Program Review and Investigations Committee




<MeetMDY1> November 9, 2004


The<MeetNo2> November 9, 2004 meeting of the Program Review and Investigations Committee was held at<MeetTime> 10:00 AM, in<Room> Room 129 of the Capitol Annex. Senator Katie Stine, Co-chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Katie Stine, Co-Chair; Representative Charlie Hoffman, Co-Chair; Senators Charlie Borders, Brett Guthrie, Ernie Harris, David K. Karem, Vernie McGaha, and Dan Seum; Representatives Dwight Butler, Rick Nelson, Dottie Sims, and Jim Thompson.


Guests:  Dale Brown, Superintendent, Warren County School District; Curtis Hall, Superintendent, Southgate School District, and Kyna Koch, Associate Commissioner, Office of District Support Services, Kentucky Department of Education.


LRC Staff: Greg Hager, Committee Staff Administrator; Kara Daniel; Rick Graycarek; Tom Hewlett; Margaret Hurst; Van Knowles; Erin McNees; Cindy Upton; Susan Spoonamore, Committee Assistant; and Dudley Cotton, LRC Budget Review Staff.


Minutes of September 9, 2004 and October 19, 2004 were approved, without objection, by voice vote upon motion made by Sen. Karem and seconded by Sen. McGaha.


Cindy Upton, Program Review staff, presented a summary of the draft report Kentucky Can Improve the Coordination of Protective Services for Elderly and Other Vulnerable Adults. (A full presentation was made at the October 19, 2004 meeting).


Sen. Stine asked if the report was recommending that an alleged perpetrator be placed on a roster if the alleged abuse had only been substantiated but not adjudicated through the court system.


Ms. Upton stated that a person's name did not go on the Nurse Aid Registry until the abuse had been substantiated. She said that once a case had been substantiated, then the alleged perpetrator could go through an administrative appeals process or through the court system. While the case is being decided in the appeal process, the person's name does not go on the registry.


Sen. Stine stated that it was important to note the definition of substantiation and adjudication. In these type cases, it would be a social worker who substantiated the abuse, but adjudication would be a decision of the court.


The report Kentucky Can Improve the Coordination of Protective Services for Elderly and Other Vulnerable Adults was adopted by roll call vote, upon motion made by Rep. Hoffman and seconded by Rep. Sims.


Sen. Stine asked Dale Brown, Superintendent of the Warren County School District, to speak on the issue of limited English proficiency students in the school systems. 


Mr. Brown stated that the Warren County School District was facing a significant increase in the number of students with limited English proficiency (LEP). He stated that ten years ago the Warren County School District had ten students with LEP, and today there were 534 students speaking 19 different languages. He stated that some of the students are given one-on-one attention and there are classrooms for LEP students. He stated that teachers, interpreters, and translators have to be hired along with parent facilitators. He stated that the school district has to purchase computer software programs that cost $15,000 to $30,000 per school.

Mr. Brown stated that he would like to ask that the SEEK formula provide funding for the limited-English-proficiency students. He said that the estimated cost per LEP student would  be between $500 and $700. 


Sen. Karem asked for details on the software programs that would cost $15,000 to $30,000. 


Mr. Brown stated that it is a language program called Open Book to Literacy. It assists students in word skills and the overall reading process.


Sen. Karem asked if the school district had to actually buy the program.


Mr. Brown stated that the school district would buy the program. He said that $15,000 would cover LEP students, but the school district would also like to expand the program into other areas.  


Sen. Harris asked Mr. Brown for his suggestions on making changes to the SEEK formula to include funding for the limited-English-proficiency students.


Mr. Brown stated that more funding was needed for early childhood, technology, and assessments.


Sen. Harris asked how much growth had occurred in the Warren County School District over the past ten years.


Mr. Brown indicated that the district was growing at the rate of 225 students per year. He stated that 15 years ago the District had 8,200 students compared to the present student population of approximately 12,000.


Sen. Seum stated that 30 million people were noncitizens and there are 45 million people without health insurance. He said that he was curious as to how many of the 45 million without health insurance were noncitizens. He noted that this is a serious issue due to the potential costs for taxpayers.


Sen. Stine asked Curtis Hall, Superintendent of the Southgate School District, to speak on teachers' salaries and why some schools receive more money than others through the SEEK formula. 


Mr. Hall stated that the practice of state government mandating salary increases to staff members and funding those increases through the SEEK formula is a major concern to his district. He said that some districts had benefited greatly from the formula, but there were districts that had also been penalized. He stated that because his school district was covered through the hold harmless provision, the Southgate Independent School District had been penalized under the SEEK formula.


He explained that the hold harmless provision does not allow the district to receive additional funds per child to meet the mandated salary increases through the SEEK formula. He stated that the salary schedule shows that his district ranks 175 of 176 school districts in Kentucky. He said that the mandated salary increase included in HB 1 would cost his district an additional $22,576, which would not be funded by the Commonwealth.


He stated that in 1990, his district ranked 90th of 176 districts in total funding from the state, and in 2003 his district ranked 166th of 176 school districts. He stated that local funding had increased from $1,029.38 per child in 1990 to $3,045.69 per child in 2003, representing a 295 percent increase in local funding with state funding per child remaining the same. He stated that his district deserved to be funded in an equitable and adequate manner as required by the Constitution of the Commonwealth of Kentucky.


Sen. Stine stated that the Rose decision made it clear that there should not be winners and losers when it comes to education.


Sen. Karem asked what type of changes could be made to the SEEK formula.  


Mr. Hall stated that he would support enhanced funding for all districts.


Sen. Stine said that an unintended consequence of the school funding formula is that all districts are not treated equitably. She explained that she filed SB 220 (2004 Regular Session) to allow equalization of utility tax or permissive tax revenue. She said that she intends to file legislation again that will allow equalization of local funds other than just property tax revenues.


Sen. Karem asked if it would be helpful to the school districts if more emphasis was placed on adequacy.


Mr. Hall stated that it would be helpful as long as all districts were adequately funded. 


Sen. Karem asked for clarification that the superintendent was not advocating that money be taken back from poor districts.


Mr. Hall agreed with Sen. Karem's clarification.


Sen. Stine stated that her efforts through SB 220 were to recognize that there was a new set of problems that needed to be addressed, and not that funding should be reduced for any district.


Sen. Karem said that officials should avoid thinking about school funding in a parochial way, keeping in mind that a poorly educated workforce in any part of the state affects everyone.


Sen. Seum asked how many students were currently in the Southgate School District, and how many buildings were in the school district.


Mr. Hall stated that there was 166 students enrolled in the school district, and that there was one building.


Sen. Seum asked if students could receive a quality education in such a small school district.


Mr. Hall stated that a small school could provide quality education. He said that based upon the CATs assessment, Southgate was meeting its goals.


Dudley Cotton, LRC Budget Review staff, spoke to the committee on the statutory authority for teachers' salaries and SEEK. He stated that HB 402, which was passed in the 2002 regular session, contains a provision regarding certified personnel (teachers, principals, librarians, and guidance counselors). He said that the provision stated that certified personnel shall be entitled to the same percentage pay raise as is given to the state employee group, and that the dollar value of that increment would be distributed through the SEEK formula. If it were 5 percent, that would amount to $106 million. He explained that because the money goes through the SEEK formula, districts with less property wealth get a greater share of state money and districts with higher property wealth get a lower share.


Sen. Karem asked if there was a hybrid approach that would help continue to create equity across the state.


Mr. Cotton stated that modification to the hold harmless provision would help the Southgate Independent District and the other two school districts that are under the hold harmless provision.


Sen. Karem asked what type of modification could be made to the hold harmless provision.


Mr. Cotton stated that over the past several years there had been efforts in the General Assembly  to adjust the hold harmless amount for inflation so that these districts would receive an annual increase regardless of the hold harmless provision.


Sen. Stine introduced Kyna Koch, Associate Commissioner, Office of District Support Services, Kentucky Department of Education.


 Ms. Koch stated that as recommended by the committee's report on SEEK, the formula had been rewritten into new code, including the transportation part of the formula. She stated that KDE was close to completely implementing the report's recommendations. 


Ms. Koch stated that in the 2004-2006 budget, the Kentucky Board of Education had requested that a weight be added to the SEEK formula for limited-English- proficiency students. She stated that there was general recognition of the need for funding LEP, but financial priorities would be a factor.


She stated that she agreed that adequacy was an issue in the SEEK formula. She stated that putting a considerable amount of money into the formula would actually fix the problem for Southgate and Fayette County, but that the Anchorage school district would still be under the hold harmless provision. 


Sen. McGaha asked for a definition of adequacy.


Ms. Koch stated that in her opinion, adequacy meant sufficient resources to meet the needs of the students according to the standards that were set in 1990 through the Kentucky Education Reform Act. She stated that the Kentucky Board of Education had commissioned two adequacy studies. She said that one of the studies estimated that the SEEK formula needed an additional $750 million; the other estimated $1.2 billion. Neither of these estimates included salary increases for teachers.


Sen. McGaha asked if the studies were completed by two different companies.


Ms. Koch stated that both studies were conducted by the same company, but used two different approaches. 


Sen. Stine stated that equity was just as important as adequacy. She stated that inequity still existed in the SEEK formula and it needed to be addressed so that all children are treated equally. 


Sen. Stine opened the floor for discussion of study topics. 


Sen. Guthrie requested that three suggested study topics (2, 14 and 21) be combined. He asked for an analysis of school districts' administrative costs, including a comparison of  Kentucky to other states in the percentage of school personnel in the classroom. He also asked staff to look at what percentage of the costs were the result of legislation or KDE mandates, including reporting requirements, and to compare teacher's compensation to that of surrounding states and to compare teachers' salaries to private sector compensation in Kentucky.


Sen. Harris stated that he would like for staff to find out if there was a disproportionate number of administrators in schools that had stable or moderate growth, and if so, have recent statutory changes contributed to this.


A study of school administrative costs and teachers' salaries was approved by roll call vote, upon motion of Sen. Guthrie and seconded  by Sen. Harris.


Sen. Seum proposed that staff study, evaluate and make recommendations to improve the process for issuance, tracking, and servicing of criminal warrants (topic 19). He stated that Jefferson County had approximately 50,000 outstanding warrants including misdemeanors. He asked staff to look at the outstanding warrants to determine how many were for violent crimes.


A study of criminal warrants was approved by roll call vote, upon motion made by Sen. Seum and seconded by Sen. Karem.


 Sen. McGaha proposed that the committee do a study of the Medicaid Management Information System and KASPER (Kentucky All Schedule Prescription Electronic Reporting System) to determine if there are issues or problems with the systems that can be corrected through legislation or through the request-for-proposal process (topic 10).


Sen. Harris asked if the results of the study would expose existing fraud.  He also asked if staff would include recommendations to tighten up the system if they found that the problems were omissions instead of fraud.


Sen. McGaha stated that he hoped the report would address those issues. He also asked staff to look at how the information system can weed out those ineligible for Medicaid.


A study of the Medicaid Management Information System and KASPER was approved by roll call vote, upon motion made by Sen. McGaha and seconded by Sen. Seum.


Sen. Borders stated that the General Assembly would probably need to look at the reimbursement rates for providers in the future. He stated that reimbursing providers for only 60 to 65 cents per dollar of actual costs was a major problem.


Rep. Hoffman proposed that staff study the outsourcing of services to other countries, including an analysis of trends in other states (topic 13).


A study of outsourcing was approved by roll call vote, upon motion made by Rep. Hoffman and seconded by Sen. Guthrie.


Rep. Butler proposed that staff study whether Kentucky should develop a long-term plan for water and sewer facilities that would be similar to the six-year highway plan (topic 9).


Sen. Stine asked that the study include a determination of how well SB 409 (enacted 2000 Regular Session) was working to improve the planning process for such projects.


A study of planning for water and sewer projects was approved by roll call vote, upon motion made by Rep. Butler and seconded by Rep. Thompson.


Meeting adjourned at 11:50 a.m.