Legislature(2013 - 2014)HOUSE FINANCE 519
04/11/2014 08:30 AM House FINANCE
Audio | Topic |
---|---|
Start | |
HB89 | |
SB137 | |
SB74 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | SB 74 | TELECONFERENCED | |
+= | HB 316 | TELECONFERENCED | |
+ | HB 116 | TELECONFERENCED | |
+ | SB 137 | TELECONFERENCED | |
+ | TELECONFERENCED | ||
+= | HB 89 | TELECONFERENCED | |
SENATE BILL NO. 74 "An Act creating the University of Alaska building fund for the payment by the University of Alaska of the costs of use, management, operation, maintenance, and depreciation of space in buildings; and authorizing the Board of Regents of the University of Alaska to designate buildings for which the fund is to be used." 9:04:59 AM HEATHER SHATTUCK, STAFF, SENATOR PETE KELLY, testified that SB 74 would create the University Building Fund (UBF) as a special account in the general funds. She stated that it was modeled after the Alaska Public Building Fund, which had been operated successfully by the Department of Administration (DOA) since 2000. She shared that currently there was approximately $1.2 billion in backlog maintenance for the University's 7 million square feet of facilities. She said that the University was shifting to long-term strategic planning to adequately address the ongoing maintenance issue. She relayed that the UBF would be one tool to arm the University to do its part in order to get out from under the billion dollar problem and ensure that facilities were properly taken care of while bringing down the deferred maintenance to a responsible and sustainable level. She related that the fund forced departments to fully think through every square inch of space that was actually necessary. She said that with the UBF the University could begin charging departments for rent, encourage improved space utilization, and see efficiencies in operations. She shared that collecting rent from tenants and departments was an important feature of the fund and part of the rent could come from federal grants that the University already received and designated of portion of to be used for maintenance. She furthered that the concept would allow the University to first list new buildings and those under 15 years of age. As older buildings were rehabbed through renewal and replacement, and deferred maintenance, they would be added to the fund so that they did not backslide into the same situation again. She elaborated that the model of charging for space had been implemented at several large universities across the United States and experience had shown that it improved internal discipline, leading to improved space utilization and efficiencies in operation. She spoke to the letter from Legislative Legal clarifying that it did not create a dedicated fund (copy on file). 9:09:05 AM PATRICK GAMBLE, PRESIDENT, UNIVERSITY OF ALASKA, testified that the University sought a paradigm change with regard to the way to programmatically examine ways to address deferred maintenance, buildings on the verge of being put on the deferred maintenance list, and operations and maintenance costs. He said that when the deferred maintenance cost got so big that failures occurred, operations and maintenance money had to be used to fix the problem. He stated that there were 174 academic buildings in the system, 8 of which would cost more to fix up than they were worth and should be torn down. He opined that it cost a lot to tear down a building but that it cost a lot more not to. He related that there were 28 building with a low net asset value, but the function inside the buildings had a high University value with regard to education and research. The deferred maintenance backlog for those buildings was $300 million, the renovation and repair (R&R) backlog was $100 million. He explained that those were the main campus buildings, mostly in Fairbanks, and once building of this kind went into deferred maintenance the risks involved in working in the buildings increased. He shared that in the past they University would come before the legislature each year and attempt to break the work that needed to be done into categories; only 10 percent of what was asked over the years had been given to help with the problem. 9:12:51 AM Mr. Gamble expressed enthusiastic support for the legislation. He noted that in a tough budget year, like the on the legislature currently faced, the seed money to start the fund would be problematic but had to begin sometime. He stressed that there were many different sources available for funding: excess capital appropriations, donations, and rental income. He suggested that online classes could lessen the need for academic buildings. He believed that there would not be much money put into the fund in its first year and it could take up to 5 years before the fund was fruitful. He said that each year the legislature would have the appropriation responsibility, while the University sought different sources for the fund. He thought a source could be the Alaska Sovereign Education fund. He shared that the fund used an education funding source from oil royalties being diverted into an education account. 9:18:51 AM Representative Holmes wondered whether there had been discussions about putting any seed money in the fund in the present year. Mr. Gamble replied in the negative. Representative Holmes asked whether the fund would be managed for sustainability. Mr. Gamble replied that it would have an inflation proofing element to it and that sustainability was a goal. Representative Holmes she spoke of the Alaska Children's Trust as a sub-account of the general fund. She thought that the legislature should encourage private donations but wondered whether people would donate if the fund was part of the general fund. Mr. Gamble answered that a lot of advice would be needed in order to lock down the actual components of the idea. 9:23:19 AM Representative Thompson expressed concern that donations to the building fund could have a negative effect on donations to other University departments. Mr. Gamble answered that it was a possibility. He relayed that many donors were specific with regard to their donations. He said that unspecified donations would be considered for the fund. 9:26:27 AM Co-Chair Austerman assumed that the fund could handle any component. Mr. Gamble did not think that using the fund to build new buildings was part of the plan; operation and rehab, certainly, but the capital cost of building a new building would deplete the fund. Co-Chair Austerman thought that lapses in funding could be problematic. Mr. Gamble stressed that the initiation of the fund would concentrate on newer buildings that had less cost associated with the maintenance. Vice-Chair Neuman asked about appropriations from endowments. He noted that if they were not specifically mentioned in the appropriations language then they could not be accepted. He thought that perhaps the language should be added to the bill. 9:31:07 AM Mr. Gamble said that they had the ability to track specific buildings, if a large project came up a few million dollars short those dollars could be used to fund something else and would be included as candidates to be put into the fund for broader use. Representative Guttenberg wondered whether the result of Subsection 10 on page 2 would allow the University to reconfigure space on campus that could be leased out and allow for maintenance and operation outside of the normal University budget. Mr. Gamble answered in the affirmative. 9:34:02 AM Representative Edgmon asked for the definition of maintenance versus "depreciation related to space in covered buildings." Mr. Gamble explained that the notion of building depreciation was central to the whole idea of R&R, every single year a building aged. He said that the definition of "covered" meant buildings that were specifically occupied for research or academics. He said that the depreciation, opposed to a financial depreciation, was related to how quickly the building was aging. When the buildings were analyzed and categorized an assessment was made as to how far it had depreciated from its original construction, this gave an idea of the net asset value of the building which was then compared to the R&R required to re-age the building, and then the depreciation on the started over from where it had been re-aged. Co-Chair Stoltze asked if assurances could be given that deferred maintenance or improvements would not be construed as allowing new construction. Mr. Gamble believed that the integrity of the assessment of deferred maintenance was fundamental to the trust that dollars were being used as intended. He said that the poster child for deferred maintenance was the power plant at the University of Fairbanks, the entire structure had aged out of its useful service life. He relayed that most of the deferred maintenance would be smaller issues. 9:38:17 AM Representative Holmes noted that the account was a sub- account of the general fund and would not allow the University to use it as a checking account. She advised that the legislature maintain control of appropriating the money from year to year. Vice-Chair Neuman assumed that the fund would be under the control of the Board of Regents or the University president. He wanted to ensure that the university would have the autonomy to determine where the funds would go. He did not want individual legislators to have the ability to designate what the money would be spent on. Mr. Gamble replied in the affirmative. Vice-Chair Neuman asked whether the legislature would have the ability to amend their appropriation. Mr. Gamble did not believe he would have the authorization to make the decision. 9:40:54 AM Representative Holmes believed that the legislature would had the power to amend the appropriation. Co-Chair Stoltze noted that there had been some questions and suggestions related to changes in the legislation. He relayed that the committee would look at the issues and hear the bill at a later date. SB 74 was HEARD and HELD in committee for further consideration.
Document Name | Date/Time | Subjects |
---|---|---|
SB 74 - Back up Documents.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 74 |
SB 74 - Dedicated Fund Question Legal Memo.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 74 |
SB 74 - Full Text.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 74 |
SB 74 - University Response to Questions from 4.4.13.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 74 |
SB 74-Sponsor Statement.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 74 |
Sectional Analysis for SB 74.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 74 |
SB 137 Annual Report 2013.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 137 |
SB 137 ASHSC Strategic Plan.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 137 |
SB 137 Sponsor Statement.docx |
HFIN 4/11/2014 8:30:00 AM |
SB 137 |
SB 137 Supp Letter RobertScher.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 137 |
SB 137 Written Testimony John Aho.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 137 |
SB 137 Leg Audit Report.pdf |
HFIN 4/11/2014 8:30:00 AM |
SB 137 |
HB 89 CS WORKDRAFT FIN P version.pdf |
HFIN 4/11/2014 8:30:00 AM |
HB 89 |