Legislature(2023 - 2024)DAVIS 106
02/07/2024 08:00 AM House EDUCATION
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Audio | Topic |
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Start | |
Presentation(s): the Nation's Charter Report Card | |
HB236 | |
HB230 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | TELECONFERENCED | ||
*+ | HB 236 | TELECONFERENCED | |
*+ | HB 230 | TELECONFERENCED | |
+ | TELECONFERENCED | ||
HB 236-UA MAJOR MAINTEN. MODERNIZATION FUND 9:09:14 AM CO-CHAIR RUFFRIDGE announced that the next order of business would be HOUSE BILL NO. 236, "An Act relating to the duties of the Board of Regents of the University of Alaska; establishing the University of Alaska major maintenance and modernization fund; repealing the University of Alaska building fund; and providing for an effective date." 9:10:12 AM REPRESENTATIVE WILL STAPP, Alaska State Legislature, as prime sponsor, presented HB 236, and paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: As of this year, the University of Alaska (UA) system has an estimated $1.4 billion in backlogged deferred maintenance projects. 40% of state buildings belong to the university, and university-affiliated members across our state are hindered while working, studying, and living in facilities and dormitories that have fallen into disrepair. Without a clear fiscal vision and framework, the $1.4 billion backlog will only continue to grow, and our university system will suffer. HB 236 will solve this problem by establishing a major maintenance and modernization fund. With this fund, the Board of Regents will be able to leverage state funding to create a clear, concise plan for reducing the UA system's deferred maintenance backlog. This bill intends to bring UA long-term financial stability that will signify the State of Alaska's investment for its students and higher education institutions. Deferred maintenance is an ongoing cost, not a one- time payment. The University of Alaska building fund exists in the state's budget but has not been consistently funded, which led to an unreliable funding stream which the UA system could not utilize to resolve its deferred maintenance backlog. To remedy this, HB 236 will establish a funding source that will be exclusively used for major maintenance and modernization projects. The future generations and workforces of our state must have the opportunity to thrive in safe, modern buildings that lead Alaskans north to the future. 9:13:13 AM PAUL MENKE, Staff, Representative Will Stapp ,Alaska State Legislature, on behalf of Representative Stapp, prime sponsor of HB 236, began a PowerPoint [hardcopy included in the committee packet], titled "HB 236: UA Major Maintenance and Modernization Act." He proceeded to slide 2, titled "Problem," which read as follows [original punctuation provided]:' .notdef UA System has an extensive Deferred Maintenance (DM) backlog .notdef 40% of Alaska state buildings are university- owned .notdef 68% of Alaskas DM backlog is in the UA system .notdef Currently no clear fiscal plan for catching up on deferred maintenance projects MR. MENKE added that projects within the university system are capital projects which require individual appropriations, and it is not conducive to creating a predictable source of funding for the university to catch up on its deferred maintenance backlog. 9:14:02 AM MR. MENKE moved to slide 3, titled "Map of UA System," showing a visual representation of the state's main and satellite campuses. The deferred maintenance backlog is spread across almost all campuses throughout Alaska, and HB 236 has a solution for reducing the expensive backlog and making the university system more marketable, he said. 9:14:31 AM MR. MENKE moved to slide 4, titled "HB 236's Solution:," which read as follows [original punctuation provided]: .notdef Create a reliable fund that the UA system can use to catch up on deferred maintenance projects .notdef Ensure the fiscally responsible expenditure of funds being used for deferred maintenance projects .notdef Maintain respect for legislative constitutional appropriation authority 9:15:07 AM MR. MENKE gave the section analysis for HB 236 shown on slides 5 through 7, which read as follows [original punctuation provided]: Section 1: - Adds the duty for the Board of Regents to develop a comprehensive plan for applicable projects to be funded from the UA Major Maintenance and Modernization Fund Section 2: - Adds the duty for the Board of Regents to present a detailed, written report to the Alaska Legislature within the first 30 days of each regular session about current and proposed major maintenance and modernization project. Section 3: - Defines "major maintenance and modernization project" Section 4: - Creates the UA Major Maintenance and Modernization Fund which will consist of: - Appropriations from the legislature - Transfers from the Board of Regents - Interest and investment income - Donations - Establishes procedures in the event that the legislature disapproves of a proposed project - States the intent of the legislature to appropriate $35,000,000 /year - Defines: - "Board of Regents" - "Fund" - "Major Maintenance and Modernization Project" Section 5: - Repeals the UA Building Fund (AS 37.05.555) Section 6: - Outlines current projects that the Board of Regents can leverage funds from the UA Major Maintenance and Modernization Fund without further appropriation Section 7: - Provides for an immediate effective date 9:16:48 AM MR. MENKE moved to slide 8, titled "Projects Approved in HB 236 (Section 6)." The slide showed the improvements needed to all three major universities and a list of all the projects contained in the bill. He reminded committee members they have additional attachments in their committee packets. 9:18:50 AM REPRESENTATIVE PRAX brought up the report to the legislature as opposed to just letting regions "do their business." He said the legislature does not know about deferred maintenance, and he asked, "Why the legislature?" REPRESENTATIVE STAPP replied that the legislature is the accountability body and controls the appropriations. He added that the legislature, being the approving body, seemed to be the most effective way to have resources attributed. REPRESENTATIVE PRAX asked whether the legislature needed to come up with a definition to establish deferred maintenance. REPRESENTATIVE STAPP responded there were people online who would explain more in depth. 9:21:31 AM CHAD HUTCHINSON, Director of State Relations, University of Alaska (UA), explained the definition of deferred maintenance and how it associated with the age of the building, the amount of construction work needed, as well as being prioritized by student use and both electrical and mechanical issues. REPRESENTATIVE PRAX opined that there are necessary compliance needs, and improvements are not maintenance. MR. HUTCHINSON said that the Americans with Disabilities Act (ADA) compliance is a component of UA's focus, but the predominant focus is out-of-date mechanical equipment, leaking fuel tanks, and insufficient electrical systems. He said UA's hope is to become more self-sufficient and less dependent on state dollars. 9:24:01 AM CO-CHAIR ALLARD asked how much [money] is in deferred maintenance. MR. HUTCHINSON answered that it is approaching 1.48 billion. He added that the top three projects are at the University of Alaska Anchorage (UAA). He also spoke to the amount of wear and tear, such as roofing issues, at the University of Alaska Southeast (UAS) due to weather conditions. He noted that the governor has had conversations with UA's president, Pat Pitney, regarding creative solutions for sustained funding. 9:26:37 AM CO-CHAIR ALLARD expressed her frustration at the university not "maintaining its home," and now pleading with the legislature for "all this money" now and each year thereafter. She gave an example wherein she had dereliction of duty and not maintained her home but expected insurance to cover the damages. MR. HUTCHINSON referred to the 1.5 billion dollars and the "red book" on page 56 that showed a chart, and the lack of capital appropriations over the years. CO-CHAIR ALLARD interjected Mr. Hutchinson and opined that what he began stating is just an excuse and it was alarming that UA's finances have not been figured out. She questioned what UA's capital budget money went to. REPRESENTATIVE STAPP suggested to think about who appropriated the money in the first place, which was the state, having a constitutional obligation to the university system. He further explained that the university gets its money through various entities and the budget is transparent as to where those funds actually go. 9:30:12 AM LUKE FULP, Chief Financial Officer, University of Alaska System, explained that the deferred maintenance priority had been a top capital priority for the Board of Regents for the last 20 years, with most recently a $50-million request before the legislature every year with a specific slate of projects. He added that UA had adjusted its approach, and now comes with a request for $35 million, which he stated was "a modest request." He said UA is a very large system with many facilities within. He stressed that UA is not just looking to the legislature to "solve the problem" for it but has designed a plan to use its own funds to contribute starting in 2028. If HB 236 were enacted, UA would pay $10 million per year and receive $35 million per year from the legislature. 9:35:08 AM REPRESENTATIVE STORY asked how the Board of Regents and the president [of UA] have been involved, as well as the involvement at the legislative level. REPRESENTATIVE STAPP said there is a lot of technical thought to unwind the problem. He said that outside of state appropriation, the primary purpose is tuition. He gave an example of a maintenance backlog and the possibility of then raising tuition; however, if that type of policy were enacted to solve the problem, it incentivizes Alaska children to pursue education elsewhere for more reasonable tuition. He said deferred maintenance is a problem that has gotten progressively worse, and in turn gets progressively more expensive over time. He said the concept behind HB 236 is to make the velocity of money more efficient so it can go further. 9:39:25 AM CO-CHAIR RUFFRIDGE referred to page 5 of the bill and that he was seeing prescribed language referencing specific places and things. He asked if someone could speak to the specific language. MR. MENKE replied the specific language built into the bill is based off of the capital projects that UA had requested and is designed that if the bill were passed, these projects in Section 6 would be the projects that the Board of Regents would be allowed to use funds for. CO-CHAIR RUFFRIDGE commented about a possible statutory process to alter the bill and asked whether there would be a simpler way or a potential change that may need to be made 20 years down the road. MR. MENKE replied that he did not see a simpler way. If there were new projects that came up, a similar process would be needed, and he opined that the proposed way is a more streamlined way. 9:41:40 AM REPRESENTATIVE HIMSCHOOT commented that the bill looked like a creative solution to a very real problem, and she supported it. She added that it was important to recognize the state's K-12 system lacks the same opportunities UA has to meet its own needs. 9:42:37 AM REPRESENTATIVE PRAX advised that the proposed legislation must be evaluated carefully, and he noted that modernization is not maintenance. REPRESENTATIVE STAPP stated that he agreed; however, when looking at building operations it is wise to look at replacement costs and modernizing systems to reduce overall operation costs. 9:44:32 AM CO-CHAIR RUFFRIDGE announced that HB 236 was held over.