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Lawmakers in Hawaii have approved a $780-million budget for precollegiate education for the 1988-89 biennium that fails to provide pay raises for teachers in the statewide school system because negotiations with a union have reached an impasse.

The legislature was unable to complete action on the state budget before the end of its 1987 regular session in mid-April when negotiations broke down between the state board of education and the Hawaii State Teachers Association.

The union initially sought a 35 percent pay increase, but eventually lowered its demand to 12 percent. The state board's "best offer'' was 7.5 percent, according to Lionel Aono, the state education department's budget director.

First-year teachers with bachelors' degrees now earn $17,500 annually, Mr. Aono said.

Lawmakers approved the education budget on April 30 at the end of a one-week special session without providing for the pay raises. Henry Epstein, a spokesman for the teachers' association, said the dispute is now before a state fact-finding board. He added that the union hopes it will not have to resort to a strike next fall.

The $780-million education budget will raise state aid to schools by $57 million over its current biennial level, Mr. Aono said. Total state spending under the budget plan will reach approximately $4 billion in the upcoming biennium.

Gov. John D. Waihee 3rd is expected to approve the spending measure, a spokesman for the Governor said last week.

Budget highlights include:

$63.8 million for the maintenance and repair of school buildings.

$12 million to reduce class sizes in kindergarten and the 1st grade, from 26 students to 20 by 1989.

$7 million to hire 200 language-arts and mathematics teachers. The effort is intended to address the needs of gifted, handicapped, underachieving, and "alienated'' students--those with high rates of absenteeism or misbehavior.

Another $2 million was earmarked to add 50 part-time counselors, activity directors, registrars, and other support personnel at intermediate schools.
$2 million for inservice training for teachers and administrators, a substantial increase over the $100,000 appropriated for such programs in the 1986-87 biennium.

The education department also benefited from Governor Waihee's challenge to government agencies in his State of the State Message last January to cut the fat from their budgets, Mr. Aono said. In his address, the Governor said agencies would receive $2 in matching funds for every $1 reprogrammed in an effort to reduce state costs. (See Education Week, Feb. 11, 1987.)

According to Mr. Aono, by cutting back on utility costs and salaries, the education department saved $5- million, entitling it to an extra $10- million in matching funds.--A.P.

The Kansas legislature has passed bills that will restore $17.3 million cut from the fiscal 1987 school-aid budget and raise overall spending for schools in fiscal 1988 by $3.6 million over its new current level.

In setting total state spending last week at $1.9 billion for fiscal 1988, the legislature closely followed Gov. Mike Hayden's budget proposals, which he said would give education "priority treatment.''

The budget will provide $456.2- million in state aid to schools in fiscal 1988, $20.9 million above the amount that districts would have received this year if lawmakers had not voted to restore the $17.3-million emergency spending cut for fiscal 1987.

A separate measure already signed by Governor Hayden will prohibit school districts from increasing their own budgets in the upcoming fiscal year by more than 3.5 percent over 1987 levels.

The law may force some districts to find ways to cut costs to accommodate anticipated increases in enrollment, according to Veryl D. Peter, director of school finance for the state education department.

In other action in its 1987 session, the legislature:
Approved two bills that will require districts to pick up part of the cost of special-education and transportation programs that were paid for either entirely or predominantly by the state in the past.

Under the measures, the state will pay 95 percent of student transportation costs, compared with 100 percent of such costs previously, and 91 percent of special-education costs, compared with 95 percent previously. The total cost to districts of both changes is expected to be $8.3 million.
Altered the state's school-finance formula in an effort to "slow down'' the flow of equalization funds from wealthy to poor districts.

Relatively wealthy urban districts "were losing big chunks of state aid rather quickly'' to rural districts suffering from decliningland values, Mr. Peter said.
Modified the state's income-tax code to bring it into conformity with revisions in the federal tax code. The changes are expected to generate an additional $140 million in revenue.--K.G.

Legislators in Montana have frozen state aid to schools at its current level for the next two years, angering many educators who accused the lawmakers of failing to avert a budget crisis in education.

Elementary and secondary education will receive $536 million in the 1987-89 biennium, the same amount as was approved in the current biennium. The no-growth budget will force many cash-poor school districts to cut both staffing levels and programs, according to R.W. Stockton, a legal assistant in the state school superintendent's office.

"We lost big,'' said Eric Feaver, president of the Montana Education Association. "Educational excellence and equity have taken a back seat to survival.''

Tax matters, as expected, dominated the session, which ended late last month. Last November, Montana voters approved a ballot question that held local property-tax rates at their current levels unless the legislature provided some form of property-tax relief.

No such relief was granted, and the legislature also decided against enacting a 3 percent sales tax proposed by Gov. Ted Schwinden. Education groups, which for years had opposed the imposition of a sales tax, this year supported the proposal.

Educators also lost their battle to preserve the state's $82-million educational trust fund, which is financed by taxes on coal producers. The legislature used all but $2 million of the trust to finance the state government for the remainder of the current biennium, Mr. Stockton said.

The legislature also increased school districts' contributions to the state workers' compensation fund. The effect of the measure will vary among districts, Mr. Stockton said.

Schools have also been hurt by recent property-tax protests by large corporations. The Montana Power Company, for example, is protesting its taxes in several districts throughout the state, Mr. Stockton said. Although no decisions have been made in the cases, the taxes the companies pay are being placed in escrow and cannot be used by the schools.

In other tax-related matters, the legislature approved a 10 percent surcharge on the state income tax, which is expected to provide an additional $40 million in revenue next year.

The state also is expected to receive $78 million in additional revenue by conforming state income taxes to changes in the federal tax code.

Lawmakers also failed to reach a consensus on altering the state school-finance formula. More than 60 school districts filed suit against the state in 1985, charging that the state's foundation program does not make up for funding disparities among districts, and thus violates the state constitution, which requires equal funding for education.

The suit was scheduled to go to trial on May 11. The teachers' association has intervened in the case on the side of the plaintiffs.

The association supports the school-finance formula, but says that not enough money is put into the formula to achieve equalization.

Mr. Feaver said lawmakers mistakenly have attempted to tie reform of the state's tax system and school finance to property-tax relief. As a result, he said, "most school districts won't receive a dime this biennium.''--K.G.

Vol. 06, Issue 33

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