Interim Joint Committee on Appropriations and Revenue


Budget Review Subcommittee on Primary and Secondary Education


Minutes of the<MeetNo1> 2nd Meeting

of the 2009 Interim


<MeetMDY1> September 24, 2009


The<MeetNo2> second meeting of the Budget Review Subcommittee on Primary and Secondary Education of the Interim Joint Committee on Appropriations and Revenue was held on<Day> Thursday,<MeetMDY2> September 24, 2009, at<MeetTime> 10:00 AM, in<Room> Room 154 of the Capitol Annex. Senator Vernie McGaha, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Vernie McGaha, Co-Chair; Representative Tommy Thompson, Co-Chair; Senator Tim Shaughnessy; Representatives Will Coursey, Charles Miller, Carl Rollins II, and Dottie Sims.


Guests:  Dr. Terry Holliday, Commissioner, Kentucky Department of Education; Hiren Desai, Associate Commissioner, Kentucky Department of Education; and Dr. Larry Stinson, Acting Deputy Commissioner Kentucky Department of Education.


LRC Staff:  L. Bart Hardin, Tom Willis, Greg Rush, Tracy Goff Herman, Jonathan Lowe, Spring Emerson, and Amie Elam.

            Chairman McGaha began the meeting by welcoming Dr. Terry Holliday, Commissioner, Kentucky Department of Education (KDE), who addressed the impact of budget reductions on KDE and on local school districts. 


            Chairman McGaha asked about the use of flex funds and if there were a primary target where the money has been rechanneled. Commissioner Holliday responded that he does not know yet where the funders were moved but that would come in a monthly report. Mr. Desai said that KDE will provide that information as soon as it is available. He noted that funds cannot move from preschool but a district may move funds from Extended School Services (ESS) or other areas. Dr. Holliday said that from speaking to superintendents he sensed local school districts were using local dollars to cover the textbook shortfall because Professional Development (PD) and ESS had already been reduced in the budget.


            Representative Miller inquired about spending money on Title I. He said that by having deadlines during the school year money is often wasted and asked why the deadline is September 30, so close to the beginning of the school year. Commissioner Holiday said that the issue is the Federal Fiscal year which begins October 1. The districts should spend Title I monies received from the American Recovery and Reinvestment Act (ARRA) by the end of the school year in fiscal year 2011. They could carry over some of the dollars through September 30 but it should be used for things like materials, supplies, and software licensure.


            Representative Moberly asked for an explanation of the four Race to the Top criteria. Commissioner Holliday replied that those were the options for school reform in the lowest performing 5% of schools. Option one, according to the current guidelines, is to close the school and send the students somewhere else. Option two would be a reform effort to fire the principal, replace 50% of the staff, and reform the school. Option three would be the district or the state could contract with a provider to come in and reform the school. Option four would be to transform the school with a very prescriptive list of assurances that are very similar to the four areas that are in the Race to the Top dollars which are standards, teacher/principal effectiveness, data systems, and focusing on low performing schools. The final guidance for the application is not yet available from the United States Department of Education. Dr. Holliday stated that the plan is to introduce this early and let everyone know the final guidelines and then engage in conversations about Site Based Decision Making, principal effectiveness, teacher effectiveness, and other barriers. Representative Moberly asked when the final guidelines would be provided. Commissioner Holliday answered most likely in December. Representative Moberly asked if the Commissioner planned on correlating these dollars with the Commonwealth School Improvement Fund. Commissioner Holliday said yes and that he had an internal task force in place to make ensure that the federal guidelines were aligned with Senate Bill 1. He assured the committee that efforts to turn around low performing schools and ensuring the effectiveness of our assist model and our Title I school improvement model are integrated, and by doing this KDE hopes to leverage the dollars to do one model rather than two or three different models.


Representative Moberly inquired as to what Commissioner Holliday meant when he said that this is where the charter school language would come in. Commissioner Holliday responded that in the ARRA in the School Improvement Grants and under Race to the Top, the language implies that states should have no barrier to limiting the use of high quality charter schools for the purpose of turning around low performance schools. Representative Moberly asked for a definition of charter schools in that language. Commissioner Holliday responded that there was not necessarily any definition in the language, but what he is pushing and would encourage is a conversation between local districts and local school boards about working with providers, a team of teachers, maybe a university, or someone that could bring in a new reform model. Representative Moberly asked if it would be up to the legislature to define what a charter school is. Commissioner Holliday responded yes. Representative Moberly asked if KDE would be proposing legislation on allowing and defining charter schools and School Improvement Grants. Commissioner Holliday stated that there is a team that will be meeting with key leaders to prepare for the session. Representative Moberly asked if the $47 million amount mentioned by Commissioner Holliday was the amount that Kentucky could potentially receive under the federal program. Commissioner Holliday responded yes and added that Kentucky would continue to receive the current $8 million a year. Dr. Holliday stated that the $47 million is a one-time infusion of money that would be spread over three fiscal years. Representative Moberly asked if there would be accountability factors put in place regarding this money, especially as it is a larger amount than is usually received. Commissioner Holliday said yes.


Representative Rollins asked if all four options under Race to the Top had to be considered or if it could be a combination. Commissioner Holliday stated that there are some limitations currently in the language and that they would not want to force all schools to use the same model, so he does not want to be in the position of forcing a local Superintendent and board to have to choose between two options with one of them being to close the school. He stated that KDE would like to have all four options.


Chairman McGaha asked how much local input would be considered in making the choice or if this would be a mandate from the legislature. Commissioner Holliday stated that it would always be up to the local board and the local superintendent; this just provides them options for when they have tried everything else unsuccessfully. Senator McGaha asked if he was right in assuming that the legislature would be responsible to define and clarify the options but the actual choice would be left up to the local board. Commissioner Holliday responded in the affirmative but added that after a certain period of time if the school had not turned around then there would be more control at the state level.


Senator Shaughnessy asked what group of schools Race to the Top focused on. Commissioner Holliday responded all schools. Senator Shaughnessy asked about the initiative that focused on the lowest performing schools. Commissioner Holliday said this was School Improvement Grants. Senator Shaughnessy asked if the four criteria were focused on the federal flow of resources of the lowest performing schools. Commissioner Holliday answered that the Race to the Top has a focus on turning around low performing schools as well as School Improvement Grants. Senator Shaughnessy asked what source of federal funding the four components related to. Commissioner Holliday stated that the charter school issue was one of nineteen criteria within Race to the Top. Senator Shaughnessy wanted to know if Kentucky would indeed be one of those states that would have a barrier to charter schools, as Kentucky law does not currently allow charter schools, and would that eliminate Kentucky from being eligible for funding. Commissioner Holliday responded that it did not eliminate Kentucky and that they are working on making the application as innovative as possible to show that Kentucky has done good work and to improve our chances of receiving these funds. Senator Shaughnessy asked how many schools make up the top 5% of the lowest performing schools. Commissioner Holliday replied it could be anywhere from twelve to thirty depending on definition. Senator Shaughnessy inquired about the geographical locations of these schools. Commissioner Holliday responded that the schools are concentrated in urban areas.


Senator Shaughnessy recognized that Commissioner Holliday has been embraced statewide and is off to a good start. He then strongly suggested that Commissioner Holliday look to the legislature for definition of charter schools. He also pointed out that Commissioner Holliday had made many references to the relationships between our universities. He stated that there are some successful examples of where universities have developed primary and secondary relationships but the students that go to those schools would not be considered failing students. He cautioned against looking to the already challenged universities as an alternative to an existing model. 


Chairman McGaha asked if the funds could be used for staffing. Commissioner Holliday responded in the affirmative adding that many of the districts have used Title I and IDEA funds to cover shortfalls in other funds.


Representative Flood stated that the given to districts was not to start new programming with this money, but to use it for seeding a few good ideas and not invest too much in staffing. Commissioner Holliday agreed.


Representative Richards asked how many school systems were taking advantage of changing buses to more fuel efficient models. Dr. Stinson said that he could get a report to answer this with more detail. He explained that there is a purchasing program in place and they develop specifications each year to maintain safety and fuel efficiency. Representative Richards inquired about hybrid buses. Dr. Stinson said there are two approaches as they look at the recovery act money; one is to help control emissions by modifying exhaust systems, and the second is to purchase hybrid buses.


Representative Richards inquired about technology in Kentucky’s schools. Commissioner Holliday explained that we have a great team that is very focused on classroom and school districts. He said that he believes that Education Week would put us in the top 5% consistently across the nation. In early October, Microsoft will be announcing that we are the first state to go to Cloud Computing, giving a lot of our teachers and schools access to social networking within a safe environment. Measurable objectives will be out in early January.


Representative Coursey inquired about increases in the free and reduced lunch program resulting from the downturn in the economy. Commissioner Holliday said those numbers are not currently available and will be provided at a later date.


Senator Shaughnessy asked if a plan was in place for fiscal year 2012 if no federal funds are available. Commissioner Holliday stated that they will try to find external dollars, new dollars, or they will have to cut back on programs. He added that the state board is in the review process to make sure there is accountability for every flow-through dollar so that they can report to the legislature which programs seem to be effective for addressing needs-especially graduating more students and preparing more students for college. Representative Shaughnessy expressed his concern that with the influx of recovery funds that the inevitable is just being prolonged and that two years from now Kentucky may be in a worse position than if the problem was addressed now. Commissioner Holliday stated that when one is talking about cutting people’s jobs it often just continues the cycle and if you can keep people working and spending dollars and investing in their local communities it would be better in the long run. He added that it is hoped that the economy can be stimulated through things like school construction.


Chairman Thompson asked if superintendents were looking at SEEK being reduced.  Commissioner Holliday said that superintendents were definitely looking at efficiencies and effectiveness, looking at every program and every dollar to make sure the focus is on kids and learning.


Chairman Thompson asked for an update regarding Senate Bill 1 and what kind of funding the implementation would impose on KDE and on local districts. Commissioner Holliday stated that the Council of Chief State School Officers (CCSSO) and the National Governors’ Association (NGA) provided college readiness standards, and that there had been teams of teachers working this week to analyze those and provide feedback. The math standards are expected to be in by the end of October.  The focus of the Race to the Top application is to try to get dollars from external sources rather than relying on Commonwealth dollars for PD and development of the assessments that Senate Bill 1 requires. The next two Senate Bill 1 Steering Committee meetings will focus on PD and what the anticipated cost will be.


Representative Flood recognized the good work that was being done to deal with an inadequate tax base, adding that she agrees with not invading the dollars that local districts have built up for emergencies.


Representative Miller stated his concern with replacing buses, which were deemed unsafe, and selling them to private drivers and then rehiring these buses for field trips.


Representative Moberly asked if Commissioner Holliday had been told by the administration that there would be a mid-year cut. Commissioner Holliday said that he had not been told of a cut, but that he was just always preparing and that he anticipated the recovery process was going to be slower so he was trying to be fiscally responsible.


Representative Moberly asked if Commissioner Holliday had been told that there would be any new money in the next biennium. Commissioner Holliday responded that he was told that there most likely would not be any new money. Representative Moberly stated that there was projected growth in the next biennium, with the only problem being that we are spending more than that growth brings us. Representative Moberly stated that there is more stimulus money going to education than any other area, so if the budget was cut according to the amount of stimulus money each area got in the base in January, then education would be in the worst position. He stated that it was his understanding that the administration had committed to treating all of those funds as general funds when they are putting the base together so that the stimulus will come off the top and affect everyone equally so that those areas that received greater amounts of stimulus funds would not be disproportionately punished. Commissioner Holliday said that he had not yet heard that.


Representative Moberly inquired about what Commissioner Holliday was planning to do in respect to applying for Teacher Incentive Funds from the ARRA. Commissioner Holliday said that from his understanding the money was more likely to go to non-profits and Local Education Agencies (LEAs) rather than directly to states. Representative Moberly asked if local districts would be the ones applying for these funds. Commissioner Holliday said he would not know until he saw the guidelines.


Representative Moberly asked if Commissioner Holliday was aware of the pilot programs that were set up in Kentucky that provided money and got some results. Commissioner Holliday said that he would be sure to look into that. Representative Moberly inquired about the qualified school construction bonds and whether or not the application deadline had passed. Commissioner Holliday answered that the deadline for the first wave was October 1 and the second wave deadline was December 15. Representative Moberly asked if schools were fully apprised of this opportunity. Commissioner Holliday said that they did get the information out and that he will get another correspondence out about the second wave deadline.


Representative Moberly inquired about the 23 districts that were awarded diesel hybrid and emissions funds and asked if all districts were given the opportunity to apply for this. Commissioner Holliday answered in the affirmative.


Representative Richards asked about Commissioner Holliday’s take on the No Child Left Behind (NCLB) scores. Commissioner Holliday stated there were mixed reviews. He said that the performance of students is directly tied to the effectiveness of teachers, and the focus is how we can improve the effectiveness of teachers and instruction. We need to raise accountability and standards. He believes that NCLB needs to move to a growth model. Representative Richards asked if there were lessons learned or if there were notable improvements. Commissioner Holliday responded that there were slight improvements in math but reading is flat. He added that the focus right now is reading because it is the foundation for all learning.


Representative Henley stated that there are two forces at work that adversely affect Kentucky’s financial structure; one being that we have, for more than a decade, been moving from a manufacturing-based economy to a service-based economy and Kentucky has been heavily reliant on manufacturing, the automobile industry, and we do not tax services. The second force is internet shopping and the fact that many times no sales tax is collected. Representative Henley indicated that perhaps we are moving toward an interstate compact with some states and that may help to alleviate some of the problem. He stated that because of the growth in internet shopping that our sales tax collections will not keep up with inflation.


Representative Miller stated that he would like to follow federal guidelines in regards to test scoring for Limited English Proficient (LEP) children. Federal guidelines state there is a five-year waiting period before testing counts and Kentucky guidelines state there is just a one-year waiting period. He feels that schools with large numbers of LEP children are being penalized.  


Representative Moberly thanked Representative Henley for a very astute analysis of the Kentucky sales tax issue regarding internet sales. He added that Kentucky needs tax reform as the Commonwealth moves to a service-based economy.


Representative Moberly urged Commissioner Holliday to get involved in the failing schools battle and not just to leave it to the legislature.


Chairman McGaha thanked Commissioner Holliday for appearing before the committee. He recognized that Kentucky faces great challenges but continues to do great things whether the economy is strong or weak. He stated that as long as we have good and dedicated teachers, and students who will come to school committed to learn, that Kentucky will survive. He then introduced and welcomed new LRC employee Amie Elam, committee assistant.


There being no further discussion, the meeting was adjourned at approximately 11:40 A.M.