Legislature(1993 - 1994)
04/19/1993 08:33 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HB 82 An Act relating to school construction grants and major maintenance grants to school districts; providing for school district participation in the cost of school construction and major maintenance; creating a major maintenance grant fund; and providing for an effective date. HB 82 was held in Committee for further discussion. HOUSE BILL 82 "An Act relating to school construction grants and 1 major maintenance grants to school districts; providing for school district participation in the cost of school construction and major maintenance; creating a major maintenance grant fund; and providing for an effective date." EDWIN GONLON, SUPERINTENDENT, NORTHWEST ARCTIC SCHOOL DISTRICT, KOTZEBUE, ALASKA, addressed concerns regarding the legislation. He noted that only a REAA would have the opportunity to apply for a waiver. The Kotzebue area contains the highest unemployment rate, per capita income is low and the borough currently does not have a property taxing system in place. The community does not have the resources necessary to provide a match in order to be able to participate in the construction process. In order to receive a school construction or major maintenance grant, a school district must provide a participating share of the project cost. Mr. Gonlon urged the Committee to consider amending Page 2, Line 30 by deleting the language "regional educational attendance area" and inserting "district". [Attachment #1]. DWAYNE GUILEY, DIRECTOR, SCHOOL FINANCE, DEPARTMENT OF EDUCATION, provided the Committee a sectional analysis for CS HB 82 (HES). He pointed out that the legislation separates construction grants into two categories; grants for school construction and grants for major maintenance of school facilities. The legislative appropriations for the two different types of school facility projects will go into the appropriate fund and will be subject to the existing grant procedures as indicated in AS 14.11. Section 1 provides that the Department may not award a school construction or major maintenance grant under AS 14.11 to a municipality that is a school district or a REAA that is not in compliance with the insurance requirements of AS 14.03.050 (a). Section 2 extends the duties of the Department of Education under AS 14.07.020 (a)(11) to include review of major maintenance projects. Section 3 establishes a major maintenance grant fund in the general fund through legislative appropriations for school major maintenance. Section 4 amends the section on grant applications to reflect the new major maintenance grant fund and eliminates the reference to school construction. 2 Section 5 substitutes capital improvement project for the term construction in reference to grants under AS 14.11.013 (a). Section 6 amends AS 14.11.013 (b) to substitute the term capital improvement project for construction and by eliminating the term school construction. Section 7 eliminates the term school construction in reference to approval of a grant application. This section would provide that the grants will be approved only to the extent that money is available in the appropriate fund. Section 8 eliminates the term school construction under grant conditions for a municipality that is a school district or a REAA. Section 9 adds a new subsection to allow the Department by regulation to establish time periods for establishing costs of school construction. Section 10 eliminates the term school construction from grant appropriation under AS 14.11.019 and substitutes the terms capital improvement projects for construction. Section 11 changes the definition section. This section would define "capital improvement project" to mean to school construction or major maintenance. It would define "grant" to mean a grant for school construction or major maintenance. Section 12 allows that changes made by this Act apply to grants awarded under AS 14.11.005 - 019 after June 30, 1993. Section 13 provides an effective date. Representative Brown asked if the "cost of school construction" would include the technology purchases of computer systems. Mr. Guiley stated it would. Representative Grussendorf pointed out that there is no prioritization between construction and maintenance projects. He recommended that legislation should encourage maintenance rather than construction. Mr. Guiley stated that HB 82 would allow the Legislature to concurrently fund both types of projects. It will require the Department to continue to prioritize projects. The Legislature then would have the authority to tilt the funding. Representative Martin advised that maintenance needs not be 3 funded through the capital budget. Mr. Guiley replied, currently there are not any restrictions for categorical expenditures associated with public school foundation dollars. Money allocated to the school districts are subject to the local school board for budget management. There is no specific formula which provides for maintenance activity. Mr. Guiley stated that under current regulations, the Department is required to put first, life, health and safety. He added that the Department is anticipating rewriting the regulations and the prioritization of projects. All projects are rated in category types and are ranked 1 - 7 in importance. That list is then published and the Governor is then obligated by statute to include in the capital appropriation bill a list of school construction projects which are derived from the Department's lists. (Tape Change, HFC 93 - 108, Side 1). Mr. Guiley stated that the Department has prioritized categories #1 & #2. Current law provides the opportunity for the Legislature to make one appropriation to the Department of Education. The major maintenance projects are the ones listed on Page 4, Line 2 & 3. The school construction fund picks up the other projects defined on Page 3, Sections (A), (B), (F) and (G). Co-Chair MacLean understood that the legislation would provide more flexibility to the priorities. Mr. Guiley agreed. Representative Hoffman asked why the first category is not mandated. He pointed out that category addresses the health and safety of the school children. Mr. Guiley stated that the current statute does not give priority to any one classification. The Department of Education does have regulations which address that concern. Representative Hoffman recommended not changing this structure. Mr. Guiley stated that if HB 82 and HB 83 were to pass, the Department of Education would completely fund all the life, health and safety projects on the current list. Representative Martin expressed concern that the legislation could create incentive to incorporated areas to become single site districts. Mr. Guiley stated that the proposed legislation establishes the match based on an amount of local wealth available for each community served. The size of the school district is immaterial. The legislation would not serve as an incentive for a district to incorporate. The advantage to a district to be incorporated is the 4 ability to provide more to the students above the basic needs. An REAA is restricted to funding only the "basic need". Co-Chair MacLean echoed Representative Martin's concerns and referenced the handout provided by him. [Attachment #2]. Co-Chair MacLean asked if the fish tax and the forest receipts had been taken into consideration of the wealth factor in the determination for the match section. Mr. Guiley stated that the federal forest receipts and fish tax was not considered. The calculations were based upon the taxable value of real and personal property located within the district boundaries. The ability to come with a match can originate from any other source other than grant funds. Representative Hoffman asked under what circumstances could a commissioner deny a waiver if a REAA were unable to provide their participating share. Mr. Guiley replied those situations would be arise when a REAA would have sufficient fund balance in a capital project fund designated for future construction and then that district wished to hold those funds for use ofa different project. Discussion followed regarding the qualifications of receiving a waiver. Mr. Guiley added that with the passage of the legislation a "waiver" will not be easy to get. Traditionally, REAA's have set aside money to help with major projects, knowing that they would not be funded through the capital funding process. HB 82 and HB 83 would provide a vehicle from which to fund major projects. Representative Hoffman asked the Department's position should the language on Page 3, Line 2 be changed from "may" to "shall". Mr. Guiley advised that the determiniation would no longer continue to be at the discretion of the commissioner. Co-Chair Larson stressed that the Department of Education can not establish what is equitable in determining major school construction. He noted that he supported the legislation. HB 82 was HELD in Committee for further discussion.
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