition to the bill.  She expressed concerns  that                                                            
the Kenai Peninsula Borough  School District would "lose" funds as a                                                            
result  of the  transportation  provisions.  She spoke  of  academic                                                            
programs and other operations  that have received reduced funding in                                                            
the  past several  years.  She informed  that  transportation  costs                                                            
within the  district vary  by community and  that funding should  be                                                            
assessed based  on the cost of each route rather than  on the number                                                            
of students  in a district. She requested  this portion of  the bill                                                            
be "tabled" to garner additional  input from affected districts. She                                                            
furthered that  State, federal and local parties should  discuss the                                                            
issue  of who  is responsible  for the  education  of children.  She                                                            
stated  that  transportation  and  foundation  formula  funding  are                                                            
different  issues  that  should  be  addressed  independently.   She                                                            
indicated  that as a  parent, she  is willing  to contribute  to the                                                            
cost of her children's education.                                                                                               
                                                                                                                                
Senator  Bunde asked  if the Kenai  school district  has  considered                                                            
requesting that parents  help pay the cost of transporting students.                                                            
                                                                                                                                
Ms. Hammond repeated  that the matter should be discussed  in school                                                            
districts across Alaska.                                                                                                        
                                                                                                                                
TODD SYVERSON,  Assistant  Superintendent,  Kenai Peninsula  Borough                                                            
School District, testified  via teleconference from Kenai to express                                                            
concerns  that the  District has  with this  legislation. He  stated                                                            
this  bill  would  reduce  funding  for  pupil  transportation   and                                                            
informed  that the District  must transport  students 45 miles  from                                                            
Cooper  Landing  to Skyview  High  School, and  from  Moose Pass  to                                                            
Seward, regardless  of the number  of students along each  route. He                                                            
also  told   of  the  special  education   students  that   must  be                                                            
transported, often  involving "singleton routes".  He explained this                                                            
involves picking  up only one student  and transporting them  to the                                                            
school equipped  to meet their special requirements.  He pointed out                                                            
this legislation does not  address the extra expense of transporting                                                            
special education students.                                                                                                     
                                                                                                                                
Mr.  Syverson  supported Co-Chair  Wilken's  proposed  amendment  to                                                            
inflation proof the funding for pupil transportation funding.                                                                   
                                                                                                                                
Mr. Syverson appreciated  the proposed increase to  the base student                                                            
allocation,  but stressed the amount  of the increase is  inadequate                                                            
to address  the needs of  the District. He  also noted that  an area                                                            
cost differential is not addressed in this bill.                                                                                
                                                                                                                                
Co-Chair  Wilken  requested   Mr.  Jeans  address  comments  on  the                                                            
differing costs  of routes and special  education students'  routes.                                                            
                                                                                                                                
                                                                                                                                
EDDY  JEANS,  Manager,   School  Finance  and  Facilities   Section,                                                            
Education  Support  Services,  Department  of  Education  and  Early                                                            
Development,  testified  the grant  amount  awarded  to each  school                                                            
district  would be determined  by  dividing the  amount of the  FY03                                                            
State appropriation by  the total number of students enrolled in the                                                            
district  during  FY 03.  He  stated that  therefore,  the  costlier                                                            
routes  are  already   reimbursed  in  FY  03.  He  qualified   this                                                            
legislation  does  not provide  increased  funding  in  the event  a                                                            
district must  add any special education  routes or the development                                                             
of a new subdivision.                                                                                                           
                                                                                                                                
Co-Chair  Wilken remarked  this has  been an  important concept  the                                                            
Committee has considered.                                                                                                       
                                                                                                                                
Amendment #1:  This amendment inserts a new bill section  on page 2,                                                            
following line 7 to read as follows.                                                                                            
                                                                                                                                
          Sec. 3. The uncodified law of the State of Alaska is                                                                  
     amended by adding a new section to read:                                                                                   
          TRANSITION PROVISION FOR TRANSPORTATION FUNDING. In                                                                   
     addition  to funding provided  for public transportation  under                                                            
     AS  14.09.010,   a  school  district   that  provides   student                                                            
     transportation is,  beginning July 1, 2004, and ending June 30,                                                            
     2006, eligible to  receive additional funding for operating the                                                            
     student  transportation  system in an  amount equal to  funding                                                            
     provided  to the school district under AS 14.09.010  multiplied                                                            
     by a percentage equal  to 50 percent of any percentage increase                                                            
     during  the  second preceding  calendar  year  in the  consumer                                                            
     price  index   for  all  urban  consumers  for  the   Anchorage                                                            
     metropolitan area,  compiled by the Bureau of Labor Statistics,                                                            
     United States  Department of Labor. The index  for January 2002                                                            
     is the reference base index.                                                                                               
                                                                                                                                
Co-Chair Wilken moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Green objected.                                                                                                        
                                                                                                                                
Co-Chair  Wilken explained  this  amendment acknowledges  that  some                                                            
school districts would  prefer transitional funding to implement the                                                            
changes.  Therefore, he  stated this  amendment  would increase  the                                                            
"per pupil grant"  for FY 05 and FY 06 calculated  from the consumer                                                            
price index for Anchorage.                                                                                                      
                                                                                                                                
Co-Chair Green asked impacts of this amendment.                                                                                 
                                                                                                                                
Co-Chair  Wilken noted  a draft fiscal  note dated  5/14/03 for  the                                                            
Pupil Transportation budget request unit (BRU).                                                                                 
                                                                                                                                
Senator Hoffman  understood  the increase would  be one half  of two                                                            
percent, or a one percent increase.                                                                                             
                                                                                                                                
Co-Chair Wilken  clarified the actual  amount of the increase  could                                                            
vary based on the consumer price index for Anchorage.                                                                           
                                                                                                                                
Senator Hoffman asked why  the increase would not be a full percent,                                                            
rather than a partial percentage of the consumer price index.                                                                   
                                                                                                                                
Co-Chair  Wilken  responded it  is  a "matter  of money",  and  that                                                            
increasing funding for this item could not exceed $1 million.                                                                   
                                                                                                                                
Co-Chair  Green opposed  funding  items based  on any  index, as  it                                                            
would become an "automatic escalator".                                                                                          
                                                                                                                                
Co-Chair Wilken  shared the concern  about automatic increases,  but                                                            
expressed that  because this legislation would impose  a significant                                                            
change  to the  program,  this  amendment  would lessen  the  fiscal                                                            
impact to school districts.                                                                                                     
                                                                                                                                
Senator Hoffman pointed out the increase would end after FY 06.                                                                 
                                                                                                                                
Senator  Hoffman  moved  to  amend the  amendment  to  increase  the                                                            
multiplier percentage  of any percentage increase  during the second                                                            
preceding calendar year from 50 to 75 percent.                                                                                  
                                                                                                                                
Co-Chair Green and Co-Chair Wilken objected.                                                                                    
                                                                                                                                
A roll call was taken on the motion to amend the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Hoffman                                                                                                       
                                                                                                                                
OPPOSED: Senator  B. Stevens, Senator Bunde, Co-Chair  Green and Co-                                                            
Chair Wilken                                                                                                                    
                                                                                                                                
ABSENT: Senator Olson and Senator Taylor                                                                                        
                                                                                                                                
The motion FAILED (1-4-2)                                                                                                       
                                                                                                                                
The amendment FAILED to be amended.                                                                                             
                                                                                                                                
Co-Chair  Wilken affirmed  his intent that  this increase would  not                                                            
extend beyond FY 06 and  that the funding is solely for transitional                                                            
purposes.                                                                                                                       
                                                                                                                                
Senator  B. Stevens  asked  how the  increase would  be distributed                                                             
given that  the calculation  is different  than  the method used  to                                                            
determine the grant funding for each district.                                                                                  
                                                                                                                                
Mr.  Jeans referenced  the  fiscal note,  which details  the  dollar                                                            
amount allocated  per student to each  district. He explained  these                                                            
amounts  would be  adjusted by  one percent  of  the consumer  price                                                            
index for Anchorage.                                                                                                            
                                                                                                                                
Senator  Taylor  clarified  that  school  districts  with  declining                                                            
enrollments would  receive reduced funding and those  funds would be                                                            
reallocated to districts with increased enrollment.                                                                             
                                                                                                                                
Mr. Jeans detailed  the per student  allocation would be  calculated                                                            
for each district  utilizing the number  of students and  the amount                                                            
appropriated  in  the base  year of  FY 03.  He continued  that  the                                                            
actual number  of students enrolled in FY 05 would  be multiplied by                                                            
the per student allocation  for that district to determine the grant                                                            
amount  for  FY  05.   He  affirmed  that  districts  with  declined                                                            
enrollment would receive fewer funds under this proposal.                                                                       
                                                                                                                                
Senator  Taylor expressed  confusion,  saying that  if the  consumer                                                            
price index  increases dramatically  the actual appropriation  would                                                            
increase but not based on per capita.                                                                                           
                                                                                                                                
Co-Chair Wilken understood  that districts with declining enrollment                                                            
would  receive less  of a  reduction under  the  provisions of  this                                                            
amendment.                                                                                                                      
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator  B. Stevens  asked  if the  baseline for  determining  grant                                                            
funding of  FY 03 be utilized for  calculating the grant  amount for                                                            
FY 06.                                                                                                                          
                                                                                                                                
Mr. Jeans explained  the adjustment  proposed in this amendment  for                                                            
FY 06 would  be based on the FY 05  appropriation. He clarified  the                                                            
increase of FY  05 would "roll forward" and the adjustment  would be                                                            
"added to the prior year".                                                                                                      
                                                                                                                                
Co-Chair Wilken furthered the increase would be cumulative.                                                                     
                                                                                                                                
Senator Hoffman  asked when and how  often the consumer price  index                                                            
for Anchorage is determined.                                                                                                    
                                                                                                                                
Mr. Jeans replied  this information  is published on the  Department                                                            
of Labor and Workforce Development website.                                                                                     
                                                                                                                                
Senator  B. Stevens  informed the  index is  calculated annually  on                                                            
July 1.                                                                                                                         
                                                                                                                                
Co-Chair  Green  removed  her  objection  to  the  adoption  to  the                                                            
amendment and Amendment #1 was ADOPTED.                                                                                         
                                                                                                                                
Amendment  #2: This  amendment  deletes "to  school transportation;                                                             
relating" from  the title of the bill. The amended  bill title reads                                                            
as follows.                                                                                                                     
                                                                                                                                
     "An Act relating to the base student allocation used in the                                                                
     formula for state funding of public education; and providing                                                               
     for an effective date."                                                                                                    
                                                                                                                                
This amendment  also deletes  Section 1 from  the bill, amending  AS                                                            
14.09.010. Transportation of pupils.                                                                                            
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator  Hoffman stated  this amendment  would  eliminate the  grant                                                            
formula proposed in this bill.                                                                                                  
                                                                                                                                
Co-Chair Wilken  understood this would "continue the  status quo" of                                                            
the current system.                                                                                                             
                                                                                                                                
Senator Hoffman affirmed.                                                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Taylor, Senator Hoffman and Senator Olson                                                                     
                                                                                                                                
OPPOSED: Senator B. Stevens, Co-Chair Green and Co-Chair Wilken                                                                 
                                                                                                                                
ABSENT: Senator Bunde                                                                                                           
                                                                                                                                
The motion FAILED (3-3-1)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #3: This amendment  repeals the provisions of Section 1 of                                                            
the bill, amending AS 14.09.010.  Transportation of pupils., on July                                                            
1, 2006.                                                                                                                        
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected for an explanation.                                                                                    
                                                                                                                                
Senator Hoffman  pointed out that the impacts of the  grant proposal                                                            
are  unknown. He  asserted  the proposal  is  unfair  to the  school                                                            
districts  located in his  election district.  He remarked  it would                                                            
penalize  the districts that  have been frugal  and kept costs  down                                                            
and reward  the districts  that have  allowed costs  to "run  willy-                                                            
nilly".                                                                                                                         
                                                                                                                                
Senator Hoffman  stated this amendment  would implement the  program                                                            
for two  years, after which  it could be  evaluated with input  from                                                            
school districts and a fairer program could be created.                                                                         
                                                                                                                                
Co-Chair Wilken maintained his objection.                                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Taylor, Senator Hoffman and Senator Olson                                                                     
                                                                                                                                
OPPOSED: Senator B. Stevens, Co-Chair Green and Co-Chair Wilken                                                                 
                                                                                                                                
ABSENT: Senator Bunde                                                                                                           
                                                                                                                                
The motion FAILED (3-3-1)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #4:  This amendment increases the base student  allocation                                                            
from $4,169 to $4,280.                                                                                                          
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator Hoffman remarked,  "The cost of education has been stagnant"                                                            
and that the National  Education Association-Alaska  and some school                                                            
districts support the amount proposed in this amendment.                                                                        
                                                                                                                                
Senator  Taylor  expressed  concern  about  the  unknown  amount  of                                                            
education funding that  would be appropriated in the FY 04 operating                                                            
budget. He reminded  that he has supported the proposed  increase in                                                            
the past and would continue to support it.                                                                                      
                                                                                                                                
Co-Chair  Wilken pointed  out  the fiscal  note for  this  amendment                                                            
would be approximately $41 million.                                                                                             
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator Bunde  moved to amend  the amendment  to change the  funding                                                            
source to earnings of the permanent fund.                                                                                       
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
A roll call was taken on the motion to amend the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Bunde, Senator Hoffman and Senator Olson                                                                      
                                                                                                                                
OPPOSED: Senator B. Stevens,  Senator Taylor, Co-Chair Green and Co-                                                            
Chair Wilken                                                                                                                    
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
The amendment FAILED to be amended.                                                                                             
                                                                                                                                
A roll call was taken on the motion to adopt the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Hoffman, Senator Olson and Senator Taylor                                                                     
                                                                                                                                
OPPOSED: Senator Bunde, Senator B. Stevens, Co-Chair Green and Co-                                                              
Chair Wilken                                                                                                                    
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Co-Chair Wilken recalled  a discussion between himself and Mr. Jeans                                                            
regarding instituting a  specific funding amount into statute rather                                                            
than a funding formula.                                                                                                         
                                                                                                                                
Mr. Jeans  explained  the option of  listing in  statute a  specific                                                            
dollar  amount  to  be appropriated  to  each  school  district.  He                                                            
cautioned against  this practice, warning that individual  districts                                                            
would  begin  lobbying  for  an  increase   to  their  district.  He                                                            
furthered that  it would be difficult to justify funding  changes to                                                            
one districts without reviewing all districts.                                                                                  
                                                                                                                                
Senator  Taylor countered  that  rather  than assigning  a  specific                                                            
funding amount to each  school district, this legislation institutes                                                            
a formula  based on  number of students  enrolled  during FY  03. He                                                            
expounded on  the inequity of this  system to school districts  that                                                            
have declining enrollment.                                                                                                      
                                                                                                                                
Senator  Hoffman recalled  provisions  included  in the legislation                                                             
establishing the foundation  funding formula to address the "eroding                                                            
floor" in an attempt  to achieve equity. He asked  whether a similar                                                            
provision has  been considered for this formula program  as well. He                                                            
exampled that  an upper limit of $1,000 per student  could be phased                                                            
in so that over  a period of time, "restraints" could  be imposed to                                                            
address those routes currently costing $1,200 per student.                                                                      
                                                                                                                                
Co-Chair Wilken asserted  that changes would not be made to increase                                                            
funding to this program.  He pointed out this has been a "cost plus"                                                            
program  across the  State  and he  surmised that  program  managers                                                            
would identify  sufficient funding to operate routes  as efficiently                                                            
as possible.                                                                                                                    
                                                                                                                                
                                                                                                                                
SFC 03 # 96, Side A 12:52 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair  Wilken  continued that  decisions  on how  to efficiently                                                             
deliver education  services  must be made  locally by school  boards                                                            
rather than by the legislature.  He predicted this legislation would                                                            
result  in  a "vast  improvement"  in  the operation  of  the  pupil                                                            
transportation  system and funds saved  that could be spent  "in the                                                            
classroom".                                                                                                                     
                                                                                                                                
Senator  Taylor agreed  with Co-Chair  Wilken's  concerns about  the                                                            
rising  costs of pupil  transportation  and pointed  out that  until                                                            
recent years,  the legislature has not fully funded  these expenses.                                                            
He  surmised  this  caused  the  costs  to  rise  dramatically   and                                                            
inefficiencies   especially   in   larger  school   districts   with                                                            
"economies  of scale". He stressed  that much of the expense  is the                                                            
result of federal  mandates and compliance  with the Americans  with                                                            
Disability Act requirements.                                                                                                    
                                                                                                                                
Senator Taylor  referenced the hold  harmless provision intended  to                                                            
limit  the impact  to  the two  largest  school districts  from  the                                                            
consolidation  of the  LOGs into  the funding  formula. He  asserted                                                            
that a hold  harmless provision should  be adopted for the  proposed                                                            
pupil transportation  grant formula  to limit the impact  to schools                                                            
with declining enrollment.                                                                                                      
                                                                                                                                
Co-Chair  Wilken  agreed  this  proposal  does not  include  a  hold                                                            
harmless provision,  although "token" funding would  be allocated to                                                            
limit the impact. He cited  the higher costs of transporting certain                                                            
special  needs   students  and  the   significant  percentage   this                                                            
comprises  of  the  total  pupil  transportation   expenditures.  He                                                            
referenced a spreadsheet  titled, "Department of Education and Early                                                            
Development, Reimbursable  Transportation Costs Per Student (Regular                                                            
V. Sped)--FY 02, May 8, 2003".                                                                                                  
                                                                                                                                
Mr.  Jeans  qualified  the  information   on  the spreadsheets   was                                                            
gathered from  each school district  and includes transportation  of                                                            
all special education students,  not just those requiring additional                                                            
assistance, such as full time aid workers or wheelchair lift.                                                                   
                                                                                                                                
Mr. Jeans reiterated  that the higher  cost of transporting  special                                                            
education students  is included in the base formula.  He relayed the                                                            
concern  of school  districts is  their "profile"  would change  "so                                                            
dramatically"  as to  be negatively  affected  by  this program.  He                                                            
stressed  that  100  percent  of  the  special  needs  expenses  are                                                            
currently reimbursed by the State.                                                                                              
                                                                                                                                
Senator Taylor  asked how special  education student transportation                                                             
cost increases would be addressed in contract negotiations.                                                                     
                                                                                                                                
Mr. Jeans responded these  costs are currently reimbursed calculated                                                            
by dividing the student  population by the total transportation cost                                                            
per  district to  determine  the allocation  for  each district.  He                                                            
explained  that  this  formula  does not  make  adjustments  if  the                                                            
percentage of special needs students in a district increases.                                                                   
                                                                                                                                
Senator  Taylor commented  that currently,  the funding is  provided                                                            
based on the needs  of students and that under this  proposal future                                                            
funding would  be provided  based on the  total number of  students,                                                            
regardless of their special needs.                                                                                              
                                                                                                                                
Mr.  Jeans  affirmed,  and  again  voiced   the  concern  of  school                                                            
districts  that  the amount  of funding  does  not increase  if  the                                                            
percentage  of  a  district's  population  that  has  special  needs                                                            
changes.                                                                                                                        
                                                                                                                                
Senator  Bunde surmised  that  such  percentage increases  have  not                                                            
occurred in the past.                                                                                                           
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator Taylor agreed with  Senator Bunde that such changes have not                                                            
occurred  historically on  statewide average.  However, he  remarked                                                            
that the percentage change  considerably in smaller school districts                                                            
when "a  family moves to  town" that has one  or more special  needs                                                            
children.                                                                                                                       
                                                                                                                                
Co-Chair Green offered  a motion to report the bill, as amended from                                                            
committee with accompanying and new fiscal notes.                                                                               
                                                                                                                                
There was  no objection  and CS  SB 220 (FIN)  MOVED from  Committee                                                            
with fiscal note  #1 of $32,136,600 for the Department  of Education                                                            
and  Early  Development,   K-12  Support  BRU,  Foundation   Program                                                            
component, and  a new fiscal noted dated 5/14/03 of  $10,745,600 for                                                            
the   Department  of   Education   and  Early   Development,   Pupil                                                            
Transportation BRU and component.                                                                                               
                                                                                                                                
AT EASE 1:02 PM / 1:03 PM                                                                                                       
                                                                                                                                
AT EASE 1:03 PM / 4:52 PM                                                                                                       
                                                                                                                                

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