The3rd meeting of the Subcommittee on Elementary and Secondary Education of the Interim Joint Committee on Education was held on Monday, November 8, 2004, at 10:20 AM, in Room 129 of the Capitol Annex. Representative Jim Thompson, Chair, called the meeting to order.
Guests: Emil Jezik, Education Cabinet, Office of Career and Technical Education (OCTE) of Kentucky Workforce Investment; Rodney Kelly, Office of Career and Technical Education (CTE) of the Kentucky Department of Education; and Wayne Young, Kentucky Association of School Administrators.
LRC Staff: Audrey Carr, Janet Stevens, and Jo Ann Paulin.
Representative Thompson welcomed everyone and introduced Senator Katie Stine who sponsored SB 220 during the 2004 Legislative Session. Senator Stine discussed her legislation to make changes to the SEEK school funding formula.
Senator Stine asked the committee to look at the handouts in the committee folders that are a part of this record. Senator Stine said that the SEEK formula was part of the Kentucky Education Reform Act that was created to address inequities that existed in the system in how schools were funded. There were many inequities that were addressed through that system but as happens sometimes there are unintended consequences. There are some inequities that have been created by the effort to address the other inequities. Senator Stine said that her proposal will: 1) Provide funding to school districts that have limited English proficient students; 2) Fund transportation for students living one-fourth mile or greater from school; 3) Provide for SEEK equalization of permissive taxes; and 4) Establish an equivalent property tax rate (EPTR).
Senator Stine explained that SEEK equalizes funds to school districts based on their property or occupational values. However, some school districts also levy permissive taxes such as utility taxes. Senator Stine said that her legislation would allow school districts the option to continue to use the current system for school funding or they could choose to have the utility or permissive taxes equalized. If school districts choose to have permissive taxes equalized, the permissive taxes could not be used for Tier I. Tier I would have to be matched with property taxes. Many districts have property tax rates sufficient to fund Tier I and equalize permissive taxes. Senator Stine gave an example of the inequities that currently exist, comparing the Frankfort Independent and Ludlow Independent districts. In the example Senator Stine said that a family owns a home that is assessed at $150,000 and they own a car that is valued at $15,000, and that two school districts have the following equivalent tax rates:
Frankfort Independent - - 83.7 cents
Ludlow Independent - - 76.9 cents
Both districts levy a utility tax. In which district would you prefer to pay taxes? Senator Stine explained that given a choice on the face of the data, most people would choose Ludlow Independent district. Senator Stine said that both districts levy a three percent utility tax rate, so you would pay approximately the same amount for the tax on utilities in both districts. However, in reality the tax burden would be greater in the Ludlow district.
For 2003 - 2004, Frankfort has a total school tax on real property of 43.6 cents. The tax on the $150,000 home would be $654.00. Frankfort also has a motor vehicle tax of 44.5 cents so the tax on a $15,000 automobile would be $66.75. The combined school tax paid on the two properties in Frankfort would be $720.75. For 2003 - 2004, Ludlow has a total school tax on real property of 64.9 cents. The tax on the $150,000 home would be $973.50. Ludlow also has a motor vehicle tax of 74.6 cents so the tax on a $15,000 automobile would be $111.90. The combined school tax paid on the two properties in Ludlow would be $1,085.40. A person would pay an additional $364.65 in school taxes in Ludlow.
Senator Stine asked which district has the most combined per pupil local and state revenue for FY 2003 - 2004. She said the two districts had the following combined local and state revenue: Frankfort - - $7,849.23 Ludlow - - $6,266.17. Therefore, Frankfort had $1,583.06 more per pupil revenue than Ludlow. Senator Stine said that some would suggest the difference was probably due to the SEEK add-ons (at-risk, special education, transportation, and home & hospital). That accounts for some small portion of the difference. If you adjust for the add-ons, Frankfort had revenue of $7,849.23 minus the add-on of $1,201.21 which gave a balance of $6,648.02. Ludlow had revenue, using similar calculation, of $6,266.17 minus $665.71, giving a balance of $5,600.46. While $535.50 of the difference is due to the add-ons, most is due to other factors. Senator Stine said that if you are a parent living in Ludlow with children in the public schools, you pay substantially more taxes than a parent in Frankfort, However, your children's schools have less financial resources. She said the major difference is due to the three percent utility tax rate. This rate produces substantially different per pupil revenues in the two districts. It generates $1,075.32 in Frankfort and only $184.76 in Ludlow.
Senator Stine said to correct this inequity she proposes a bill to equalize the permissive taxes to 150 percent of the previous year's statewide revenue generated by permissive taxes, provided the revenue is not used to equalize the adjusted base, Tier 1 or Facilities Support Program of Kentucky (FSPK). The bill defines an equivalent property tax rate for the purposes of funding the base SEEK, Tier 1, and FSPK with an equivalent property tax rate instead of an equivalent tax rate. It requires that an additional tax levied by a local board after the effective date of this bill to be subject to recall, which is what is currently the case. Her proposal would eliminate the recall provision for those districts that wish to levy a permissive tax and reduce the property tax by an amount equal to the revenue generated by the permissive tax. Therefore, the citizen paying the taxes would have the same burden but the schools would actually generate more money.
The bill would also allow the local board of education to continue to fund base SEEK, Tier 1, and FSPK using an equivalent tax rate or an equivalent property tax rate. If permissive taxes are equalized, the revenue from those taxes may not be used as part of the equivalent tax rate. That would be double dipping.
Senator Stine asked Faurest Coogle to briefly give an explanation. Mr. Coogle said that currently SEEK is funded through an equivalent tax rate. The equivalent tax rate is determined by taking all the revenue that is generated by all the taxes (property and permissive taxes) for the previous year and dividing the total revenue by the total current property assessment in the district. Several variables impact the actual revenue, for example, the Sheriff's percentage for collecting. Some districts pay one percent, or one and a half percent, and some four percent of the total revenue. Also, the discounts given for early payment impact the total revenue. There are also people who don't pay their taxes. These variables are eliminated in this bill. Every year the Department of Education sends to each district the total evaluation of property in each classification (real property, personal property, and motor vehicles for the current year) as certified by the Revenue Cabinet. The equivalent property tax rate takes the tax rate that is levied by the district for the current year times the evaluation of property for the current year in each classification, which are then added together and divided by the total assessment. This calculation actually increases the equivalent property tax rate slightly over what it would be if the previous year's revenue is used. Therefore, a few more districts would be able to participate in equalization of permissive taxes as they could fund more of Tier 1, or in many instances all of Tier 1, with property taxes.
Senator Stine said she is seeking to address the needs of school districts, such as Jefferson, Warren, and Fayette, who are grappling the most with the issue of children who don't speak English. The legislation will also help with transportation needs of the various school districts. It also provides an option for school districts who are currently being hurt by some of the inequities that are in the current SEEK formula. Senator Stine provided a packet of in-depth graphs that show, county by county, all the calculations needed to be considered in the event her legislation proposal is adopted.
Representative Thompson asked how many districts would be included in a similar situation as the Ludlow school district. Faurest Coogle directed the committee to the legal size chart entitled "Additional Revenue Assuming No Additional Local Taxes." Mr. Coogle said looking down the chart you will see "Per Pupil Additional Revenue." The counties with significant amounts would fit in the same category as Ludlow Independent. He said there were probably more districts with the revenue from permissive taxes in the situation as Ludlow than there were districts in the category of Frankfort. Representative Thompson asked for a ball park figure of how many districts fit the category of Ludlow schools. Mr. Coogle said 60 - 90 districts. Representative Thompson said that would be more than one third of Kentucky's districts. Mr. Coogle said it would benefit significantly those in that category and he asked the committee to look on the form at the column that says "2002 - 03 Per Pupil State Permissive Tax Revenue." This column will show the additional revenue that is projected for each district under the proposal. Representative Thompson said he realized that this is a complicated issue but he said when you fix one thing, then another item may be affected. He asked what was the downside to this change.
Senator Stine said that the beauty of this bill is that it is volitional. If the district chooses to continue under the old system it can do so. This provides an alternative method for those districts being hurt by the current system.
Senator Guthrie said that there was a chairman of a rather large national corporation who made comments to him comparing Bowling Green to Northern Kentucky and other counties in the south where they were considering locating. His comment was that some of his countrymen could come to Bowling Green and immediately fit in and blend in because of the cultural diversity that has developed over the past few years. Senator Guthrie said that Mr. Coogle could explain that to track a student's educational development you only need to look at the mother's educational attainment. There is a high correlation between the two, and Kentucky has many people that come from countries that do not have, particularly for women, overall good education systems. Kentucky is dealing with kids that are academically behind and also not able to speak the language. Senator Guthrie then asked if the property tax rate is dropped to equal that raised by a utility tax, whether more revenue would be generated without the taxpayer paying more.
Mr. Coogle said there were 17 districts that do not have a permissive tax. He said by his estimation 13 or 14 of these districts have extremely high property tax rates. If permissive taxes are equalized, they then must equalize calculated base SEEK, Tier 1, and FSPK with property tax rates. He said these districts have tax rates high enough that they could reduce their property tax rate by an amount that would be equal to the revenue that a permissive tax would raise and still have property tax rates sufficient for base SEEK, Tier I and FSPK. Locally, it is the same tax burden and they receive the same amount of tax money. However, once they do that, they could participate in equalization of permissive taxes from the state, and receive additional state funds. Senator Stine said that property tax is limited and is capped, whereas utility tax is going to grow as you have more entities paying a utility tax. Mr. Coogle said that one of the criticisms was that districts who do not currently have a permissive tax are penalized because they could not levy one and participate without being subject to recall. This changes that by allowing the levying of a permissive tax with the reduction of property taxes. Senator Stine said they would still be subject to recall if they wanted to go off without counterbalancing it. It was important to her for this not to be perceived as a tax increase, but rather an opportunity for the districts to balance taxes and get more money from the state.
Representative Cherry asked Senator Stine to explain the cost to the state of what this bill will do. Senator Stine referred the committee to the handouts. The cost of the limited English proficiency portion would be an estimated $5 million per year. The cost of the transportation would be an estimated $14 - $16 million per year. The total cost to the state, if the bill is fully implemented, would be $134 - $136 million per year. She suggested it could be phased in as money is available. She said the state needs to do what is fair and equitable. There are needs in the school system that should be met. Representative Cherry said Senator Stine wouldn't get any argument from this group about more money needed for education.
Senator Kerr said she appreciated Senator Stine for undertaking this issue and she very much wanted to be a co-sponsor of this bill. Representative Thompson thanked Senator Stine for her time and diligence.
Representative Thompson stated that based on a study by the Subcommittee on Vocational Education of the Interim Joint Committee on Education, a recommendation was made to immediately start a process that would identify the geographical areas, including specific schools, where students lacked access to high speed, high-demand occupational programs, and to prioritize where new programs should be placed when funds become available. Representative Thompson introduced Mr. Rodney Kelly from the Department of Education's Division of Career and Technical Education and Mr. Emil Jezik from the Office of Career and Technical Education of Workforce Investment to discuss a recently completed study.
Mr. Kelly said that Mr. Jezik would give the presentation of the summary entitled "Career and Technical Education and Program Access and Prioritization of New Programming." The handout for this presentation is a part of this record.
Mr. Jezik said there were now two departments and he represents the Office of Career and Technical Education (CTE) that resides in the Education Cabinet. Mr. Kelly represents the Division of Career and Technical Education that resides in the Department of Education. Mr. Jezik said his aspect of CTE is coordinating the 53 state operated area technology centers and their satellites. Mr. Kelly's basic responsibility is for the locally operated CTE programs that exist throughout Kentucky.
Six guidelines were provided for the direction of the study. The six guidelines included: 1) Study based on state and national employment projections through 2010; 2) Factors impacting program access would be documented for each county and all high schools within the county; 3) Documentation for each high school to include: a) which high-needs, high-demand occupational programs were not offered; b) high school enrollment, percentage of students enrolled in high-needs, high-demand occupational programs; c) the distance to the nearest area technology center when appropriate; d) lack of participation to the nearest area technology center when appropriate; e) lack of participation even though access to programs was possible; and f) other information pertinent to program access; 4) Schools would be ranked according to the factor(s) deemed to have the greatest impact on program access; 5) Rankings of schools would be further delineated into priorities of 1-3 with schools in priority "1" recommended for new programming that may include new center construction; and 6) Study findings and recommendations would be depicted on a Kentucky map according to colors designated for each priority.
A committee analyzed these guidelines for information from several sources to identify high-needs, high-demand occupations. The sources that provided the most up-to-date information were the "Occupational Handbook" published by the Bureau of Labor Statistics, U.S. Department of Labor, the 2002 - 2003 " Kentucky Career Guide" published by the Kentucky Cabinet for Workforce Development, and the "Kentucky Statewide Occupational Employment Outlook and Job Openings" developed by the Department for Employment Services.
The seven high-needs, high-demand occupational areas identified were: 1) health - allied health and pre-nursing; 2) informational technology; 3) automotive technology; 4) carpentry; 5) computer aided drafting; 6) electrical technology; and 7) welding. This does not exclude other areas such as manufacturing and other mechanical technical type programs but these were the listings that were showing the greatest shortages. These occupations provided the base for developing a program accessibility report by counties and schools. Documentation for each school was obtained from the 2002 - 2003 Technical Education Data System and other reliable sources. Mr. Jezik had the committee turn to the first map in the handout labeled "Career and Technical Centers Serving Secondary Students."
Mr. Kelly said he would highlight the findings of the study and show where there is inequitable access. He directed the committee to the second map, a color coded geographical representation of the priority and need for career and technical programs. He said the color red was designated for priority one, yellow for priority two, and green for priority three. The red counties show where less than five percent of the high school population is enrolled in high-needs, high-demand occupational programs and program access is very limited. There are also some schools that are a priority since they have access, but various circumstances keep students from participating.
The yellow counties have from five to 10 percent of the high school population enrolled in high-needs, high-demand occupational programs. In the 234 high schools found within these yellow and red counties, 90 have more than 10 percent of the high school students enrolled in the programs, 52 have between five and 10 percent enrolled in the programs, and 92 have less than five percent of students enrolled in the programs. The 92 schools represent a total enrollment of 72,900 students. Of that population, just slightly more than 3,000 are enrolled in career and technical education programs.
Mr. Kelly said the first map showed the location of the centers. He said you could overlay the maps and the areas would correspond as to the districts with the highest priorities and the areas that need centers. He gave Hardin County as an example of this situation. There are 5,000 students enrolled in the high school level and 74 of those students have access to these type programs. In Warren County there are over 3,000 students enrolled in high school, yet only 100 of these students have access to these programs. Pulaski County has 2,400 high school students, and less than 100 of these students have access. In these three districts alone, total enrollment exceeds 10,000 high school students, but fewer than 300 students have access to the programs. This is fewer than 2.5 percent of the students. There are significant inequities in Kentucky schools related to access to career and technical education programs.
In 53 state operated ATCs, 80 percent of the enrollment comes from the local high school district. Basically, the location of the centers is a factor on the availability of these programs to the students. Distance is definitely a factor, as transportation becomes an issue when you get outside the home high school area. A high school by high school analysis of this problem was done. The report lists every high school and where they do or do not have access to programs.
In the last 25 years, there have only been three technical centers constructed in Kentucky. The majority of the high schools were built back in the 1960's, and very little construction has occurred since that time. There are a few districts that are looking at constructing now, but funding is a major issue. Many school districts realize they have limited access for their students, while understanding that these programs are directly connected to economic development for Kentucky. Research shows that once students are enrolled in focused fields of study in the high school level, they begin to develop a plan for what they will do after high school and after postsecondary education. This improves academic performance in schools. Career and technical education students made more gains on the CATS achievement assessment in the last two years than did all other students.
Health care is a major area where occupational shortages exist in the nation and in our state as well. Secondary programs either at the high school or the ATCs are getting students into these occupational areas. However, there are 44 counties in Kentucky where students do not have access to a secondary health science program.
This study has prioritized where these programs are needed. Mr. Kelly said there are multiple ways to accomplish this task, including constructing centers in those pockets of high need areas, adding programs at the high school level at the community or technical college level, or providing on-line internet courses as an option. The major concern is the inequities across the state.
Mr. Jezik said all the programs in state operated facilities give academic credit to students. An example of this is that students now receive geometry credit when enrolled in carpentry classes.
Representative Graham said he comes from a county that has two different school districts, independent and county. He asked what has been the policy for trying to encourage two different districts to work together to develop these programs. Mr. Kelley said they have encouraged districts to work together. He said there are sometimes issues between local boards of education, but in many cases there are good relations. One example is Fayette County where they have two centers and they have students coming from Jessamine and Scott Counties to participate. The three districts have a good working relationship that provides good opportunities for all students involved.
Representative Graham asked for an example of a partnership between an independent district and a county district. Mr. Jezik said there were some, but there needs to be better working relationships between school districts because scheduling is a major issue.
Representative Graham asked if they would agree that it would better serve the needs of the community and its economic development if an independent district and a county district were working together. Mr. Kelly said Covington Independent operates a local center and they have students from the surrounding school districts involved in programs at that center. Representative Graham asked if the majority of the students are at the center all day. Mr. Kelly said that often there are problems with scheduling and transportation, but most students are there for one, two, or three hours. Representative Graham asked if students included freshman to seniors or is it primarily for upper classes. Mr. Kelly said primarily upper level students, juniors and seniors.
Representative Thompson said that there is a whole segment of students out there not connected to the academic setting that is connected to the vocational setting. He said there is a misconception that vocational education is somewhat dated and that is not really the case these days. It is a changing curriculum and in some ways is more flexible than the traditional school curriculum. It is important to get back on track. Mr. Kelly said one of the enemies of this whole field is the "myths" that have existed for years.
Representative Thompson said he could think of several instances in which the state might have lost students who are now productive members of society and achieving good standards of living because of their training in the vocational schools. Representative Thompson thanked the gentlemen for their presentation and information.
Representative Thompson said the committee had reviewed and discussed the recommendations of the Teacher and Principal Internship Study. There has been difficulty formally approving this because of a lack of a quorum. This committee is going to send the study on to the full committee without taking any action. It will be noted in the report.
There being no further business before the subcommittee, the meeting was adjourned at 11:05 AM.