PUBLIC HEARING: SB 427

WORK SESSION: SB 718

 

TAPES 69, 70 A

 

SENATE REVENUE COMMITTEE

MARCH 16, 2005 ††8:30 AM† †STATE CAPITOL BUILDING

 

Members Present:††††††††††††††††† Senator Gary George

††††††††††††††††††††††††††††††††††††††††††††††† Senator Rick Metsger

††††††††††††††††††††††††††††††††††††††††††††††† Senator Floyd Prozanski

††††††††††††††††††††††††††††††††††††††††††††††† Senator Charles Starr, Vice Chair

†††††††††††††††††††††††

Members Excused:†††††††††††††††† Senator Ryan Deckert, Chair

 

Witnesses Present:††††††††††††††† Brian Reeder, Dept. of Education

††††††††††††††††††††††††††††††††††††††††††††††† Kent Hunsaker, Confederation of Oregon School Administrators

††††††††††††††††††††††††††††††††††††††††††††††† Tricia Smith, Oregon School Employees Association††††††††††

††††††††††††††††††††††††††††††††††††††††††††††† Sen. Vicki Walker, District 7

††††††††††††††††††††††††††††††††††††††††††††††† Kate Richardson, State Treasury

 

Staff Present:††††††††††††††††††††††††† Paul Warner, Legislative Revenue Officer

††††††††††††††††††††††††††††††††††††††††††††††† Steve Meyer, Economist††††††††††††††††††††††††††††††††††††††††††††

††††††††††††††††††††††††††††††††††††††††††††††† Mazen Malik, Economist

††††††††††††††††††††††††††††††††††††††††††††††† Barbara Guardino, Committee Assistant

 

 

TAPE 69, SIDE A

005

Vice Chair C. Starr

Calls meeting to order at 8:38 a.m. as a subcommittee to await a quorum.

 

PUBLIC HEARING, SB 427

010

Steve Meyer

Gives overview of SB 427. Revenue Impact of Proposed Legislation (EXHIBIT 1). Changes the calculation of the transportation grant in the school equalization formula. Makes the grant the greater of 2 numbers.

 

030

Sen. Metsger

Explains his basis for sponsoring this bill. It is designed to provide flexibility to school districts. There is currently no incentive for reducing the cost of transporting students.

 

053

Sen. Metsger

Of importance:

         SB 427 does not take away the mandate for transportation. Refers to School Finance Distribution (EXHIBIT 2).

         Any reduction in the transportation grant goes to regular distribution so the money is still in the system.

 

080

Sen. Metsger

Closing comments: The question is when the state gives dollars to local school districts, should those dollars be flexible, or should the state dictate how they are spent? Flexibility would maximize their value in these difficult times.

 

090

Brian Reeder

Opposes SB 427 as written. See written testimony (EXHIBIT 3). Responds to Sen. Metsgerís description of the bill and its purpose. Dept. of Education supports the intent of the bill, but disagrees with converting a grant based on the number of students in a district. They vary tremendously in transportation costs due to geography. This bill will steer money away from rural areas.

 

126

Reeder

Agrees with the spirit of the bill and would be glad to work with the committee on amendments.

 

134

Sen. Prozanski

Asks what would be the nature of the amendments.

 

143

Reeder

Responds, DOE has 2 viable approaches, each with advantages and disadvantages:

1)      Determine based on district circumstances what it should cost to operate an efficient transportation system.

 

175

Vice Chair C. Starr

Seems like it would be simple to come up with an effective formula based on miles per student.

 

191

Reeder

2)      Second approach solves that problem. That is to base a grant on past experience of each transportation system.

Contends that basing a grant on past experience is the better approach.

 

235

Sen. Prozanski

Would like to see a blending of approaches. The state should be able to figure out factors and use past costs as a gauge for efficiency. The biggest issue is whether this can be accomplished mid-session. Perhaps this issue would be better dealt with during the interim.

 

264

Reeder

Believes DOE has most of the data and could generate estimates in 4-6 weeks.

 

275

Sen. Prozanski

Follow-up questions concerning data on busses.

 

291

Sen. Metsger

Shares Mr. Reederís concerns about unintended consequences. Is interested in discussing possible solutions.

320

Reeder

The key is making sure schools get to keep any savings they generate.

 

345

Kent Hunsaker

Opposes SB 427 on behalf of COSA. The OSEA Steering Committee (consisting of 40 superintendents) reviewed this bill and gave feedback on their concerns. Costs vary greatly per student depending on the district. The bill does not change any of the inputs, and therefore would hurt small, high-cost districts over time.

 

416

Hunsaker

Points out a strong correlation between districts that contract out and those that donít. Suggests leaving the system the way it is and providing districts that save money with some monetary incentive to decrease costs.

 

456

Sen. Metsger

Disagrees with Mr. Hunsakerís contention that school districts would be unable to reduce costs.

 

TAPE 70, SIDE A

025

Hunsaker

Responds, explaining how it would work. The other option would be to do nothing. There are efficient systems, but even they would lose money over time under this bill.

 

051

Tricia Smith

OSEA represents transportation providers. Opposes SB 427. OSEA appreciates sponsors keeping transportation the mandate as it is. Parents canít provide transportation to children, particularly the rural and poor.

 

066

Smith

Discusses inefficiencies and the background of the transportation funding formula. It was a reimbursement formula because transportation cost are largely beyond the control of a district, in relation to fuel, driver pay, children moving, etc.

 

103

Smith

Discusses inefficiencies as observed by bus drivers. Dept. of Education should be able to determine whether transportation costs are appropriate before they approve them. SB 156 allows Secretary of State to build a state school fund for performance audits.

 

148

Smith

Contracting out bus driver service is not efficient. Bus drivers have to go through extensive training. If their benefits were reduced, it would be more difficult to find good drivers.

 

168

Smith

Suggests considering SB 156.

 

179

Sen. Metsger

Comments on Ms. Smithís points on efficiency. Asks her to cite examples of ďbus barnĒ inefficiencies in the transportation system.

 

195

Smith

Has not researched this, although members provide examples to her. Most common is not enough drivers and too many bosses. Also thereís a lot of waste in route design. Look at management.

 

WORK SESSION, SB 718

215

Mazen Malik

Refreshes membersí memories on what this bill does. Directs members of Oregon Investment Council to declare conflicts of interest in writing not later than one business day after discovering a conflict.

 

226

Malik

Presents SB 718-1 Amendments (EXHIBIT 4) which extend 1 business day to 3 business days, and reduce the penalty from $1,000 to $250.

 

275

Sen. Vicki Walker

Discusses compromises made with Chair Deckert and State Treasurerís Office on the bill.

 

290

Kate Richardson

Concurs, all agree on the current amendments. Reiterates that this bill addresses a potential conflict of interest, not an existing one.

 

301

Sen. George

Opposes -1 amendments. Believes the fine should be substantially higher than $1,000, not lower.

 

311

Sen. Walker

Explains, the fine is for a potential conflict. It does not change the fine for an actual conflict of interest.

 

326

Sen. Metsger

MOTION: MOVES ADOPTION OF SB 718-1.

 

328

Vice Chair C. Starr

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS.

VOTE 4-0-1

MEMBERS VOTING AYE: GEORGE, METSGER, PROZANSKI, C. STARR

MEMBERS EXCUSED: CHAIR DECKERT

 

325

Sen. Metsger

MOTION: MOVE SB 718 AS AMENDED TO THE SENATE FLOOR WITH A DO PASS RECOMMENDATION.

 

330

Vice Chair C. Starr

ORDER: THERE BEING NO OBJECTION THE CHAIR SO ORDERS.

VOTE 4-0-1

MEMBERS VOTING AYE: GEORGE, METSGER, PROZANSKI, C. STARR

MEMBERS EXCUSED: CHAIR DECKERT

 

340

Vice Chair C. Starr

Closes work session on SB 718. Adjourns meeting at 9:27 a.m.

 

 

 

Tape Log Submitted by,

 

 

 

Barbara Guardino, Committee Assistant††††††††††††††††††††††††††††††††††††††††††††††††††††††

 

Exhibit Summary:

1.      SB 427, Revenue Impact of Proposed Legislation, 3/15/05, Meyer, 1 pp.

2.      SB 427, School Finance Distribution, 3/14/05, Meyer, 6 pp.

3.      SB 427, Senate Education Committee, Testimony of Brian Reeder on SB 427, Reeder, 1 pp.

4.      SB 718, (LC 2110), proposed -1 amendments, 3/11/05, Malik, 1 pp.