Legislature(2003 - 2004)

03/24/2003 05:02 PM Senate HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
        SB  10-EDUCATION FUNDING:INSTRUCTIONAL COMPONENT                                                                    
CHAIR DYSON announced SB 10 to be up for consideration.                                                                         
SENATOR GUESS, sponsor of SB  10, stated that she introduced this                                                               
bill when she was in the  House and agrees with the chairman that                                                               
it should  be held as  this is its first  hearing and there  is a                                                               
broader  philosophical and  policy  call  the legislature  should                                                               
make. She has already had  good conversations with Senator Wilken                                                               
about it.                                                                                                                       
When the  legislature decided  to use  70% for  the instructional                                                               
component minimum  for the  state, she always  had an  issue with                                                               
the  approach.  It  was  not  because she  didn't  think  it  was                                                               
correct,  but because  there  was  no changing  of  that 70%  for                                                               
economies of scale.  So Sitka, which has a  very dense population                                                               
and  should be  able to  put more  money into  the classroom,  is                                                               
compared  with the  Lower Kuskokwim,  which is  a more  dispersed                                                               
district  and has  more overhead  costs. She  has worked  hard to                                                               
find  the  best economies  of  scale  proxy.  One could  look  at                                                               
density   as   the   number  of   students   per   square   mile.                                                               
Unfortunately, if they use that  with Juneau, given the park that                                                               
is behind us, the community wouldn't show the correct density.                                                                  
The best proxy she could find  was the number of kids per school.                                                             
If the  school districts  have greater  economies of  scale, they                                                               
should be  able to be more  efficient with their overhead  and be                                                               
able to put more money in the classroom.                                                                                        
She worked with  the department today on which  schools count and                                                               
which schools don't  and how to do the counting.  It becomes more                                                               
complex when you  look at Anchorage, which has  three students at                                                               
Charter  North. So,  that really  doesn't count  as a  school. If                                                               
this  bill moves,  she  would  move for  a  10-student minimum  -                                                               
schools or correctional facilities.                                                                                             
SENATOR GREEN  asked if  in preparing her  list of  where schools                                                               
fell, she  considered having a column  for the number of  years a                                                               
waiver has already  been issued and established.  She also wanted                                                               
to know if there were any incentives for the anomalies.                                                                         
SENATOR GUESS  responded that she  is wed  to the intent  of this                                                               
bill.  The  numbers  were  created   from  looking  at  what  the                                                               
distribution is  right now.  She freely  admitted there  wasn't a                                                               
lot  of science  behind  them except  for  looking where  natural                                                               
breaks occurred.  She didn't  look at  schools that  had waivers,                                                               
but she thought there was an  issue with schools that are 70% and                                                               
under right now  that are continually getting  waivers. She hoped                                                               
as the discussion went forward,  they would consider what is good                                                               
policy and  if the waiver situation  is good policy or  if energy                                                               
costs of  schools will ever  reach the 70%. She  purposely didn't                                                               
deal  with the  low  end, because  her issue  was  more with  the                                                               
economies  of  scales,  which  looks at  the  more  dense  school                                                               
CHAIR DYSON asked  if the existing formula altered  or takes into                                                               
account the number of special needs kids.                                                                                       
SENATOR  GUESS  replied  that   the  current  foundation  formula                                                               
adjusts  for  intensive  needs  kids,  which  are  a  very  small                                                               
population, but not special needs  in a more general sense. There                                                               
is a 20%  addition in the formula to encompass  the former gifted                                                               
and talented and bilingual programs.                                                                                            
CHAIR DYSON  said the bill's  5% increase  in money spent  on the                                                               
mission as opposed  to administration adds 100  more students and                                                               
that seems ambitious  to him, but he would bow  to her experience                                                               
and education.                                                                                                                  
SENATOR  GUESS said  he made  a good  mathematical point  and she                                                               
often looks  at things that  are linear. Most things  are natural                                                               
log curves, so it goes down  a little differently with each step.                                                               
She thought  they should continue  to keep  that in mind  if they                                                               
are going to continue with the 70% mark.                                                                                        
5:25 p.m.                                                                                                                     
MR.   EDDIE  JEANS,   School  Finance   Manager,  Department   of                                                               
Education, said  he had been  working all day with  Senator Guess                                                               
on the  analysis and  would provide a  spread sheet  that details                                                               
the department's analysis along with  the fiscal note, which will                                                               
be  zero, because  they  are  currently doing  the  work that  is                                                               
required  under the  minimum instruction  percentage requirement.                                                               
This  bill would  simply  expand  that to  a  different rate  for                                                               
different schools, as  Senator Guess described. He  added that at                                                               
the 70% level,  there are still 27 school  districts that require                                                               
a waiver  statewide, although they have  made tremendous progress                                                               
over  the years.  He stated,  "We,  too, believe  the more  money                                                               
directed to instruction, the better."                                                                                           
SENATOR WILKEN  asked if  there were any  issues with  any school                                                               
district  in  the  state  ascribing  to  the  standard  chart  of                                                               
MR.  JEANS replied  that the  department continues  to work  with                                                               
school  districts  to  follow  the chart  of  accounts  and  this                                                               
process goes  well with that. If  a district comes in  under 70%,                                                               
they have serious discussions with  the district about why it was                                                               
beyond the district's control to not meet the 70% requirement.                                                                  
SENATOR WILKEN asked if all  53 districts are following the chart                                                               
of  account categories  and subcategories  and if  they are,  are                                                               
they just  being creative in  their definitions among  the levels                                                               
and sublevels of expenses.                                                                                                      
MR. JEANS  replied that all  53 school districts are  required to                                                               
follow  the  chart of  accounts.  Creative  classification was  a                                                               
problem, but  they have given school  districts clearer direction                                                               
on where to classify expenditures  so there is more uniformity in                                                               
the expenditures being reported to the department.                                                                              
SENATOR WILKEN  asked if he still  has one or two  staff that are                                                               
helping  school  districts  align  themselves  to  the  chart  of                                                               
MR. JEANS replied they have those two positions.                                                                                
SENATOR WILKEN  asked if  federal funds  are considered  with the                                                               
MR. JEANS replied they measure  that against the school operating                                                               
fund, which includes federal impact aid. He pointed out:                                                                        
     It's the  discretionary money, but it  does not include                                                                    
     all  the other  categorical federal  funds, which  many                                                                    
     districts would  argue in many cases  are instructional                                                                    
SENATOR WILKEN said in 2001,  his school districts received about                                                               
$96.6 million in federal money. He continued:                                                                                   
     So, a  portion of  that would be  impact aid  money and                                                                    
     the other portion would be  something other than impact                                                                    
     aid.  So, you're  saying we  would consider  the impact                                                                    
     aid money, but  not the other what I think  to be about                                                                    
     $40  million. Is  that correct?  Is there  some federal                                                                    
     money outside the 70% calculation?                                                                                         
MR. JEANS  replied, "There's a  whole bunch of money  outside the                                                               
SENATOR WILKEN  said the  special revenue  funds in  2001 equaled                                                               
about $115 million. He asked if  those were considered as part of                                                               
the 70% calculation.                                                                                                            
MR.  JEANS  replied no,  "The  statute  specifically says  school                                                               
operating fund expenses."                                                                                                       
SENATOR GUESS asked  as he is transitioning into  the new system,                                                               
he is  finding districts that are  under 70% are striving  to get                                                               
to 70%.                                                                                                                         
MR.  JEANS replied  yes, although  there are  a few  small school                                                               
districts in  the state where 70%  is going to be  impossible. He                                                               
noted, "Some districts are very  dispersed with small populations                                                               
which are going  to have high fixed operational  costs. They will                                                               
never meet the 70%."                                                                                                            
However, he thought those were the  extremes and if they get down                                                               
to a small number of school  districts that require the waiver on                                                               
an annual basis, he thought they had done well.                                                                                 
SENATOR GUESS  said that  certain districts  never had  to strive                                                               
and if they  raise the bar to an appropriate  level, she asked if                                                               
people would try to reach that level.                                                                                           
MR. JEANS replied that his experience  is that no school wants to                                                               
ask for  a waiver. "They  all strive  to meet the  requirement no                                                               
matter what it is."                                                                                                             
5:35 p.m.                                                                                                                     
SENATOR  WILKEN  suggested  for  the  smaller  school  districts,                                                               
rather than raising  the bar, they should  consider whether there                                                               
is  a  way to  consolidate  their  administrative functions  that                                                               
weigh so heavily  on their overhead. He thought that  was the way                                                               
out of the 70% mark.                                                                                                            
SENATOR GUESS  clarified that was  not her intent. She  is trying                                                               
to take it from the top end.                                                                                                    
CHAIR DYSON  suggested that it  was fair to  use the 70%  to give                                                               
people a standard to measure themselves with.                                                                                   
MR. JEANS agreed.                                                                                                               
CHAIR  DYSON  asked  if  it  would  be  wise  to  lower  the  70%                                                               
requirement for the smaller schools.                                                                                            
MR.  JEANS  replied they  had  not  had  that discussion  at  the                                                               
department level.                                                                                                               
CHAIR DYSON asked if he had  pushed the folks to use the standard                                                               
chart of accounts and there reports and audits of their budgets.                                                                
MR. JEANS  replied that all  53 school districts are  required to                                                               
file an  audited financial  statement with  the department  on an                                                               
annual basis.                                                                                                                   
SENATOR  WILKEN added,  "That  report is  given  annually to  the                                                               
Legislative Budget  and Audit Committee, whose  responsibility it                                                               
is to do something with it."                                                                                                    
MR. CARL ROSE said they didn't have  a position on SB 10, but did                                                               
have one on minimum expenditures.  The governor's proposed budget                                                               
is  not adequate  in  the area  of education  and  there are  the                                                               
mandates of No Child Left  Behind, IDEA and current reductions to                                                               
consider. He elaborated:                                                                                                        
     If we're looking at about  a $33 million reduction, and                                                                    
     I  hope that  that  does not  take  place, and  there's                                                                    
     evidence  that there  is a  change of  heart, at  least                                                                    
     we're  not   focusing  on  the   same  number   in  the                                                                    
     legislature  from   what  I   see  proposed   from  the                                                                    
     governor.  Nevertheless, we  are still  looking at  the                                                                    
     issue of  adequacy and that's  a critical issue.  If we                                                                    
     lack the funding  and we don't get all of  the money we                                                                    
     need...that money comes directly  out of the classroom.                                                                    
     That's an increased burden  on the local appropriation.                                                                    
     That  in light  of  the concern  that  we would  reduce                                                                    
     municipal assistance  and revenue sharing, the  cost we                                                                    
     pass  on to  the  local communities  for  those who  do                                                                    
     taxing is a continued burden.                                                                                              
MR.  ROSE said  he supports  the standard  chart of  accounts and                                                               
believes in the improved quality of  data they get from it. It is                                                               
important to be able to meet  the federal mandates as well as our                                                               
own  quality  initiatives,  but  he  sees  inadequate  levels  of                                                               
funding across the state. He would  like districts to have a shot                                                               
at being successful.  He is not in  favor of the bill  as is, but                                                               
he understands they are trying to get accountability.                                                                           
MS. MARY  FRANCIS, Executive Director,  Alaska Council  of School                                                               
Administrators,  supported the  intent  of SB  10 and  definitely                                                               
supported more resources going to the classroom and said:                                                                       
     As previous  speakers pointed out, rising  fuels costs,                                                                    
     rising insurance  costs, the  possibility of  having to                                                                    
     pay  for  people  transportation,  the  possibility  of                                                                    
     including community  schools...would mean that  some of                                                                    
     those expenses would  go into one's budget  and a great                                                                    
     percentage of the  budget would not go  directly to the                                                                    
CHAIR DYSON  asked if  she knew  how to  get better  numbers than                                                               
Senator Guess had  and the valid targets would be  to ask schools                                                               
to meet.                                                                                                                        
MS.  FRANCIS   said  she   would  bring   her  experience   as  a                                                               
superintendent to Senator Guess to help figure it out.                                                                          
CHAIR DYSON asked  Senator Guess what she wanted to  do with this                                                               
SENATOR  GUESS replied  that this  is  where the  policy work  of                                                               
education needs  to be done  in the HESS Committee.  She believes                                                               
they  are trying  to treat  all  school districts  alike and  she                                                               
didn't  think that's  correct.  She has  always  been willing  to                                                               
examine  the  details of  that  with  the communities  and  their                                                               
representatives and she wouldn't  mind taking direction from this                                                               
committee on certain work that needs to be done.                                                                                
She thought the  discussion needed to be in a  broader context of                                                               
funding  and the  foundation  formula and  changing  some of  the                                                               
unintended consequences that happened in SB 36.                                                                                 
MR.  JOHN  ALCANTRA,  Director,  Government  Relations,  National                                                               
Education  Association (NEA)  Alaska,  supported Senator  Guess's                                                               
efforts and Mr.  Rose's good comments about No  Child Left Behind                                                               
and exit exams. He applauded the  effort to get more dollars into                                                               
instruction and wanted to help  them work on something that would                                                               
works for all 53 school districts throughout Alaska.                                                                            
CHAIR DYSON  thanked him and said  they would hold this  bill for                                                               
further work.                                                                                                                   
TAPE 03-12, SIDE B                                                                                                            
CHAIR DYSON adjourned the meeting at 5:50 p.m.                                                                                  

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