Legislature(1993 - 1994)

02/09/1993 03:00 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  TAPE 93-12A, SIDE A                                                          
  Number 000                                                                   
                                                                               
  CHAIR BUNDE called the meeting to order at 3:04 p.m. and                     
  noted members present.  He announced the meeting would be                    
  teleconferenced as listen-only to Delta Junction, Soldotna,                  
  Ketchikan, Kenai, Tok, Valdez, Juneau and Anchorage.                         
                                                                               
  CHAIR BUNDE announced the committee would hear presentations                 
  on HB 82 and HB 83, but to gather information only, not to                   
  take action on the bills.                                                    
                                                                               
  HB 82:  SCHOOL CONSTRUCTION & MAINTENANCE GRANTS                             
                                                                               
  Number 020                                                                   
                                                                               
  COMMISSIONER JERRY COVEY, OF THE DEPARTMENT OF EDUCATION                     
  (DOE), began his overview of HB 82 and HB 83.  He introduced                 
  Gary Bader, director of Educational Finance and Support                      
  Services for the DOE.                                                        
                                                                               
  COMMISSIONER COVEY began his discussion of HB 82, regarding                  
  school construction and major maintenance grants.  He said                   
  that many people involved in the Alaska 2000 committee                       
  process focussed on school construction issues.  The                         
  committee included legislators, school facilities officials                  
  from urban and rural Alaska, architects, engineers,                          
  estimators, plus facilities officials from some school                       
  districts or borough governments managing school facilities.                 
  Over four months, the committee arrived at 12                                
  recommendations on facilities, which the department                          
  evaluated through public hearings and developed into HB 82.                  
                                                                               
  Number 118                                                                   
                                                                               
  COMMISSIONER COVEY said the bill is aimed at developing a                    
  practical plan to address school facilities' needs across                    
  Alaska and to gather support for such plans.  The department                 
  is required by statute and regulation to follow the current                  
  facilities funding process, known as the HB 37 process.                      
  They want to identify two grant categories:  major                           
  maintenance and school construction.  Major maintenance                      
  grants, currently included in priority levels three and four                 
  of the HB 37 process, would address buildings violating                      
  building codes.  School construction grants, currently                       
  included in priority levels one and two of the HB 37                         
  process, would address life, safety and safety issues raised                 
  by overcrowded schools, he said.                                             
                                                                               
  COMMISSIONER COVEY stated the current process requires the                   
  department to start at the top priority item and fund                        
  projects in descending order of priority as long as funding                  
  holds out.  The problems with this process are demonstrated                  
  by the allocation of $25 million for capital school projects                 
  and the presence of at least $75 million in priority one                     
  projects alone.  He said the process which has been in place                 
  for the last three years has not worked because there is not                 
  enough money to fund any more than the top 15 projects,                      
  while the increasing numbers of priority level two projects                  
  to ameliorate overcrowded schools never get funded.  Also,                   
  it encourages school facility administrators to inflate                      
  their maintenance and code violation problems into health,                   
  life and safety problems in order to get greater priority.                   
                                                                               
  COMMISSIONER COVEY said the process in place has not worked                  
  in part because it has not been funded.  His department's                    
  solution is to increase funding and to spread it out around                  
  the state.  He said there are reasons why some school                        
  districts do not show up on the construction projects wish                   
  list.  One reason is that, because the process has been                      
  inadequately funded, some districts do not consider it a                     
  serious source of construction funds when they can get money                 
  from legislative grants.  Other districts do take it                         
  seriously and follow through with the process.  The                          
  department can only deal with the projects on the list, he                   
  said.                                                                        
                                                                               
  Number 200                                                                   
                                                                               
  COMMISSIONER COVEY stated that HB 82 would require each                      
  district to share the cost of any school construction or                     
  maintenance project, to the extent it can afford to do so.                   
  The bill includes a matching spending formula, which                         
  establishes a ratio of taxable real personal property value                  
  per student, derived by comparing the taxable property in a                  
  school district with the district's average daily                            
  attendance.  The bill also allows a way to gradually phase                   
  in a local contribution from the Rural Education Attendance                  
  Areas (REAA).  It set the maximum local contribution from an                 
  REAA at 75 percent of the assessed value of the state's                      
  poorest organized community, which is St. Mary's.  That                      
  maximum level of contribution, which comes to 3.8 percent of                 
  any request, would be phased in over four years.                             
                                                                               
  Number 240                                                                   
                                                                               
  CHAIR BUNDE thanked Commissioner Covey, and voiced his                       
  support for local contributions from school districts.  He                   
  asked how proposals to establish minimum student populations                 
  for maintaining a rural school district would affect the                     
  proposed bill HB 82.                                                         
                                                                               
  COMMISSIONER COVEY said the DOE is considering addressing                    
  the problem of small districts, but not in statute.  He said                 
  the department is considering raising the minimum number of                  
  students in a district from five, a number which was set                     
  arbitrarily, to ten students in five years.                                  
                                                                               
  CHAIR BUNDE asked whether consolidating schools would affect                 
  the department's list of capital improvement requests.                       
                                                                               
  COMMISSIONER COVEY answered that he suspected the list would                 
  change considerably because with more local funding                          
  districts will pay more attention to their construction                      
  grant requests, focussing less on what they would like if                    
  the state bore the entire cost.                                              
                                                                               
  Number 278                                                                   
                                                                               
  CHAIR BUNDE asked if there was support from smaller                          
  districts for the plan, and asked when he expected the                       
  reprioritization of the list to occur.                                       
                                                                               
  COMMISSIONER COVEY answered that support among smaller                       
  districts was mixed, with some feeling they should not have                  
  to make any local contribution at all.  He said that, if HB
  82 were to pass, then changes in the districts' funding                      
  request lists would likely begin showing up in the requests                  
  this fall for FY95, as school districts start their six-year                 
  plans this spring with the understanding that the funding                    
  process is going to be significantly changed.  He said the                   
  department's two bills, HB 82 and HB 83, would also create                   
  building codes and standards to prevent districts from over-                 
   or under-building their structures.                                         
                                                                               
  Number 315                                                                   
                                                                               
  (Rep. B. Davis arrived at 3:20 p.m.)                                         
                                                                               
  CHAIR BUNDE encouraged those people listening to the meeting                 
  from teleconference sites to submit questions.                               
                                                                               
  REP. BRICE asked why priority one and two schools were                       
  combined, instead of priorities one, three, and four, and                    
  breaking priority two schools out separately.                                
                                                                               
  Number 320                                                                   
                                                                               
  COMMISSIONER COVEY answered that the department was                          
  attempting to get away from the old system in which funding                  
  did not last long enough to fund priority two projects.  He                  
  said the department wanted first to make sure each district                  
  got some money from the program so as to ensure support for                  
  the plan, and second, to direct some money at smaller                        
  problems before they became major problems.                                  
                                                                               
  REP. BRICE said he has heard the HB 37 process has not                       
  worked well, especially in funding priority two projects.                    
  He supported the idea of breaking out maintenance grants                     
  separately.                                                                  
                                                                               
  Number 366                                                                   
                                                                               
  COMMISSIONER COVEY said that even the old process addressed                  
  priority one projects.  He said the plan as presented would                  
  take all of priority ones, 20 percent of priority twos, all                  
  of priority threes and half of priority fours.  And, in the                  
  next year, funding would be provided to take care of the                     
  remaining 80 percent of priority two projects, dealing with                  
  overcrowded schools.  He added that the department wanted to                 
  present a rational, reasonable and defensible plan to                        
  address the needs of schools.  He said the department                        
  remained open to committee suggestions.                                      
                                                                               
  Number 390                                                                   
                                                                               
  REP. AL VEZEY asked if the department's proposal to                          
  establish a property value per student ratio for setting                     
  required local contribution required an annual survey of                     
  property values to determine full and true value.                            
                                                                               
  Number 400                                                                   
                                                                               
  GARY BADER, DIRECTOR OF THE DIVISION OF ADMINISTRATIVE                       
  SERVICES IN THE DOE, answered that the property assessments                  
  would be based on the Department of Community and Regional                   
  Affairs' surveys, on their regular schedule.                                 
                                                                               
  REP. VEZEY said it would be easier for a taxpayer to                         
  understand that ratio as taxable value per average daily                     
  student membership, or the tax base per student.                             
                                                                               
  MR. BADER said the DOE was attempting to exclude any                         
  exemptions that might be allowed in a community's property                   
  tax code.                                                                    
                                                                               
  REP. VEZEY asked clarifying questions about HB 82, which Mr.                 
  Bader answered.  Rep. Vezey said that requiring a 5 percent                  
  contribution from smaller school districts, with less than                   
  $100,000 per average daily membership, was not enough to                     
  encourage such districts to be responsible for their                         
  construction plans.                                                          
                                                                               
  Number 450                                                                   
                                                                               
  COMMISSIONER COVEY responded, acknowledging urban concerns                   
  that REAAs do not have to pay anything for construction of                   
  their schools.  He said the DOE plan in HB 82 and HB 83 is                   
  significant in that it marks the start of requiring REAAs to                 
  pay any money at all for their schools, and leaves the                       
  possibility open to raise local contributions even more                      
  later.  He said many of the Alaska 2000 proposals are                        
  designed to provide gradual transition to a new way of doing                 
  business.  He noted that some REAAs have not had to pay for                  
  any of their own construction during their 20 years of                       
  existence.                                                                   
                                                                               
  Number 490                                                                   
                                                                               
  REP. VEZEY asked if the department had considered balancing                  
  the per-capita distribution of money, which he considered a                  
  fair method, and a (unintelligible) basis.                                   
                                                                               
  Number 500                                                                   
                                                                               
  DUANE GUILEY, DIRECTOR OF THE DIVISION OF EDUCATION FINANCE                  
  AND SUPPORT SERVICES FOR THE DOE, said the Alaska 2000                       
  committee had considered a per-capita funding for                            
  construction, but found that any such proposal would not                     
  allow them to clear the existing backlog of life-health-                     
  safety projects and unhoused student projects on the current                 
  priorities list.  The committee felt they should first fund                  
  the projects on the current list or on some other needs-                     
  based list, then possibly later move to a per-capita based                   
  list that might even be merged with the foundation formula,                  
  as is done in some other states.                                             
                                                                               
  Number 513                                                                   
                                                                               
  CHAIR BUNDE asked if there had been public response to the                   
  proposal to fund school construction through the                             
  undistributed earnings of the Permanent Fund.  He encouraged                 
  committee members to tell their constituents about that                      
  element of the bill, and to solicit public comment.                          
                                                                               
  Number 520                                                                   
                                                                               
  COMMISSIONER COVEY answered that he had not heard much                       
  feedback, though the department was planning a public                        
  information campaign on the proposal that would probably                     
  generate public comment.  The campaign will describe the                     
  undistributed earnings from the Permanent Fund as                            
  extraordinary earnings available even after contributions to                 
  the Permanent Fund, inflation-proofing, and dividends.                       
                                                                               
  Number 544                                                                   
                                                                               
  CHAIR BUNDE noted that the Kenai Peninsula Borough School                    
  District had sent documents by facsimile machine indicating                  
  support for the proposals, with some provisos.                               
                                                                               
  REP. BRICE asked Commissioner Covey to walk through the flow                 
  chart on page 12 of the DOE information packet on HB 82.                     
                                                                               
  REP. CYNTHIA TOOHEY said the DOE educational campaign needs                  
  to make very clear that the bill would be funded by the                      
  Permanent Fund's undistributed earnings and that the impact                  
  would not be felt for 20 years.  She further asked how the                   
  state could avoid getting into a similar situation in which                  
  school construction and maintenance was underfunded, in                      
  which school districts built not uniform schools but                         
  individual custom schools, which in some cases leaked water                  
  within a year of construction.  She said dipping into the                    
  Permanent Fund earnings should be a one-time occurrence.                     
                                                                               
  Number 572                                                                   
                                                                               
  COMMISSIONER COVEY said there is a way out of the current                    
  situation.  The DOE is proposing that a one-time use of the                  
  Permanent Fund earnings over the next four years would clear                 
  up the backlog of construction projects and cut in half the                  
  bonded indebtedness that doubles the cost of construction.                   
  Decreasing bonded debt would free up an additional $60                       
  million per year for school construction.  But according to                  
  the committee's estimates, growing school populations will                   
  require about $100 million per year in new construction, he                  
  said.  The current facilities are inadequate to revitalize                   
  the state's educational system, he said.  He added that many                 
  districts have simple plans ready should they need another                   
  elementary school, plans which are not site-specific.                        
                                                                               
  Number 600                                                                   
                                                                               
  MR. BADER proceeded to discuss the flow chart included on                    
  page 12 of the departmental handout on HB 82, which outlines                 
  the current HB 37 process of funding school construction                     
  projects.  He said districts submit a six-year capital plan                  
  to the DOE by September 1.  The DOE categorizes the grants,                  
  then prioritizes them in each category and publishes the                     
  list by November 5.  Districts may appeal the rankings                       
  through a three-step process.  The first step is a public                    
  hearing by December 1, which results in a new ranking list,                  
  which is subject to a second appeal.  The department must                    
  appoint a neutral hearing officer within 15 days who issues                  
  a report to the state school board, which may accept or                      
  reject his opinion.  As a third level of appeal, districts                   
  may still appeal to the Superior Court.                                      
                                                                               
  Number 653                                                                   
                                                                               
  REP. BRICE asked if the current appeal system would remain                   
  under HB 82.                                                                 
                                                                               
  COMMISSIONER COVEY responded that it would.                                  
                                                                               
  REP. BRICE asked who would serve as the hearing officer and                  
  who served on the team that evaluated districts' grant                       
  request.                                                                     
                                                                               
  Number 650                                                                   
                                                                               
  COMMISSIONER COVEY answered that hearing officers are                        
  usually people outside the DOE, and the hearing officer this                 
  year was a private attorney in Anchorage.  He said the                       
  evaluation team is comprised of civil servants who are long-                 
  time department employees with experience in facilities.                     
                                                                               
  Number 666                                                                   
                                                                               
  REP. TOOHEY expressed the opinion that the long appeals                      
  process was why government has a bad name.  She asked how                    
  many schools engaged in appeals last year.                                   
                                                                               
  COMMISSIONER COVEY answered that 14 appeals went to first                    
  public hearing last year, and three of them led to hearings                  
  last week in Anchorage.                                                      
                                                                               
  REP. TOOHEY expressed the opinion that the appeals process                   
  was very expensive, complicated and ineffective.                             
                                                                               
  COMMISSIONER COVEY said the appeal process was similar to                    
  the state procurement code.  He noted that 14 appeals out of                 
  168 projects was not an excessive number.                                    
                                                                               
  Number 685                                                                   
                                                                               
  TAPE 93-12A, SIDE B                                                          
  Number 000                                                                   
                                                                               
  REP. BETTYE DAVIS apologized for being late to the meeting.                  
  She expressed satisfaction that education was receiving                      
  attention and early discussion.  She complimented the                        
  governor and DOE for identifying the problems and presenting                 
  a proposal to remedy them.  But she expressed the opinion                    
  that the HB 37 process was not working because it was not                    
  funded sufficiently to meet even all the priority one grant                  
  requests.  She said the proposal in HB 82 was a step in the                  
  right direction to address the state's problem with                          
  crumbling and overcrowded schools, and the legislature would                 
  eventually decide on a funding source.  She said she was                     
  unhappy Anchorage would not get as much as she would like at                 
  first, but accepted that for the greater good.  She said it                  
  has been difficult for districts to submit grant requests                    
  when they knew there was no money to fund their requests.                    
                                                                               
  HB 83:  APPROP:SCHOOL CONSTRUCTION GRANT FUND                                
                                                                               
  Number 064                                                                   
                                                                               
  CHAIR BUNDE brought to the table HB 83, and repeated that                    
  the committee was taking no action on the two bills, but                     
  only gathering information on them.                                          
                                                                               
  COMMISSIONER COVEY said HB 83 was an appropriations bill                     
  that goes along with HB 82.  It directs $107,688,000 to a                    
  school construction grant fund for life-health-safety issues                 
  and for unhoused students.  The bill's second section                        
  directs $42,312,000 to fund major maintenance and repairs.                   
                                                                               
  REP. BRICE asked about the process for making appeals of                     
  state construction grant decisions.  He referred to page two                 
  of the bill, line 18, an $8.8 million allocation for an                      
  elementary school addition in the North Star Borough School                  
  District, which he believed was not as important as others,                  
  but to which he believed the local school district would                     
  probably accede rather than enter the long, difficult                        
  appeals process.  He invited Commissioner Covey's comment.                   
                                                                               
  Number 130                                                                   
                                                                               
  COMMISSIONER COVEY said regulations limit how the DOE may                    
  classify priorities.  He admitted that in some cases, local                  
  districts may see their highest priorities given lower                       
  priority in the state's evaluation and categorization                        
  process.  He said some school administrators have expressed                  
  an interest in revisiting the priority criteria to prevent                   
  such problems.                                                               
                                                                               
  Number 152                                                                   
                                                                               
  CHAIR BUNDE expressed disagreement with Rep. Toohey                          
  concerning the appeals process, saying he believed that,                     
  though complex, it provided ample opportunity for districts                  
  to shape how they would be affected by departmental                          
  appropriations.                                                              
                                                                               
  REP. GARY DAVIS asked whether there was any mechanism in                     
  HB 83 to require local districts to be responsible for                       
  maintenance.                                                                 
                                                                               
  COMMISSIONER COVEY said that the state would require                         
  districts to prove they had adequately maintained existing                   
  facilities on their own as a condition of future funding.                    
                                                                               
  REP. G. DAVIS mentioned new school construction, which in                    
  some cases had suffered leaking roofs, and said he believed                  
  strongly that each district should ensure quality of                         
  construction on its own by requiring performance bonds.                      
                                                                               
  Number 198                                                                   
                                                                               
  COMMISSIONER COVEY said the DOE shared those concerns.                       
                                                                               
  REP. VEZEY asked for help from departmental staff in                         
  formulating more questions about the bill.                                   
                                                                               
  COMMISSIONER COVEY said he and his staff stood ready to                      
  answer questions.                                                            
                                                                               
  CHAIR BUNDE repeated his belief that the committee and DOE                   
  should consider their work an ongoing process to develop the                 
  bills.                                                                       
                                                                               
  Number 230                                                                   
                                                                               
  REP. BRICE asked whether the DOE's list of projects                          
  represented firm commitments, or whether there was room for                  
  negotiation.                                                                 
                                                                               
  COMMISSIONER COVEY indicated that, while the DOE had                         
  provided a rational plan, it was up to the legislature to                    
  set the final list.                                                          
                                                                               
  Number 248                                                                   
                                                                               
  REP. TOOHEY asked Commissioner Covey to provide new copies                   
  of the grants list, including information on the date each                   
  school was built, its capacity at construction and its                       
  present capacity.                                                            
                                                                               
  CHAIR BUNDE asked the addition of the school's enrollment as                 
  well, as distinct from capacity.                                             
                                                                               
  REP. IRENE NICHOLIA said she had visited some of the schools                 
  on the list and was glad that the DOE was doing something                    
  about them.  She said it was a shame that building codes                     
  could prevent the use of an existing vocational education                    
  facility.  She thanked the department and the governor for                   
  submitting the bill.                                                         
                                                                               
  REP. G. DAVIS asked about an item on page three of the bill,                 
  line nine.  He asked whether the $298,400 for the Kenai                      
  Peninsula Borough schools addressed problems with the                        
  Tustanema School, the district's top priority.                               
                                                                               
  GARY BADER said that was one project that had been moved up                  
  in response to public hearings.  The determination that the                  
  relocatable classrooms had exceeded the core capacity of the                 
  facility earned the school a spot on the list, he said.                      
                                                                               
  Number 300                                                                   
                                                                               
  REP. G. DAVIS referred to page two, line 24, and asked the                   
  location of the Kashunamiut School district.                                 
                                                                               
  COMMISSIONER COVEY answered that the district was near                       
  Bethel in Southwest Alaska.                                                  
                                                                               
  Number 314                                                                   
                                                                               
  There being no further questions, and no further business                    
  before the committee, CHAIR BUNDE ADJOURNED the meeting at                   
  4:04 p.m.                                                                    

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