Interim Joint Committee on Appropriations and Revenue


Minutes of the<MeetNo1> 3rd Meeting

of the 2007 Interim


<MeetMDY1> September 27, 2007


The<MeetNo2> 3rd meeting of the Interim Joint Committee on Appropriations and Revenue was held on<Day> Thursday,<MeetMDY2> September 27, 2007, at<MeetTime> 1:00 PM, in<Room> Room 154 of the Capitol Annex. Senator Charlie Borders, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Charlie Borders, Co-Chair; Representative Harry Moberly Jr, Co-Chair; Senators David E. Boswell, Tom Buford, Carroll Gibson, Ernie Harris, Alice Forgy Kerr, Bob Leeper, Vernie McGaha, Robert Stivers II, Gary Tapp, Elizabeth Tori, and Jack Westwood; Representatives John A. Arnold Jr, Carolyn Belcher, Scott W. Brinkman, Dwight D. Butler, Larry Clark, James R. Comer Jr, Jesse Crenshaw, Bob M DeWeese, Jon Draud, Danny Ford, Derrick Graham, Mary Lou Marzian, Lonnie Napier, Fred Nesler, Don Pasley, Marie Rader, Rick Rand, Charles Siler, Arnold Simpson, John Will Stacy, Tommy Turner, Jim Wayne, Robin L. Webb, and Brent Yonts.


Guests:  Christie McCravy, Tyler Allen, and Raymond Burse,  Kentucky Center for African American Heritage; Tom Platt, Management Partnership Services, Inc.


LRC Staff:  Pam Thomas, Charlotte Quarles, John Scott, Jennifer Hays, and Sheri Mahan.


Chairman Borders introduced a committee resolution honoring retiring Deputy Director Janie Miller.  Chairman Moberly read the resolution and commented on Ms. Miller's integrity and work ethic.  Senator Boswell moved for the adoption of the committee resolution.  The motion was seconded by Representative Webb.  The motion carried by voice vote.


Representative Ford moved for the adoption of the minutes from the previous meeting.  Senator Tori seconded the motion.  The motion carried by voice vote.


Ms. Christie McCravy, Board Chair of the Kentucky Center for African American Heritage addressed the committee regarding the center's work and desired future expansion.  Speaking with Ms. McCravy were Tyler Allen, board member, and Raymond Burse, Vice Chair of the Board for the center.  Ms. McCravy discussed the progress towards completion of the project, which is currently 67% complete.  She also discussed the educational opportunities that will be offered by the center to Louisville and the state.  Ms. McCravy then presented a virtual video tour detailing the center at completion, and future desired expansion of the center.  She requested $750,000 during the next biennium for educational programs and administration.  Mr. Burse discussed how the center would utilize the funds, stating the funds would allow the center to expedite the processing of the Memorandum of Agreement to accelerate the completion of the center.  


Senator Harris asked if the center will feature a display concerning the Tuskegee Airmen. Ms. McCravy replied that the permanent exhibit would address the civil war and Camp Nelson.  There will be traveling exhibits presented at the center which could possibly include an exhibit on the Tuskegee Airmen.


Representative Napier stated that an African American Heritage Festival has been proposed for his district and he asked if the center could assist in getting the festival started.  Ms. McCravy stated that yes, the center could assist in festival start up, as well as traveling educational programs.


Representative Draud asked about the size and total cost of the facility.  Ms. McCravy replied the center is approximately 100,000 square feet with an estimated $26 million cost. 


Representative Crenshaw asked what the offered loan amounts are for US Bank and Community Ventures.  Ms. McCravy stated that the Community Ventures loan has expired, but the US Bank loan is $7.5 million.


Senator Boswell suggested the center make a proposal to both candidates for governor.


Next, Mr. Tom Platt of Management Partnership Services, Inc. (MPS) discussed student transportation funding and operations in Kentucky.  The 2006 budget bill (House Bill 380) called for a study to evaluate the formula for allocating state transportation funds to local school districts.  Also, the study was to evaluate local school district transportation operations.  Mr. Platt stated that MPS was contracted with to conduct the study and report to the Legislative Research Commission.  He briefly discussed the background of MPS.   


Mr. Platt stated that MPS studied four key aspects in their report which were: 1) student transportation funding in general; 2) evaluation of the current formula in practice; 3) evaluation of student transportation operations in Kentucky; and 4) alternate formulas  and recommendations.  First, he discussed transportation funding in general providing an overview of the key objectives for funding mechanisms.  He also discussed current approaches utilized by the 50 states. 


Next, Mr. Platt discussed the evaluation of the current funding formula in practice.  He stated that the formula distributes funds on the basis of the average cost for a given level of student density.  The funds that are received are not directly influenced by how much is spent, therefore spending more or less in a given year will not alter the amount of funding received. He said that at the local district level the understanding of formula design and purposed is mixed and that funding implications are generally not considered as part of operational decisions.  In most districts, decisions are made based on local service needs, expectations, and financial constraints.  Mr. Platt stated that the current funding formula is not efficiency based and does not motivate districts to reduce costs.


Mr. Platt then discussed transportation operations in Kentucky.  He stated that the state has diverse geography, but is dominated by small, low density service areas and there is a low demand for enhanced services.  He said the average cost to run and operate a school bus is low in Kentucky relative to the national average and the average cost to transport each student is comparable to the national average.  Mr. Platt concluded that industry best practices are being applied in Kentucky to the extent they are not limited by the operating environment.  He discussed the low usage of routing software in the state.


Mr. Platt discussed funding formula alternatives and recommendations. He said that one alternative would be allocating an equal amount for each eligible student.  This simplifies the administrative process and provides clear methodology. However, this method does not promote efficiency or account for important factors outside the control of local districts. A second alternative is to retain the current funding formula, but to improve its formulation.  This would improve equity by treating current inputs as site characteristics.   A third alternative is to implement a new formula model.  This is called an efficiency frontier model.  This model incorporates all relevant site characteristic, provides full, but not surplus, funding for the most efficient districts, and incorporates an inherent efficiency motivation by providing proportionately less funding for less efficient districts. Mr. Platt said that this style of funding formula is the most complex and difficult and the most costly to administer. 


Chairman Borders asked if the state could purchase and implement routing software in areas where it is not utilized.  Mr. Platt replied that he can not comment on the cost of systems because they vary widely.  He did say that there is precedent in at least one state where routing software has been implemented on a statewide basis.


Representative Comer asked if any states have privatized their public school transportation.  Mr. Platt replied that he is not aware of any state systems that have privatized entirely, but that a few local districts have.


Representative Draud asked if interviews were conducted in researching the report.  Mr. Platt stated that seven regional meetings were held, which were sponsored by the educational cooperatives around the state.  Local school district transportation officials and school officials attended those meetings. Representative Draud asked what complaints were offered by the officials.  Mr. Platt stated that the primary complaint was lack of funding. 


Representative Clark asked what state at present has the best funding formula.  Mr. Platt said that if the goal is to promote efficiency the formula must be complex and that it would be hard to single out one specific state as the best example. 


Representative Webb asked what the best formula would be for states with such contrasting demographic and geographic realities such as Kentucky.  Mr. Platt responded that the best formula is one that promotes efficiency and incorporates into the formula factors that account for uncontrollable aspects of service delivery.


Representative Wayne asked if utilizing mass transit for pupil transportation is beneficial to a school system.  Mr. Platt replied that he is not aware of any local district utilizing mass transit in Kentucky.  This approach is commonly used in urban areas around the country, but there are issues as to transportation availability.


Senator McGaha stated that with the diversity in our state, it is almost impossible to implement an equitable funding formula with meets every local district needs. 


Senator Harris asked what causes the differences in how much comparable districts spend on pupil transportation.  Mr. Platt responded that typically the level of services offered by the district is the largest determining factor.


Chairman Borders thanked those who testified.  He informed the members that the next meeting would be held on October 18, 2007 in Lexington at Keeneland.  Staff will provided details to the members. 


There being no further business, the meeting was adjourned at 2: 25 p.m.