Legislature(2013 - 2014)CAPITOL 106

03/11/2013 08:00 AM House EDUCATION


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08:03:44 AM Start
08:04:07 AM HB133
09:25:14 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 142 STIPEND FOR STATEWIDE BOARDING SCHOOL TELECONFERENCED
<Bill Hearing Rescheduled to 3/13/13>
*+ HB 133 SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE EDUCATION STANDING COMMITTEE                                                                             
                         March 11, 2013                                                                                         
                           8:03 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Lynn Gattis, Chair                                                                                               
Representative Gabrielle LeDoux                                                                                                 
Representative Dan Saddler                                                                                                      
Representative Peggy Wilson                                                                                                     
Representative Harriet Drummond                                                                                                 
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Lora Reinbold, Vice Chair                                                                                        
Representative Paul Seaton                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 133                                                                                                              
"An Act relating to grants for school construction."                                                                            
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 142                                                                                                              
"An Act increasing the monthly stipend available for students                                                                   
attending a statewide boarding school operated by a school                                                                      
district; and providing for an effective date."                                                                                 
                                                                                                                                
     - BILL HEARING RESCHEDULED TO 3/13/13                                                                                      
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 133                                                                                                                  
SHORT TITLE: SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES                                                                          
SPONSOR(s): REPRESENTATIVE(s) EDGMON                                                                                            
                                                                                                                                
02/20/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/20/13       (H)       EDC, FIN                                                                                               
03/11/13       (H)       EDC AT 8:00 AM CAPITOL 106                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
REPRESENTATIVE BRYCE EDGMON                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Introduced HB 133 as the sponsor.                                                                        
                                                                                                                                
TIM CLARK, Staff                                                                                                                
Representative Bryce Edgmon                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:     On  behalf  of   Representative  Edgmon,                                                             
presented the fiscal note to HB 133 and answered questions.                                                                     
                                                                                                                                
ELIZABETH NUDELMAN, Director                                                                                                    
School Finance and Facilities Section                                                                                           
Department of Education and Early Development (EED)                                                                             
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the hearing on HB
133.                                                                                                                            
                                                                                                                                
TOM BEGICH, Political Director                                                                                                  
Citizens  for the  Educational Advancement  of Alaska's  Children                                                               
(CEAAC)                                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 133.                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:03:44 AM                                                                                                                    
                                                                                                                                
CHAIR LYNN  GATTIS called the House  Education Standing Committee                                                             
meeting to order at 8:03 a.m.   Present at the call to order were                                                               
Representatives   LeDoux,  P.   Wilson,  Drummond,   and  Gattis.                                                               
Representative Saddler arrived as the meeting was in progress.                                                                  
                                                                                                                                
        HB 133-SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES                                                                    
                                                                                                                              
8:04:07 AM                                                                                                                    
                                                                                                                                
CHAIR GATTIS announced that the  first order of business would be                                                               
HOUSE  BILL  NO. 133,  "An  Act  relating  to grants  for  school                                                               
construction."   She indicated that  HB 142 was noticed  but will                                                               
not be heard.                                                                                                                   
                                                                                                                                
8:04:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE BRYCE  EDGMON, Alaska State  Legislature, sponsor,                                                               
introduced HB 133.  He said  the bill adds small municipal school                                                               
districts  to the  regional  educational  attendance area  (REAA)                                                               
school construction fund.   This fund was created  to comply with                                                               
the court decision  of Kasayulie v. State  of Alaska, 3AN-97-3782                                                             
CI, (1999).  The bill addresses  five schools that are located in                                                             
first  class  municipalities  but   do  not  have  the  financial                                                               
strength to  bond for school  construction, and are  not included                                                               
in REAA  organizations.  In response  to a request from  the Bush                                                               
Caucus,  HB 133  was drafted  to include  the districts  of Saint                                                               
Mary's, Tanana, Kake, Klawock, and  Hydaburg into the REAA school                                                               
construction fund so that each  would have the ability to receive                                                               
funding in a timely manner.   A small school is defined as having                                                               
an average  daily membership (ADM) of  300 or less, and  in which                                                               
the district's full value per ADM is not more than $500,000.                                                                    
                                                                                                                                
8:06:36 AM                                                                                                                    
                                                                                                                                
TIM  CLARK, Staff  to Representative  Bryce Edgmon,  Alaska State                                                               
Legislature, sponsor,  informed the committee the  fiscal note to                                                               
HB 133 reflects  a change to the annual  capitalization amount of                                                               
the REAA  fund based on  the percentage that the  five additional                                                               
districts add in  the formula used to capitalize the  fund.  This                                                               
change  totals  about  $618,000  in   a  fund  that  is  normally                                                               
capitalized at $34 million to $35 million annually.                                                                             
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked  whether  the  affected  school                                                               
districts  are  now on  the  Department  of Education  and  Early                                                               
Development  (EDD)  capital   improvement  project  (CIP)  school                                                               
construction grant list (school construction list).                                                                             
                                                                                                                                
[The  school  construction  list   referred  to  was  a  document                                                               
included  in  the committee  packet  entitled,  "State of  Alaska                                                               
Department   of   Education   and   Early   Development   Capital                                                               
Improvement  Projects  (FY2014)  School Construction  Grant  Fund                                                               
Final List, Issued 1/22/2013."]                                                                                                 
                                                                                                                                
MR.  CLARK   responded  that  the  bill   references  the  school                                                               
construction list compiled each year by EED.                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON recalled  that state and community funds                                                               
are required for school construction.                                                                                           
                                                                                                                                
MR. CLARK said  there are several possible  match funding amounts                                                               
that  could be  required depending  on certain  factors, such  as                                                               
whether the school district is  bonding for construction, or if a                                                               
school is  in a REAA,  which always  requires some kind  of match                                                               
funds.                                                                                                                          
                                                                                                                                
REPRESENTATIVE P.  WILSON asked  for a step-by-step  analysis: If                                                               
there is not the ability  to bond, what other contributions could                                                               
a community make toward a school project.                                                                                       
                                                                                                                                
MR. CLARK explained that under  the present system REAAs, and the                                                               
proposed districts added by HB  133, would contribute in the form                                                               
of  a match.   In  most cases,  when a  municipality bonds  for a                                                               
school,  the  municipality  will   apply  for  the  state's  debt                                                               
reimbursement  program which  could be  up  to 60  percent or  70                                                               
percent of the bond.  However,  the grant amounts for projects on                                                               
the  EED capital  improvement project  (CIP) school  construction                                                               
grant  list can  differ significantly;  for example,  a non  REAA                                                               
district  seeking  a  grant  would be  eligible  for  80  percent                                                               
funding  with  a  20  percent match,  however,  the  grant  match                                                               
amounts  for REAAs  can be  as little  as 2  percent, or  less if                                                               
deemed necessary.                                                                                                               
                                                                                                                                
8:14:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   P.  WILSON   referred  to   a  list   of  school                                                               
construction projects  "automatically" funded by the  state.  She                                                               
questioned   how  the   bill  will   provide  funds   for  school                                                               
construction faster.                                                                                                            
                                                                                                                                
MR.  CLARK surmised  Representative Wilson  was referring  to the                                                               
"Kasayulie schools,"  which are a  related matter but  apart from                                                               
the  proposed  legislation.   The  Kasayulie  consent decree  and                                                               
settlement  agreement that  followed  the lawsuit  had two  major                                                               
components, one of  which was that the establishment  of the REAA                                                               
fund, which  was set aside  for rural school  construction, would                                                               
address   the  inequities   between   rural   and  urban   school                                                               
construction.                                                                                                                   
                                                                                                                                
CHAIR GATTIS  asked what  HB 133 will  accomplish beyond  what is                                                               
already available.                                                                                                              
                                                                                                                                
REPRESENTATIVE EDGMON clarified that  HB 133 creates fairness for                                                               
five small  schools that do  not have the ability  to participate                                                               
in  a bonding  process,  and that  do not  qualify  for the  REAA                                                               
school construction fund.   In further response  to Chair Gattis,                                                               
he said the  schools do not qualify for the  REAA fund because of                                                               
low property values.                                                                                                            
                                                                                                                                
REPRESENTATIVE P. WILSON  asked why these schools  may not appear                                                               
on either of the two EED priority lists.                                                                                        
                                                                                                                                
REPRESENTATIVE EDGMON  explained the  schools do appear  on EED's                                                               
"master  list,"   but  the  subject   is  funding   sources,  not                                                               
categorization in terms of need, or construction timelines.                                                                     
                                                                                                                                
REPRESENTATIVE P. WILSON questioned the need for HB 133.                                                                        
                                                                                                                                
MR. CLARK  explained that not all  of the five named  schools are                                                               
under construction  and on a list.   He said confusion  may exist                                                               
because  many  schools that  are  listed  appear under  different                                                               
categories, such  as those awaiting  bonding or  weighing bonding                                                               
versus grant opportunities.                                                                                                     
                                                                                                                                
REPRESENTATIVE LEDOUX understood  there are three ways  to have a                                                               
school constructed.                                                                                                             
                                                                                                                                
REPRESENTATIVE EDGMON deferred to EED for further clarity.                                                                      
                                                                                                                                
8:22:32 AM                                                                                                                    
                                                                                                                                
ELIZABETH  NUDELMAN,  Director,  School  Finance  and  Facilities                                                               
Section, EED,  said the proposed legislation  adds five districts                                                               
to the school  districts that can benefit from  REAA funding, but                                                               
makes no  further change  to existing programs.   The  five small                                                               
school districts named  in the bill are being  added because they                                                               
do  not  have the  financial  ability  to bond  for  construction                                                               
projects.     She  advised  there   are  two  means   for  school                                                               
construction:   to  bond, or  through  the grant  program on  the                                                               
school  construction list.   The  REAAs and  small municipalities                                                               
enter through the grant program  on the school construction list,                                                               
and the  projects are  rated each  year by  the department.   The                                                               
REAA funding provides a consistent  source of funding thus as the                                                               
department  rates projects  there is  a constant  and predictable                                                               
stream of funding.   When REAA and small  municipalities meet the                                                               
criteria  for construction,  funding is  available.    As  in the                                                               
past,  projects  on  the school  construction  list  advance  and                                                               
schools that  qualify to use  REAA funding  will do so  when they                                                               
are in funding position.                                                                                                        
                                                                                                                                
REPRESENTATIVE P. WILSON asked to have each list explained.                                                                     
                                                                                                                                
MS. NUDELMAN restated the intent of  the bill.  She explained the                                                               
existing system is  that if a district is capable  of bonding for                                                               
a project,  the state  will reimburse  70 percent  for qualifying                                                               
space  and  60  percent  for  nonqualifying  space.    Otherwise,                                                               
projects can  apply to EED's  school construction list  and await                                                               
funding.   The REAA funding  program simply sets aside  a funding                                                               
source  to  shorten the  wait.    In response  to  Representative                                                               
Saddler, she  said there are  two school construction  lists: one                                                               
for major maintenance and one for school construction.                                                                          
                                                                                                                                
8:27:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  surmised the  REAA law provides  a funding                                                               
source  so that  a REAA  school can  receive funding  even though                                                               
funding may not be available  for schools in Anchorage or Juneau,                                                               
and  the bill  adds  five  small schools  that  do  not meet  the                                                               
criteria to the REAA group.                                                                                                     
                                                                                                                                
REPRESENTATIVE P. WILSON asked how  the bill creates an advantage                                                               
for the five small districts.                                                                                                   
                                                                                                                                
MS.  NUDELMAN stated  the five  small schools  have no  chance to                                                               
obtain  bonds,   thus  they   will  be   placed  on   the  school                                                               
construction  list,   and  when   the  project   reaches  funding                                                               
position, there  will be  a predictable stream  of funding.   She                                                               
pointed out the advantage is  that REAA projects will keep moving                                                               
and projects will be funded without years of delay.                                                                             
                                                                                                                                
8:30:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX queried  how an  urban school  district is                                                               
treated  when a  project reaches  the  funding level  on the  CIT                                                               
list.                                                                                                                           
                                                                                                                                
MS.  NUDELMAN   explained  both  municipalities  and   REAAs  are                                                               
eligible to  be on the  grant list, and the  department addresses                                                               
each  in order.    If the  funding level  project  is a  non-REAA                                                               
school, EED requests general fund  (GF) money to fund the school.                                                               
If a  project at funding level  is a REAA school,  the funding is                                                               
available from the REAA source.                                                                                                 
                                                                                                                                
8:31:34 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LEDOUX  asked  whether   GF  funding  is  usually                                                               
available when a  school district in an urban area  is at funding                                                               
level.                                                                                                                          
                                                                                                                                
MS. NUDELMAN  said the project at  the top of the  list is funded                                                               
when resources are available.                                                                                                   
                                                                                                                                
REPRESENTATIVE LEDOUX observed the  REAA schools and the proposed                                                               
five districts are allowed to "jump to the top of the line."                                                                    
                                                                                                                                
MS. NUDELMAN expressed  her belief that the schools  will stay in                                                               
order  on the  list.     At  the time  of  the REAA  legislation,                                                               
schools  were waiting  ten years  for funding,  so the  intent of                                                               
REAAs was to provide a funding stream.                                                                                          
                                                                                                                                
8:34:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND directed  attention to  the document  in                                                               
the  committee packed  entitled, "State  of Alaska  Department of                                                               
Education  and  Early  Development Capital  Improvement  Projects                                                               
(FY2014)  School  Construction  Grant  Fund  Final  List,  Issued                                                               
1/22/2013."   She asked  how schools  on the  school construction                                                               
list  are  ranked,  and  whether  projects  for  the  five  small                                                               
districts affected by the bill are already on the list.                                                                         
                                                                                                                                
MS. NUDELMAN said  the projects are compared to  the criteria set                                                               
out in statute  and by regulation.  Districts  apply in September                                                               
and based  on criteria  on items such  as un-housed  students and                                                               
life,  health, and  safety issues,  projects are  awarded points.                                                               
Each year  at the end of  the process, the projects  most in need                                                               
are placed  at top of the  list.   The  five small municipalities                                                               
in question  may have projects  on the school  construction list,                                                               
but additional  projects are submitted  each year, after  a local                                                               
planning process of six to ten years.                                                                                           
                                                                                                                                
REPRESENTATIVE  SADDLER  restated the  two  ways  to fund  school                                                               
construction.                                                                                                                   
                                                                                                                                
MS.  NUDELMAN pointed  out that  EED  differentiates between  the                                                               
debt program and the grant program.   The 70:30 debt program - in                                                               
which  municipalities bond  for projects  -  is not  part of  the                                                               
grant process  which puts  projects on  the major  maintenance or                                                               
school  construction lists.   The  REAAs are  a component  on the                                                               
school construction list,  and are not under  a separate process.                                                               
In  further response  to Representative  Saddler,  she said  each                                                               
year  districts apply  to  the grant  program  for projects,  the                                                               
projects are  ranked, and  through the  governor's budget  or the                                                               
legislature, funds are appropriated.                                                                                            
                                                                                                                                
8:39:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LEDOUX  observed that if the  small schools aren't                                                               
prioritized to the top of  the school construction list, the bill                                                               
would be ineffective even if there is a funding source.                                                                         
                                                                                                                                
MS. NUDELMAN  reminded the committee that  large school districts                                                               
bond for  school construction and utilize  the debt reimbursement                                                               
program afterward.  The grant  program may take longer to receive                                                               
funding, but it  is the funding source that serves  the REAAs and                                                               
small municipalities.   It  is important for  this list  to "keep                                                               
moving," so  smaller schools are  built, and HB 133  will provide                                                               
that  movement.   In further  response to  Representative LeDoux,                                                               
she said the  school construction list is  generally comprised of                                                               
REAA schools and smaller municipal schools.                                                                                     
                                                                                                                                
MR.  CLARK,  in  response  to  Representative  LeDoux,  said  the                                                               
advantage is that  the REAA fund creates  a consistent, reliable,                                                               
funding stream for  REAA eligible schools; all  the other schools                                                               
on  the  grant  list  are  awaiting  legislative  action  and  an                                                               
appropriation from the GF.                                                                                                      
                                                                                                                                
8:45:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON  asked if the funds referred  to in 2010                                                               
and 2013 are the same fund.                                                                                                     
                                                                                                                                
MS. NUDELMAN  answered there  is one  fund; the  REAA legislation                                                               
was passed  in 2010, but the  first deposit from the  fund was in                                                               
2013.                                                                                                                           
                                                                                                                                
REPRESENTATIVE P.  WILSON expressed her understanding  that there                                                               
is $35 million in the fund, and  the REAA schools on the list are                                                               
guaranteed to receive funding.                                                                                                  
                                                                                                                                
MR.  CLARK explained  that the  REAA  fund is  capitalized on  an                                                               
annual basis at about $35 million  with a ceiling of $70 million.                                                               
The formula  currently deposits about  $35 million per  year into                                                               
the fund.  However, the majority  of the schools high on the list                                                               
are  REAA eligible,  thus it  is conceivable  that the  REAA fund                                                               
could be exploited.                                                                                                             
                                                                                                                                
MS. NUDELMAN  advised EED's intention  is to stay in  list order,                                                               
and when  a REAA project is  ready for funding it  will be funded                                                               
through this mechanism.  If  the next project is non-eligible for                                                               
REAA funding, the  department will request GF,  and continue down                                                               
the order of the list.                                                                                                          
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked  whether  the  $35  million  is                                                               
currently available.                                                                                                            
                                                                                                                                
MS.  NUDELMAN  confirmed that  the  annual  appropriation of  $35                                                               
million is  available for use.   The funding process  begins when                                                               
the department  reviews projects on the  school construction list                                                               
and  when  a   district  is  eligible,  REAA   funding  is  used.                                                               
Returning  attention   to  the  school  construction   list,  she                                                               
indicated that  Galena is  currently number  nine, but  Galena is                                                               
not  eligible   for  REAA  funding,   so  EED  will   request  an                                                               
appropriation,  fund  the  project  with  GF,  and  then  address                                                               
project number ten,  which is the Bering  Strait School District.                                                               
In further  response to  Representative P.  Wilson, she  said the                                                               
first project  on the school  construction list would  be funded;                                                               
in fact, the first four on  the school construction list are REAA                                                               
schools,  and  the  fifth,  Saint  Mary's, is  one  of  the  five                                                               
districts  that would  become eligible  for REAA  funding by  the                                                               
passage of  the bill.  The  reason Saint Mary's wants  to be part                                                               
of REAA  funding is  because each  year $35  million will  be set                                                               
aside and eventually there will be funding for its project.                                                                     
                                                                                                                                
8:54:32 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON, after  being  made  aware that  Saint                                                               
Mary's was  on the school  construction list, asked why  the bill                                                               
is necessary.                                                                                                                   
                                                                                                                                
MR. CLARK explained  that although Saint Mary's is  on the school                                                               
construction  list,  it  is  not   currently  eligible  for  REAA                                                               
funding.                                                                                                                        
                                                                                                                                
CHAIR GATTIS said  she had intended for  Representative Edgmon to                                                               
explain the  funding sources  that are  available to  small towns                                                               
and  the  difficulties  that prevent  small  municipalities  from                                                               
bonding for school construction.                                                                                                
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked whether  the  five  communities                                                               
identified by the bill are the  only ones in the state that would                                                               
qualify in that way.                                                                                                            
                                                                                                                                
MR.  CLARK said  these  five communities  are identified  because                                                               
they lack a tax base to bond for construction.                                                                                  
                                                                                                                                
REPRESENTATIVE  LEDOUX  gave  the  example  of  if  projects  one                                                               
through four on the school  construction list were funded through                                                               
REAA  funding and  Saint Mary's  project was  denied GF  funding,                                                               
project six would be funded again by REAA funding.                                                                              
                                                                                                                                
MS.  NUDELMAN  explained EED  would  advocate  for GF  for  Saint                                                               
Mary's and  maintain the order  of the school  construction list.                                                               
In   further  response   to  Representative   LeDoux,  she   said                                                               
historically the  department has  successfully funded  the school                                                               
construction list in order.                                                                                                     
                                                                                                                                
REPRESENTATIVE  LEDOUX suggested  that the  intent of  HB 133  is                                                               
advantageous from the  perspective of EED, but was  unsure of how                                                               
the five communities benefit.                                                                                                   
                                                                                                                                
MS.  NUDELMAN   informed  the  committee   that  when   the  REAA                                                               
legislation  was  researched,  it   was  found  that  the  school                                                               
construction  list  moved  very  slowly  and  many  schools  were                                                               
waiting for  legislative appropriations.  She  restated that REAA                                                               
funding  and HB  133  provide  an avenue  of  a  known stream  of                                                               
funding  to ensure  that projects  submitted by  REAAs and  small                                                               
municipalities are funded.                                                                                                      
                                                                                                                                
REPRESENTATIVE LEDOUX  failed to  see how  the bill  improves the                                                               
timing of funding for small communities.                                                                                        
                                                                                                                                
9:00:51 AM                                                                                                                    
                                                                                                                                
MR. CLARK observed that in  some years, without REAA funds, there                                                               
would be  no school construction  funded by the  legislature with                                                               
GF.   By  establishing  a REAA  fund, it  is  evident that  REAA-                                                               
eligible schools  benefit and  the uncertainty  of GF  funding is                                                               
removed.    Furthermore,   with  the  passage  of   HB  133,  the                                                               
possibility  of   long  delays   for  Saint  Mary's   project  is                                                               
diminished.                                                                                                                     
                                                                                                                                
REPRESENTATIVE SADDLER pointed out  that a small municipal school                                                               
district is  defined as "300  ADM."   He asked why  districts are                                                               
based on ADM instead of real  property value "if the issue is how                                                               
much money they have to bond for locally."                                                                                      
                                                                                                                                
MR.  CLARK said  it  is difficult  to draw  a  line to  establish                                                               
eligibility for  benefits.   The 300 ADM  figure was  selected to                                                               
ensure that school districts that  have a clear bonding authority                                                               
would not  be eligible  for the  REAA fund.   The  five districts                                                               
identified  by  the  bill are  marginalized  primarily  by  their                                                               
inability  to  bond.    In  further  response  to  Representative                                                               
Saddler, he  said the formula is  full value divided by  ADM, and                                                               
raising  the property  value would  expand eligibility  to larger                                                               
boroughs  such as  the City  of Wrangell,  which has  the taxable                                                               
base to bond without great hardship to the community.                                                                           
                                                                                                                                
REPRESENTATIVE SADDLER  asked why 300  ADM was chosen  instead of                                                               
real property value.                                                                                                            
                                                                                                                                
MR.   CLARK  responded   there  is   precedent  in   statute  for                                                               
determining  match  requirements  under the  school  construction                                                               
grant program  that uses full  value for  ADM, thus ADM  was used                                                               
for the first part  of the formula.  The second  part uses ADM to                                                               
accurately identify schools that do not have bonding capability.                                                                
                                                                                                                                
9:07:08 AM                                                                                                                    
                                                                                                                                
MS.  NUDELMAN  expressed  her understanding  that  the  sponsor's                                                               
analysis  was based  on identifying  small schools  that did  not                                                               
have the  capacity to fund construction  in the same manner  as a                                                               
school that could obtain bonds.   The assessed value and ADM were                                                               
the means used to categorize the small schools.                                                                                 
                                                                                                                                
MR.  CLARK  offered that  using  300  ADM  was used  to  identify                                                               
schools that were most in need  of consistent funding in order to                                                               
comply with the court decision.                                                                                                 
                                                                                                                                
REPRESENTATIVE  SADDLER asked  whether  real  property value  and                                                               
pupil count are both factors.                                                                                                   
                                                                                                                                
MR.  CLARK opined  ultimately eligibility  resides with  the real                                                               
property value of a municipality or borough.                                                                                    
                                                                                                                                
REPRESENTATIVE SADDLER  suggested it is more  appropriate to base                                                               
the eligibility  for small municipal  districts on  real property                                                               
value.                                                                                                                          
                                                                                                                                
MR.  CLARK said  ADM is  necessary to  help identify  the smaller                                                               
school districts with the most need.                                                                                            
                                                                                                                                
9:10:09 AM                                                                                                                    
                                                                                                                                
TOM  BEGICH, Political  Director,  Citizens  for the  Educational                                                               
Advancement of Alaska's Children  (CEAAC), informed the committee                                                               
CEAAC represents 21  school districts in Alaska,  including 12 of                                                               
the 19  REAAs.   He advised that  the bill is  a top  priority of                                                               
CEAAC as it is an extension  of the Kasayulie v. State of Alaska,                                                             
3AN-97-3782 CI, (1999)  consent decree.  Mr.  Begich recalled the                                                             
lawsuit was  filed because,  in general,  funding for  schools in                                                               
Alaska had been  directed toward urban schools  and rural schools                                                               
remained unfunded.  In 1997, the  courts ruled that the system of                                                               
funding  education, and  school construction  in particular,  was                                                               
arbitrary.   This began a  13-year process to settle  the lawsuit                                                               
in an  equitable way and  to create a  funding stream.   In 2010,                                                               
legislation was passed that set  up the REAA mechanism.  However,                                                               
although  Saint  Mary's  was  a  party to  the  lawsuit,  it  was                                                               
excluded  from the  REAA mechanism  for political  reasons.   The                                                               
REAA funding was scheduled to begin  in 2013, and the lawsuit was                                                               
settled.  As part of the  settlement, a number of schools will be                                                               
funded in the future, and the REAA  fund is to be regular and not                                                               
arbitrary.   He stressed  that it  is important  for EED  to fund                                                               
projects  in the  order  of  the school  construction  list.   In                                                               
addition, it is  appropriate to add schools that  were omitted as                                                               
a political  solution, and because  this is a  guaranteed funding                                                               
stream.  In fact, the fund has  $35 million from last year and an                                                               
additional $35  million will  be placed  there this  budget year.                                                               
That funding  will allow  an opportunity for  the funding  of the                                                               
Saint  Mary's school  in  its  position as  fifth  on the  school                                                               
construction  list.    He  returned   attention  to  the  funding                                                               
formula, saying this difficult decision  was made in order to not                                                               
extend REAA  eligibility to districts  with the capacity  to bond                                                               
and thereby shoulder the financial burden.                                                                                      
                                                                                                                                
9:16:52 AM                                                                                                                    
                                                                                                                                
[Testimony was indecipherable due to technical difficulties.]                                                                   
                                                                                                                                
The committee took an at-ease from 9:16 a.m. to 9:17 a.m.                                                                       
                                                                                                                                
[Testimony was suspended due to technical difficulties.]                                                                        
                                                                                                                                
9:20:40 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 9:20 a.m. to 9:24 a.m.                                                                       
                                                                                                                                
9:24:55 AM                                                                                                                    
                                                                                                                                
CHAIR GATTIS announced that HB 133 would be held.                                                                               
                                                                                                                                
9:25:14 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Education Standing Committee meeting was adjourned at 9:25 a.m.                                                                 

Document Name Date/Time Subjects
01 HB 133 Bill Text.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
02 HB 133 Sponsor Statement.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
03 HB 133 Sectional Summary.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
04 HB 133 ADMs and Full Values.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
05 HB 133 Kasayulie v. Alaska Consent Decree and Settlement Agreement.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133
06 HB 133 DEED FY14 School Construction Grant Fund List.pdf HEDC 3/11/2013 8:00:00 AM
HEDC 3/18/2013 8:00:00 AM
HEDC 3/20/2013 8:00:00 AM
HB 133