Legislature(2013 - 2014)HOUSE FINANCE 519
04/12/2013 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB7 | |
| SB95 | |
| SB47 | |
| SB62 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 21 | TELECONFERENCED | |
| += | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 62
"An Act relating to grants for school construction."
4:02:29 PM
DAVID SCOTT, STAFF, SENATOR OLSON, stated that SB 62 added
five schools for Regional Educational Attendance Area
(REAA) grant fund eligibility. The bill defined what a
small municipal school district is and allowed the
districts to be eligible for REAA funds including Hydaburg,
Kake, Klawock, St. Mary's, and Tanana. He added that the
locations were all first class cities and were a part of
the unorganized borough. He shared that the REAA fund was
created in the 26th Legislature [2009-2010] to provide a
revenue stream to REAA school districts; it was a funding
mechanism that arose from the Kasayulie settlement. He
furthered that the fund was capitalized through a formula
included on page 1, line 9.
Mr. Scott continued that REAA school districts lacked the
ability to bond and could not take advantage of the state's
bond reimbursement program (the term 70/30 referred to the
program). He relayed that some rural communities had
elected to incorporate as first class cities, which
required the communities to take on education
responsibilities and to lose their REAA school status. He
stated that the communities were in "limbo" because they
could not use the REAA fund and did not have bonding
authority. He communicated that the intent of the bill was
to get the schools out of limbo status. He pointed to
Section 2 of the legislation and stated that the term
"small municipal school district" was defined as a school
with an Average Daily Membership (ADM) of less than 300 and
with a full value per ADM of no more than $500,000.
4:06:04 PM
Representative Edgmon expounded on Mr. Scott's testimony
and explained that most school districts (the bigger
districts) had the ability to access the bond debt
reimbursement program. He shared that as a result of the
Kasayulie court case, the legislature had created an REAA
school construction fund in 2010. The bill would grant five
communities eligibility for the REAA school construction
fund program, which would simultaneously address a
potential log-jam on school construction capital
improvement project list. He furthered that without the
ability to bond or to access the REAA construction fund,
the communities would not have another funding source
outside a legislative capital appropriation. He clarified
that the legislature had the ability to fund the school
construction and maintenance projects; however, the
legislature did not always have the ability to put the
needed funds in the budget.
Vice-Chair Neuman commented that small schools were not
necessarily 5,500 or less.
Representative Wilson asked if the term "small municipal
school district" was used in any other locations in
statute. Mr. Scott answered that the bill created and
defined the term in Section 2.
4:09:07 PM
Representative Wilson questioned whether the districts
would have the same 70/30 structure as larger districts
where the state pays 70 percent and the districts pay 30
percent.
ELIZABETH SWEENEY NUDELMAN, DIRECTOR, SCHOOL FINANCES AND
FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
responded that the bill provided a funding source that
would fund schools on the construction list in order. She
continued that there would be funds available for the
districts as they reached the top of the list for REAAs and
small municipalities. She furthered that when a school was
funded there would be a participating share paid by the
district. The participating share had not changed and
ranged from 2 percent to 30 percent.
Representative Wilson looked at the definition of a small
municipal school district on page 2, lines 1 and 2 of the
bill. She asked if the numbers had been selected because
anything above the amounts had bonding ability. Mr. Scott
replied in the affirmative.
Representative Wilson stated that she had no problem
helping with bonding for school districts that did not have
that ability. She wanted to be fair to all communities and
noted that larger districts paid high property taxes to
participate. She was comfortable that the bill would allow
the small communities to make improvements and that they
shared in the cost. She voiced support for the definition
[for small municipal school district] used in the bill.
Mr. Scott affirmed.
4:12:30 PM
Representative Munoz thought that first class cities had
the ability to bond. Mr. Scott replied that being a first
class city did not give the automatic ability to bond. He
detailed that the five communities did not have sufficient
economic capacity to be granted bonds by a municipal bond
bank. There were some first class cities in the unorganized
borough that could bond.
Representative Munoz understood, but stated that there was
no statutory prohibition that would prevent the communities
from bonding if they had the capability. Mr. Scott agreed.
4:13:45 PM
DAVE HERBERT, SUPERINTENDENT, ST. MARY'S CITY SCHOOL
DISTRICT (via teleconference), spoke in strong support of
the legislation. He shared that the school district had
originally been part of the Kasayulie case that had been
settled in 2011. He explained that the settlement
recognized that the method of funding new school
construction in Alaska's schools needed to be fair and
equitable. He shared that St. Mary's had been excluded in
the final settlement negotiations because it was not an
REAA school district (St. Mary's is a first class city
school district). He explained that being a first class
city school district required the city to make a mandatory
local contribution to the school district each fiscal year
to help offset its operation costs; whereas, REAA schools
did not have a mandatory local contribution. He
communicated that the district had taken the necessary
steps to improve its position on the new school
construction list through DEED. He elaborated on the steps
the district had taken. He shared that currently the
district was the only small municipal school district on
the list that the legislation would apply to.
Mr. Herbert furthered that the impact of the bill was
minimal to the state, but was greatly important to St.
Mary's. He relayed that most municipalities had bonding
capacity and were eligible to receive up to 70 percent
reimbursement from the state for new school construction.
He detailed that there was only a small group of schools
that did not qualify for the bond reimbursement or the REAA
fund source. He stressed that the legislation would ensure
that new school construction funding sources were truly
equitable for all of Alaska's schools. He stated that the
district had demonstrated its ability to provide quality
education. He urged the committee and the legislature to
pass the legislation.
4:18:32 PM
TOM BEGICH, POLICY DIRECTOR, CITIZENS FOR THE EDUCATIONAL
ADVANCEMENT OF ALASKA'S CHILDREN, spoke in support of the
legislation. He shared that the organization was
responsible for initially bringing the Kasayulie suit
forward. He informed the committee that the legislation was
the organization's number one priority and the top priority
for its REAA members. He stated that the bill made a
necessary correction to an error that needed repair.
Representative Wilson asked for verification that the five
school districts were the only districts that were not
currently covered by a bonding mechanism.
Mr. Begich replied in the affirmative. The group had
reviewed the formula before the bill had been introduced to
ensure that it would not unfairly penalize schools with the
ability to bond. He added that because the bill contained a
formula instead of specifying the five school districts it
would allow districts to "pop" out of the category if their
economic capacity increased.
Representative Edgmon remarked that a significant amount of
work had gone into the bill prior to its introduction. He
believed the bill was a good compromise and noted its zero
fiscal note.
Representative Munoz appreciated the sponsors' who worked
on the bill. She asked how the construction fund worked
that had resulted from the Kasayulie case.
Mr. Begich answered that the Kasayulie mechanism
established in 2010 had been built on a fairly complex
formula developed by Senator Lyman Hoffman's office and
added to by the House Finance Committee. He elaborated that
the formula looked at the bonding capacity for any given
year for schools that were eligible for bond reimbursement
and established a referential amount based on the number of
schools that was deposited into the REAA fund annually. He
stated that the REAA fund had a $70 million cap. He
detailed that the idea was to encourage the spending of the
available funds annually in order to rectify what the
courts found was a biased process of funding schools in
Alaska.
Vice-Chair Neuman CLOSED public testimony.
4:22:15 PM
Representative Kawasaki asked about a report on school
construction and major maintenance. Mr. Scott replied noted
that the report was available on the DEED website.
Representative Kawasaki did not see a problem with the bill
if its intent was to fix the ability for schools' ability
to bond and to provide for funds. He believed a bigger
question existed regarding how schools equitably received
money for construction. He pointed to a Fairbanks school on
the list for major maintenance that continued to move down
on the priority list. He believed the overall issue should
be addressed by the committee in the future.
Representative Wilson asked how the school priority list
for major maintenance worked.
Representative Edgmon replied that the bill was not related
to the major maintenance list.
Representative Wilson clarified her interest in the
construction list. Ms. Nudelman replied that the list was
recalibrated each year; districts could reuse their
application for one year.
4:24:27 PM
Representative Costello addressed the one zero fiscal note
from the Department of Education and Early Development.
Representative Edgmon MOVED to REPORT SB 62 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SB 62 was REPORTED out of committee with a "do pass"
recommendation and with one previously published fiscal
note: FN1(EED).
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS-FIN SB 7, version C (with FilmFix).pdf |
HFIN 4/12/2013 1:30:00 PM |
SB 7 |
| Memo 13-232 lnd (for CS-FIN SB 7, version C).pdf |
HFIN 4/12/2013 1:30:00 PM |
SB 7 |