North Dakota Commission on Education Improvement
Commission Meeting Minutes
October 11, 2006
Roughrider Room, State Capitol, Bismarck, North Dakota
The ninth meeting of the North Dakota Commission on Education Improvement was called to order at 9:02 a.m. by the commission's chair, Lt. Gov. Jack Dalrymple.
Commission members in attendance included Lt. Gov. Jack Dalrymple, Warren Larson, Jack Maus, Martin Schock, Jon Martinson, Mark Lemer, Nancy Sand, Doug Johnson, Paul Stremick, Sen. Tim Flakoll, Wayne Sanstead, Sen. David O'Connell and Rep. David Monson. Rep. RaeAnn Kelsch was absent.
The September meeting minutes were reviewed and Mark Lemer suggested that language be clarified regarding the money earmarked for Gifted and Talented programs as part of the appropriation for special education funding. Lemer made a motion to approve the minutes as amended and Rep. David Monson seconded the motion. The September meeting minutes were approved as amended.
The Commission reviewed letters and feedback from administrators, school board members and organizations regarding the Commission's recommendations as outlined in the draft report. Commission members reviewed a letter from Doug Jacobson, superintendent of North Central of Barnes, and signed by 27 school districts, primarily located in the southeastern part of the state. The letter referenced specific areas of concern, including the use of ADM versus census units in the formula, the timeline for the hold harmless and the subsequent impact when removed, the distribution of funds between small and large school districts, the formula's potential to discourage reorganization, consistent property assessment practices across the state, and implications to the special education formula.
Commission members discussed options for follow up to the districts' concerns, including sending a letter of response on behalf of the Commission. Doug Johnson offered to travel later that morning to a meeting in Valley City comprised of the administrators who signed the letter. Johnson would review the cited concerns with the administrators and convey to them the Commission's responses.
Commission members commented that they were surprised by the administrators' concerns because a majority of the components of the formula where they expressed concerns actually benefit smaller schools. Mark Lemer added that a census-based distribution, as is currently used for tuition apportionment, typically benefits large school districts with high parochial school enrollment.
Doug Jacobson with North Central of Barnes and other individuals representing the districts that signed the letter attended the Commission meeting and came forward to speak in more detail regarding their concerns.
Roger Mulvaney, superintendent of the Maple Valley School District, said that the proposed funding formula is more complex because of its imputations and calculations. Mulvaney stated that another concern is that the hold harmless will be removed and then most of the smaller schools will be impacted negatively. Mark Lemer said that the Commission will recommend to the Governor and the Legislative Assembly that the hold harmless be continued indefinitely.
Lt. Gov. Jack Dalrymple said that small schools will receive more benefit from a statutory hold harmless than from an increasing mill levy deduct. Dalrymple added that language in the proposed report states specifically that school districts will receive funding in the second year no less than 102 percent of the previous year - a minimum 2 percent increase.
Rep. David Monson said that the Commission needs to educate schools about the hold harmless and the 2 percent minimum increase, and that whatever funding they receive the first year, they will receive again the second year. He added that it is the intention of the Commission that the hold harmless will not go away, but that ultimately the Legislative Assembly has the final decision.
Regarding the administrators' concern about the use of ADM versus census figures, Paul Stremick said that census figures help larger school districts because private school students are factored into the total at the expense of all districts statewide; ADM is advantageous for the small districts because the figures are based on actual enrollment.
Tracy Klein, director of the Morton/Sioux Special Education Unit, provided additional testimony regarding a letter sent to Warren Larson from Carol Jabs, chairperson of the North Dakota Special Education Study Council. The Council raised concerns about the Commission addressing the realignment of special education units around JPAs and the cap of 4 ½ times the state average on the state reimbursement for high cost students. The letter also stated the Council's position that the targeted weighted factor for special education ADM payments should be 10 to 12 percent of earmarked money.
Commission members stated that increases for special education are recommended in the report and that the state needs to continue its commitment to increasing funding for such programs. Klein commented that the ideal goal for funding special education would be 40 percent reimbursement from the federal government, 40 percent from the state, and 20 percent would be the responsibility of the local district. Currently, according to Klein, the federal and state governments are covering 40 percent of the total costs, with the local district picking up 60 percent.
At 11 a.m., members of the public were provided an opportunity to address the Commission. Vicky Steiner, representing the North Dakota Association of Oil and Gas Producing Counties, presented Commission members with a resolution voted on by the association's Executive Committee on behalf of its membership. The resolution stated that the association stands in opposition to the proposed funding formula as long as the formula contains the provision to impute any percentage of the local school district's oil and gas funding from the state gross production tax.
Steiner asked that the schools located in oil and gas producing counties receive special consideration and be exempt from having to include oil and gas funding as revenue. She added that the association as a whole is divided on whether or not to support the Commission's recommendations, with the districts located in coal producing counties not included in the resolution.
Kelly Norby, president of the school board for the McKenzie County School District, expressed his opposition to the imputation of oil and gas income in the funding formula. He said that McKenzie County has thousands of acres that cannot be taxed or included in that county's valuation, and by imputing the oil and gas funding, the district will be negatively impacted. Norby also expressed his concerns about teacher compensation and non-taxable land and businesses, and suggested that the state determine core education costs and fund 70 percent of that amount.
Steve Holen, superintendent of the McKenzie County School District, expressed his concern with imputing oil and gas funding into the formula and asked the Commission to reconsider such an imputation. Holen also expressed his concern regarding the 170 mill minimum offset. He said he does not agree with enticing schools to raise their local mill levies in order to receive state funds when they are working diligently to effectively sustain budgets without having to increase local taxes.
Mark Lemer and Warren Larson commented on how imputing oil and gas funding into the formula would protect school districts in oil and gas producing counties when those dollars are no longer available. Larson added that it is difficult to increase teacher compensation using oil and gas income because schools don't know whether or not those increases can be sustained. By imputing those dollars, districts would be able to commit to long-term funding increases such as teacher compensation because when oil and gas revenues decrease, the state would make up the difference.
Sandy Clark with the North Dakota Farm Bureau stated that the organization is opposed to the high valuation offset because they see it as a return to the mill levy deduct. She added that the Farm Bureau does not oppose the entire report, only key issues including the high valuation offset. Rep. David Monson inquired as to how the Farm Bureau could oppose a recommendation that would provide every school district with a minimum 2 percent increase, while doing away with the mill levy deduct. The proposed recommendations would help small schools represented by the Farm Bureau, not harm them.
Mike Kraft, school board president for the Apple Creek School District, discussed his concern about the imputed taxable valuation per pupil and the high valuation offset. Apple Creek educates students in grades K-6 and pays to send its students in grades 7-12 to be educated in another district. He expressed his concern regarding how those students are counted and how the proposed formula addresses tax implications for those districts paying tuition to a high school district.
Chad Dahlen, principal of Twin Buttes Elementary School, a K-8 school, discussed the high tuition other districts are charging to educate his high school students. He recommended that a cap be implemented statewide to limit the amount of tuition school districts can charge for educating students from other districts. Dahlen added that open enrollment is another factor impacting the school's declining enrollment. Lt. Gov. Jack Dalrymple added that under the Commission's proposed plan, Twin Buttes would receive an equity payment plus an 11 percent increase in state aid.
The Commission broke for lunch at 12:30 p.m. and reconvened at 1:15 p.m.
Misty Farnstrom, business manager with the Beach Public School District, presented a letter to the Commission signed by members of the Beach Public School District School Board asking Commission members to reconsider including tuition received for educating students residing in treatment centers located within their school district as excess revenue. In the case of Beach, the school district is responsible for educating the boys and girls placed at the Home on the Range treatment facility, which is located in Beach's district. The district funds the education of these students entirely with tuition dollars received from the student's resident school based on the residence of the parent(s), or directly from the Department of Public Instruction through foundation aid in the event the parent(s) is deceased, incarcerated or unknown. The school board recommended that the tuition revenue received from either the student's district of residence or the Department of Public Instruction not be considered excess revenue and not be included in the funding formula due to its specific nature.
Commission members discussed the possibility of not including tuition received for educating students placed in treatment centers as income when determining the per pupil valuation. The question was then raised about where the students would be counted. Lt. Gov. Jack Dalrymple suggested that the district educating the students should be able to count them as a part of its ADM.
The Commission agreed to propose that the students placed at treatment facilities would be counted as part of the educating school district's ADM. When determining the district's equity payment, only the district's regular tuition rate would be used and excess tuition would not be counted. The Department of Public Instruction would need to create a separate line for ADM and a separate line for restricted tuition to document this exception for school districts that educate students placed in treatment centers located within its district.
Tom Decker and Mari Rasmussen with the Department of Public Instruction presented testimony supporting the reinstatement of funding for levels III and IV of the English Language Learners program. They stated that No Child Left Behind requires separate evaluations for all four levels of English learning and that North Dakota is experiencing an increased need for English programs among students who qualify for levels III and IV.
Warren Larson reiterated that the Commission agreed to fund levels I and II so that those with the greatest need could be helped. He added that students who qualify for levels III and IV could be covered by at-risk programs. Mark Lemer suggested establishing a fund that would cover all students qualifying for levels I and II, and if excess dollars are available after funding levels I and II, level III and then level IV would be funded. Lt. Gov. Jack Dalrymple suggested that the recommendation be added to the report as a footnote. Commission members agreed.
The Commission discussed optional funding priorities over and above the Governor's proposed addition funding of $60 million. They include: (1) $5 million to be added to the formula payments to increase payments in the second year of the biennium, (2) $3 million for full-day kindergarten for at-risk students, and (3) an additional $4 million for special education ($3 million for per pupil payments and $1 million to cover special education contracts). Commission members agreed to include these optional funding priorities as a part of its recommendations.
Warren Larson made a motion to move forward with the revisions to the draft as discussed and Mark Lemer seconded the motion. The Commission agreed and the motion carried.
Mark Lemer will provide a summary of the Commission's recommendations to the Interim Education Committee on October 24 at 9 a.m. Jack Maus suggested that the Commission meet again next month for final discussion and a final vote on the recommendations. A meeting was scheduled for Wednesday, November 8 at 1 p.m. in Bismarck.
The meeting was adjourned at 5:02 p.m. by Lt. Gov. Jack Dalrymple.
