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House takes up education spending bill

By Rhonda McBride 9:24 AM April 4, 2014

Lawmakers in the House are preparing for a marathon session Friday as debate begins on House Bill 278, a comprehensive education spending bill that also deals with everything from teacher tenure to charter schools and boarding schools to education tax credits.

Two of the most controversial elements of the bill are an increase in the Base Student Allocation and changes in how the state handles its debt obligation to the teachers’ retirement system.

The bill, as originally introduced by Gov. Sean Parnell, included a number of education reforms but did not address the teacher pension program. Parnell isn’t happy with the change, and called the plan the House Finance Committee inserted into the bill “immoral” because it passes on debt to future generations.

On Thursday, committee members defended their plan, which they say will pay down the debt to the pension system over a longer period of time, making it more affordable — and reducing one of the major cost-drivers in education spending.

The governor’s plan includes the Public Employees’ Retirement System, or PERS. He wants to draw $3 billion from budget reserves to pay down the debt to the pension programs. The cash infusion would lower the amount of contributions to the fund and shorten the payment schedule.

“I’m not wed to either one of them,” said Rep. Bill Stoltze, co-chairman of the House Finance Committee, who added that the governor never put his plan in the form of a bill, so his committee stepped forward with its own plan. “I am very open to a better idea.”

Rep. Mia Costello, who also sits on the House Finance Committee and supports paying down the teachers’ retirement pension obligation over a longer time frame, said there’s room for compromise.

“I think everybody is open to find the right answer to the problem, but what I think you’re seeing here is a huge commitment to address it. Not just sweeping it under the rug,” Costello said.

But with less than three weeks left in the session, is there time?

The measure had opposition from both Republicans and Democrats, who narrowly failed to pull the plan from the House Finance Committee’s revision of HB 278.

Rep. Cathy Munoz argued in committee that the pension provision had not been thoroughly vetted.

A financial report from an independent consultant, released Thursday, raised questions about the debt payment plan.

It said the program, by extending the length of time for payments to the trust, puts the fund at greater risk for “depletion.”

“Costs are increased by billions of dollars in order to save on funding today,” the report said.

Democrats are also critical.

“I think there is a lot of discussion that needs to take place before we start thinking about such a major change in how we handle our retirement programs,” said Rep. Sam Kito of Juneau.

Democrats also think HB 278’s increase to the BSA falls short of the mark. Over the next three years it would add $300 per student. Every $100 increase in the BSA translates into $25 million in spending.

Democrats have been pushing for a $400 increase for the next fiscal year, which they say is the amount school districts need to avert massive layoffs.

They’ve argued that the state’s reserves should be used to close the gap.

“It’s not a victory to still lay off teachers,” said Rep. Les Gara, an Anchorage Democrat who serves on the House Finance Committee.

“Why not do what it takes when we have $18 billion in liquid accounts to meet the needs of the next generation?” said Rep. Andy Josephson, an Anchorage Democrat.

House leaders have been protective of the state’s savings account because of this year’s $2 billion revenue shortfall, as well as a projected decline over the course of the decade.

“I wish we had more time to work on public relations and press spin,” said Stoltze, who said the money in the HB 278 represents a substantial increase for children in the classroom — an increase that comes at a cost to other state agencies which are being cut — so schools should be grateful for the increases.

“This plan would put almost a billion dollars into education over the next 10 years; $224 million just in the next three years,” Costello said.

“We still have more educating to do in terms of what’s in the bill, but some of the feedback I’ve gotten is, this is above and beyond what they (school districts) expected,” Costello said.

Rep. David Guttenberg, a Fairbanks Democrat and finance committee member, reacted angrily.

“You know if you ask them if they take a poke in the eye, or a kick in the backside, they’ll take whatever they can get over nothing,” Guttenberg said.

Guttenberg was also unhappy with how HB 278 readjusted the way schoolchildren are counted. He said he believes it has now been skewed to favor urban districts.

The education spending bill now heads to the House for what is expected to be a protracted debate, because the measure has so many components. There will likely be a long battle to increase the BSA and remove the pension fund provision.

The Senate has its own version of the bill, which provides more money for education in the short term but less in the long run.  What ever emerges from the House will have to be merged with the Senate version of the bill.

The House postponed taking up HB 278, the governor’s omnibus education bill, until Monday. House leaders say it’s a scheduling matter. They expect a long debate over the education spending bill, because it has so many components, but they also wanted work on SB 138, the governor’s natural gas legislation, to continue in the House Resources Committee, where more than two dozen amendments are being considered. If committee members had been tied up in a floor debate Friday, work on the amendments would be delayed. SB 138 still needs review in two other committees before it can go to the House Floor for a vote. House leaders are hoping to move the bill out of committee next week.

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