Legislature(1997 - 1998)
03/10/1998 03:05 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
CSSB 11(FIN)(Title am) - SCHOOL DEBT REIMBURSEMENT Number 2024 CHAIRMAN BUNDE announced the next order of business was CS FOR SENATE BILL NO. 11(FIN)(title am), "An Act establishing a reimbursement program for municipal bonds, notes, or other indebtedness incurred for school construction; relating to administrative costs of reimbursing municipal school construction debt; relating to municipal school construction project eligibility requirements for receiving state reimbursement; and providing for an effective date." The committee discussed whether the date on page 4, line 14, should be changed from "1997" to "1998". It was determined it should not be changed. He asked Brett Huber to come forward to comment and answer questions. CHAIRMAN BUNDE advised the committee had been discussing the date on page 4, line 14, and had determined it would have an impact on impending bond sales. Number 2202 BRETT HUBER, Legislative Assistant to Senator Rick Halford, Alaska State Legislature, said it was his understanding that it would impact the bonds that will soon be going before to voters in Anchorage. Number 2009 CHAIRMAN BUNDE directed the committee's attention to the amendment that would insert a new section on page 6, line 20. Number 2216 REPRESENTATIVE BRICE made a motion to delete "50" and insert "70" on page 4, line 11. CHAIRMAN BUNDE objected. REPRESENTATIVE BRICE said this amendment was in line with the considerable amount of testimony the committee had received requesting 70 percent state reimbursement. CHAIRMAN BUNDE pointed out the proposed committee substitute needed to be adopted. Number 2263 REPRESENTATIVE BRICE made a motion to adopt proposed committee substitute 0-LS0151\P, Ford, 3/3/98, as a work draft. There being no objection, that version was before the committee. CHAIRMAN BUNDE asked for a roll call vote. Representatives Brice, Dyson and Kemplen voted in favor of the amendment. Representatives Porter, Green and Bunde voted against it. Therefore, Amendment 1 failed by a vote of 3-3. Number 2300 REPRESENTATIVE BRICE made a motion to adopt Amendment 2 which read: *Sec. 6. Insert new section AS 14.11.100. (n) The total amount of school construction projects approved for reimbursement by the department under (a)(8) of this section: (1) May not exceed $231,000,000; and (2) until July 1, 2003 (A) $131,000,000 shall be allocated to projects in a municipality with a population of 200,000 or more people; (B) $40,000 shall be allocated to projects in a municipality with a population of at least 70,000, but less than 200,000; (C) $60,000,000 shall be allocated to projects in a municipality with less than 70,000 people. Renumber the rest of the sections. REPRESENTATIVE BRICE pointed out there was a technical change to the amendment in that (a)(8) should read (a)(6). CHAIRMAN BUNDE objected to Amendment 2 for discussion purposes. REPRESENTATIVE BRICE explained the idea behind Amendment 2 is to provide a certain amount of allocation of debt to the larger municipalities; namely Anchorage and Fairbanks, and the small ones. He could not tie down a specific number on 2(C) which is for municipalities less than 70,000 people, so if anybody .... TAPE 98-22, SIDE B Number 0001 REPRESENTATIVE BRICE .... have more accurate numbers, he would be agreeable to a change. He said, "I arbitrarily hit $60,000,000 - the number I'd gotten from the department was $353,000,000 and I figured that includes everything from Ketchikan to Barrow. I think $60,000,000 is a relatively realistic number for municipalities such as communities on the peninsula and in the valley to address some. If not, you know it would be okay to increase this. But the idea is to provide the level of allocation that the state has for school debt to the municipalities to sort of take off the competitive nature necessarily of getting bonds out and approved by voters and what we've given is a five year time line for those allocations." CHAIRMAN BUNDE asked Mr. Huber to comment on Amendment 2. MR. HUBER said a change in (a)(6) brings it back to a section of the bill that was actually dealing with projects that were bonded and approved between April 30, 1993, and July 1, 1997, so the amendment establishes a cap in a time period during which there could not possibly be a project. REPRESENTATIVE BRICE maintained it would establish it back at 70/30. MR. HUBER noted that language on line 2 reads, "but before July 1, 1997." He added, "But on the policy (indisc.) amendment, I did have a change to talk with Senator Halford and he has two concerns and you've already brought one of them up and that's if you have a time period in which to qualify for these projects, you have $60 million allocated for basically the rest of the state with bonding capacity, other than Anchorage and Fairbanks, who are the only two communities that fit in the two slots, you've got Mat-Su that's already got $51 million worth of projects that local voters said they wanted to bond for. They've testified, I think in the previous hearing on the bill, that they have four or five other schools just to meet the need of unhoused students and overcapacity students now. You've got Sitka that's got two projects that's been approved and looking for funding. You have Ketchikan that has two projects. You have $60 million that doesn't go far enough. And the third, I guess, problem that the Senator sees with the proposed amendment is it puts it back in the discretion of the Department of Education (DOE) which projects get the $60 million because you're going to have more people come forward than the $60 million will serve and the DOE discretion is really the impetus behind the entire bill in the first place. And if you look at the DOE list for its school construction funding and major rehabilitation funding, I think you're going to find again until you get down well into the list, you're not going to see projects and funding for organized tax paying areas of the state." Number 0198 CHAIRMAN BUNDE asked for a roll call vote. Representatives Brice and Kemplen voted in favor of Amendment 2. Representatives Dyson, Porter, Green and Bunde voted against it. Therefore, Amendment 2 failed by a vote of 2-4. Number 0216 MR. HUBER pointed out the proposed committee substitute includes language on page 4, line 2, which reads, "but before July 1, 1997" which adds uniformity to the statute. CHAIRMAN BUNDE noted there were a number of individuals wishing to testify and called John Holst forward to present his comments. Number 0236 JOHN HOLST, Sitka School District, asked if Sitka would fall under the category being discussed. He wanted assurance that the vote taken in the spring of 1996 for two renovation projects would qualify Sitka for the school debt reimbursement. MR. HUBER replied, "Sitka would be under the purview of this bill in a bonding issue in the future - before July 1, 1997, at 50 percent, but what's been passed by Sitka is in the same boat as the Mat-Su schools that (indisc.) at 70 percent (indisc.)." MR. HOLST referred to Section 6 and said it reads 70 percent. MR. HUBER pointed out that Section 6 has already been closed out. MR. HOLST referred to his original question of what does Sitka qualify for because their vote was for 70/30 bonding authority. CHAIRMAN BUNDE understood that it came in after all the funds were expended. MR. HOLST said that was correct; Sitka knew the funds had been expended. However, the intent of the voters was to indicate their willingness to pay for the 30 percent. The municipality has done the design development, is prepared to do the bid documents and start construction in the spring of 1999 if they can get funding. He said the people of Sitka are not real anxious to see the rules change this far into the project and the voters committed at 70/30, not 50/50. CHAIRMAN BUNDE commented the voters committed to a program that no longer exists. MR. HOLST remarked the voters committed to funding at 70/30 with anticipation that the legislature would again authorize that. He said, "Let me back up. If I were going to start testifying, I would come to the podium and say, I think you need to find a bonding mechanism that will allow everyone to participate who can afford to participate, even allowing the Rural Education Attendance Areas (REAA) to stand on the sidelines - any municipality. At 50/50 there will be municipalities that will not be able to participate and I think Governor Hickel's idea of having a sliding scale made a lot of sense to a lot of people and it indicated that everyone was to take part and participate in funding their projects. I think that mentality should still exist and we should still philosophically support that type of system, not one that simply says some municipalities are going to participate and others just won't be able to." CHAIRMAN BUNDE said he understood Mr. Holst's point of view and he would be willing to entertain hearing a bill if it were to be introduced at 70/30; however, this legislation establishes the level at 50/50 and the committee has already expressed their unwillingness to change it to 70/30. MR. HOLST confirmed that he would have to advise the voters that if there's to be any funding, there would have to be another vote for 50/50. He wondered if he was the only person who saw some patently unfairness to that. CHAIRMAN BUNDE noted this legislation would be heard in the Finance Committee and suggested he confer with his area representative who sits on the Finance Committee. He called Kevin Ritchie to the witness stand to testify. Number 0453 KEVIN RITCHIE, Executive Director, Alaska Municipal League and Alaska Conference of Mayors, testified in support of this legislation, but remarked the 70/30 issue needs further discussion. He recognized this was not the Finance Committee, but he hoped that committee members would consider supporting the 70/30 issue on the House Floor at some other time in that even though times are tight on the state level, it also true at the municipal level. He said there will be a significant difference in taxes in each municipality that's going to build schools, and he's confident schools will be built. The difference between a 70/30 split and a 50/50 split for the Mat-Su Valley is one mill of property tax each year over the life of the bonds. It's a very significant issue for taxpayers. He urged committee members to keep an open mind on a 70/30 split. CHAIRMAN BUNDE called on Harriet Drummond to testify next. Number 0520 HARRIET DRUMMOND, Anchorage School District, testified the Anchorage School District is grateful to the legislature for past support in debt reimbursement and it was her hope debt reimbursement could be funded this year. She said that Anchorage is growing by 500 to 1,000 new students a year, which is equivalent to one to two new elementary schools every year to accommodate growth with mid-level and high school construction as required. The existing 1987 facilities require ongoing maintenance, renovation and additions to cover growth and change in programs. There are 140 relocatable classrooms currently in use in the Anchorage School District, or the equivalent of five elementary schools, and there are plans for two new high schools. This is the third year the Anchorage School District is asking voters to fully fund construction bonds locally, and there is a concern that voters will be unwilling to bear that burden for much longer. The bond language was written to take advantage of any debt reimbursement available. She said the Anchorage School District Board encourages the legislature to fund debt reimbursement; the preference is 70/30, but 50/50 would be acceptable. CHAIRMAN BUNDE thanked Ms. Drummond for her comments and called on Diane Keller to present her testimony. Number 0603 DIANE KELLER testified via teleconference from Mat-Su. She agreed with Mr. Holst and asked the committee to reconsider voting on the funding of new schools at the 70/30 level because schools are required by state law, and education should be a priority since children are the state's future leaders. She recognizes that oil revenues are on the decline, so her suggestion was to cut any new programs and build new schools instead. She remarked that local voters passed the bonding issue at the 70/30 level so decreasing it to a 50/50 split would require going back to the voters. A 50/50 split would require $10 million or more from local residents. She supported cuts being made to state government, but encouraged the legislature to help fund the building of new schools at a local level that a community can achieve. CHAIRMAN BUNDE thanked Ms. Keller for her testimony and asked Bob Lehman to present his comments. Number 0669 ROBERT LEHMAN, Superintendent, Mat-Su School District, testified the borough assembly and the school board have passed joint resolutions in favor of the 70/30 split. He said the voters passed the bond issue at a time when there wasn't enough money to go around, but he felt the community should be grandfathered in at 70/30. He said, "I think another thing that needs to be considered at looking at the 70/30 - and I know you're aware of the taxable valuation and how it differs by pupil from one district to another, but our taxable valuation, for example, is about half per pupil as what it is in the Anchorage borough or the Kenai borough, so that means of course that our voters have to pay double the millage rate in order to raise the same amount of money." He noted the growth in the Mat-Su district is the equivalent of about one elementary school per year; about 3,000 students have been added to the enrollment list since the last school was built. The district currently has 64 portables with about a quarter of a million dollars a year of operating monies going for rental. He said if the state passes the 50/50 split, the issue will have to go before the voters again for Talkeetna, Meadow Lake and (indisc.) school, but in the meantime a new high school is needed for Houston, another elementary school is needed in the core area, in addition to a complete remodel of the Wasilla High School and one of the elementary schools in the Palmer area. In addition, about $13 million worth of deferred maintenance costs has been identified. He emphasized the needs are great in the Mat-Su School District. CHAIRMAN BUNDE asked Dan Blanton to present his remarks. Number 0774 DAN BLANTON testified via teleconference from Mat-Su echoing the remarks of Mr. Lehman and Mr. Holst. He believed the money was available when the voters passed the 70/30 bond issue and the government should stand by those commitments. He said legislation should be passed to guarantee ongoing funding for schools so it isn't completely dependent on oil revenues. He said, "I know you're trying, I hope, but I've been in Alaska five years now and we've been in the same position every year and the capital improvement list gets longer and longer. We need to do something starting right away." CHAIRMAN BUNDE thanked Mr. Blanton for his testimony and called on Kathleen Wight-Murphy to present her comments. Number 0813 KATHLEEN WIGHT-MURPHY, Teacher, Finger Lake Elementary School, testified via teleconference from Mat-Su. She agreed and supported comments that had been made by community members. She said that Finger Lake is one of the most overcrowded schools in the Mat-Su Borough, with children being taught in converted bathrooms, hallways and other areas of the school that should not be used for instructional purposes. She reiterated previous comments about the need for the construction of new schools in the borough. She urged the committee to pass this legislation and recommended an amendment to grandfather in those boroughs that have already voted on existing debt reimbursement at the 70/30 level. CHAIRMAN BUNDE thanked Ms. Wight-Murphy for testifying. He commented on the plight of the legislature in that he frequently has heard from people in the Mat-Su Valley who want less government, less money and no taxes, yet even a 50/50 split will require more state spending and a 70/30 split would take considerable more state spending. He noted that comments and pleas are taken very seriously, but the legislature has to deal very realistically with the financial situation. Number 0934 REPRESENTATIVE J. ALLEN KEMPLEN said there is an option available to the citizens of Alaska and explained that last session the legislature deposited $803 million into the corpus of the permanent fund. This year the permanent fund is projected to produce over $1 billion after dividends are paid out and after inflation proofing and legislation has been introduced to deposit the $1 billion back into the corpus of the permanent fund. He was curious how the residents of the Mat-Su Valley felt about part of that money being used for education. CHAIRMAN BUNDE inquired as to the wishes of the committee. Number 0997 REPRESENTATIVE DYSON made a motion to move CSSB 11(FIN)(title am) as amended from committee. There being no objection HCS CSSB 11(HES) moved from the House Health, Education and Social Services Standing Committee.
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