Legislature(1993 - 1994)
03/21/1994 09:11 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSSB 312(HES): An Act relating to school construction grants and to interscholastic school activities; and providing for an effective date. David Gray, aide to Representative Jerry Mackie, spoke in support of SB 312. Duane Guiley, Director, School Finance, Department of Education, spoke to questions regarding the bill. Extensive discussion was had by the committee regarding school bonds, grants, reimbursement, and temporary facilities. Amendments 1 and 2 FAILED to be adopted. Amendment 3, MOVED by Senator Rieger, is pending. SB 312 was HELD in committee until March 23, 1994 at 8:00 a.m., or until Senators Frank and Rieger compose an amenable amendment addressing committee issues. CS FOR SENATE BILL NO. 312(HES): An Act relating to school construction grants and to interscholastic school activities; and providing for an effective date. Co-chair Pearce announced that SB 312 was before the committee, and had been sponsored by the Senate Finance Committee at the request of Representative Mackie. Senator Kerttula asked who had the competence to oversee school construction and what was the plan in order to initiate the bill. Co-chair Pearce remarked there was a zero fiscal note so positions would not be required. DUANE GUILEY, Director, School Finance, Department of Education, said an architect had been hired last year that had 40 years of experience and had designed over 200 school buildings. Currently, this architect was serving as staff to the Bond Reimbursement and Grant Review Committee. This Committee had an architect on the committee and was looking at different approaches toward cost effective construction in order to conserve state dollars given the backlog that continued to build. In answer to Senator Kerttula, Mr. Guiley said that one of the architects had written articles about building in arctic and perma-frost areas and had experience in this climate. Mr. Guiley went on to say that it was his belief the system was being enhanced so that in the future it would be more effective than it had been. DAVID GRAY, aide to Representative Jerry Mackie, said that Representative Mackie had spent considerable time trying to generate interest in this bill. The bill was in response to concern regarding school project prioritization, costs involved, varied needs, and the kind of review the legislature could expect. Senator Kerttula reiterated the need for a timely review. Mr. Gray said that originally school districts had to wait for the Department of Education's decision on school construction. The state then gave the school district permission to pursue their own building. SB 312 was an attempt to mesh those two processes. SENATOR JACKO MOVED amendment 1 which provided reimbursements to those communities that fell into the time span between April 1, 1990 and April 30, 1993, when the program had been suspended. Two boroughs in his district would benefit - Bristol Bay Borough and Aleutians East Borough. SENATOR RIEGER asked the fiscal effect of the amendment. Senator Jacko answered that the total reimbursement would be $4M so the fiscal effect would be the same as if the reimbursement process would have been in place. Senator Kerttula gave some history on school bonding. CO-CHAIR FRANK asked if this amendment would effect any other districts and if it would also mean an immediate cash reimbursement to the school districts. He also wanted to know the fiscal impact and the process used to reimburse. Senator Jacko reminded Co-chair Frank that it was limited to those districts that had built facilities with cash. Co- chair Pearce still wanted to know if any other districts could be included in this amendment. Senator Kelly said his concern was major rehabilitation projects that would be eligible with this amendment. Mr. Guiley said the department was not aware of how many dollars were spent during that time period because the program had been suspended and there was no need for a district to report to the Department of Education (DOE) cash expenditures for major rehabilitation, construction or modernization projects. He explained to the committee how it would work. Payments that were made by the municipality during 1992 would qualify under this program and would be effective immediately. If the bill was signed into law before June 30, 1994, it would mean a fiscal impact this fiscal year. At this time, there was no money appropriated for this purpose. Final fiscal impact would result in 1995. This amendment did not call for an approval from DOE so any project that was built during that time period would be subject to reimbursement provided it exceeded the $150,000 cap. DOE would have some discretion to approve facilities that provided excess space and were overly expensive. Senator Sharp seemed to think $150,000 was low. Senator Jacko said that he had not specified the $150,000 cap. Discussion followed by Senators Sharp and Jacko regarding rehabilitation projects. SENATOR KELLY asked how DOE defined a major rehabilitation project. Mr. Guiley said that under current statute two types of projects qualified for major maintenance. Those projects were expected to extend the life of the facility through a protection of the structure, such as a bearing wall or roof, or a major code upgrade project that brought the school into compliance with current fire marshall codes, Americans with Disabilities Act, and other access codes. They were projects that the nature of the code violation was such that the building would be subject to being closed and could no longer be used for educational purposes. In answer to Senator Kelly, Mr. Guiley said that under DOE's requested project list from school districts, there was a backlog of $72M worth of major maintenance projects, and $680M backlog of school construction projects (requested by the districts in the FY95 cycle). He did not know what amount of those would be subject to reimbursement. Senator Kerttula said he would have some concern whether a 70 percent reimbursement could be had on cash projects that may have originally been funded through state discretionary funds. He requested that it be mandatory for districts to provide information about the source of the funds for school projects. Co-chair Pearce stated that the bill would carry with it the requirement for an appropriation as it would go through that approval process. Co-chair Frank asked Mr. Guiley to restate the facts regarding the Anchorage situation. Mr. Guiley said that SB 7 had an amendment that provided for retroactive reinstatement of the school bond debt program to allow districts to come forward and claim reimbursement for bonds that had been sold during the time period the program had been suspended. During public hearings, testimony was heard by the Anchorage School District that they had sold bonds and would be eligible based on their understanding of the amendment. No other district came forward and identified bonds. DOE testified that they had no way of knowing the limit of bonds due to the fact that districts were not required to report to the department during that time period. The municipal bond bank was consulted and they said they were not aware of any bonds. After the bill passed, a letter was received from North Slope School District indicating that they had sold $20M worth of bonds in that interim, and were subject to retroactive reimbursement. Mr. Guiley asked to comment on existing statute AS 14.11.102 in paragraph a. He said it did require the district to notify DOE prior to October 15, of their desire to receive an allocation for reimbursement under AS 14.11.100. Since October 15 had already passed for FY94 and FY95, there was a possibility that no one would be eligible for reimbursement. Co-chair Pearce stated that was not Senator Jacko's intent. In answer to Co-chair Frank in reference to the North Slope reimbursement, Mr. Guiley said that reimbursement was part of the $50M allocation. He said that $200M had been authorized for new bond debt and was allocated throughout the state based on municipality size. All municipalities with less than 60,000 population, shared in the $50M. North Slope competed on a priority basis with other districts of equal size of their share of the $50M reimbursement. Mr. Guiley said it was retroactive but it had to come out of the $50M allocation. Senator Kelly voiced his opinion that it was unconscionable that DOE did not know $20M worth of bonds had been sold in the North Slope Borough. In answer to Senator Sharp, in reference to amendment 1, Mr. Guiley said that the phase "two years earlier" was based on audited projects and on the timeliness of the availability of the data. The program had historically provided reimbursement for expenses incurred two years prior. This would reinstate the program under a similar model that did exist prior to the suspension of the model. He again explained the two year reimbursement process. Co-chair Frank and Senator Kerttula gave their opinions on the reason for the prior two year expenditure reimbursement. Senator Kerttula asked what would stop a district from borrowing cash to build a school and then in two years come to the state for 70 percent reimbursement. Mr. Guiley said that was one of the problems with the two year program in that there was no prior approval through DOE if the district decided they could afford to build and would subsequently effect the cash flow of the state two years later. In answer to Senator Kerttula, Mr. Guiley said this amendment only applied to the time frame of April 1, 1990 through April 30, 1993. Mr. Guiley said that last year's bill did not provide for an opportunity for cash reimbursement. Senator Rieger stated that the package proposed last year was inequitable statewide. He said the legislature was forced to go to bonded debt reimbursement because the Governor's proposal used up all of the grant money available for a selected part of the state. Senator Kerttula said it was important to know if Bristol Bay had participated in that for equity. Senator Jacko said the amendment targeted Bristol Bay and North Slope's and it was his understanding there was an inequity. Co-chair Frank asked how those two districts had the cash to build their schools. Senator Jacko said the money was generated from raw fish taxes and the boroughs had not had the ability to sell bonds. Recess 9:55am Reconvene 10:00am Senator Jacko asked if the amendment should be tightened. Co-chair Pearce reminded the committee that there was no way to tell the fiscal impact of amendment 1. She felt the amendment did not belong on SB 312 and would rather see it taken care of in the appropriation process. End SFC-94 #54, Side 1 Begin SFC-94 #54, Side 2 Co-chair Frank asked if DOE had control over criteria for school projects including its appropriateness to the needs of the district. He wanted to know if a district wanted to build a new school twice as big as its projected population, could DOE refuse to approve the project. Mr. Guiley said that much of the authority that DOE had was listed in regulations in order to clarify existing statutes. SB 7 created a Bond Reimbursement and Grant Review Committee. One of the responsibilities of that Committee was to develop cost effective school construction criteria. This bill would provide an opportunity to implement the criteria developed by that Committee. He said that DOE had shared the funding of projects where a district had wanted to build a project greater than the approved square footage. In such a case, DOE provided funding for the square footage per the guidelines and the district funded 100 percent of the difference in excess. Co-chair Pearce said that SB 312 only related to grant review. Mr. Guiley agreed. In answer to Senator Kerttula, Senator Rieger said that the repealer in Section 2 was what DOE used to directly administer interscholastic athletics. In the mid to late 80s, Alaska Student Athletic Assoc., Inc. (ASAAINC) was set up which took over the duties of the department. Because the statute was still on the books, there was a concern that an appeal over a student's eligibility could still be appealed to DOE. Section 2 deleted the statutes that linked DOE with governance of interscholastic athletics. Mr. Guiley agreed. Co-chair Pearce reminded the committee that amendment 1 had been MOVED. Co-chair Pearce OBJECTED. The amendment FAILED to be adopted on a vote of 6 to 1 (All members were opposed except for Senator Jacko who was in favor of the amendment). Senator Rieger MOVED amendment 2. Senator Kelly OBJECTED. Senator Rieger said that amendment 2 addressed a concern that DOE might consider students who were housed in temporary facilities and portables as being housed. Amendment 2 attempted to clarify that "unhoused" includes students in portables or in temporary housing. In answer to Co-chair Frank, Mr. Guiley said that on some occasions districts receive reimbursement from DOE to purchase classroom space or to construct portable classroom space, or sometimes finance them through available fund balance, excess earnings, etc. Again, in answer to Co-chair Frank, Mr. Guiley said that historically, the cost of relocatables averaged from $12,000 to $400,000. Co-chair Frank remarked at the wide range. Mr. Guiley said the type of construction, utilities housed, self-contained heating systems, intercoms, etc., caused the difference. DOE was attempting to come up with an adequate definition of a relocatable, and was attempting to ignore all students housed in temporary facilities for future purposes. He would not have any problem with the amendment. In answer to Senator Jacko, Mr. Guiley felt this amendment would not overlook districts that had helped themselves in an overcrowding situation and would not leave them out of the priority sequence. Senator Jacko felt the effect of amendment 2 was the same as amendment 1. Mr. Guiley said this was an eligibility question and not a appropriation question. Currently, there were about 260 portable classroom units that were being used. Under the old process, if a district housed a child in a relocatable classroom, that classroom was counted in the gross square footage available to the school district and therefore made the district ineligible to receive a new school construction grant. Senator Jacko said the end result was the same. Co- chair Pearce disagreed with him and explained the effect of the amendment again. In answer to Co-chair Frank, Mr. Guiley said last year in SB 60 there were three grants that provided funds for relocatable or portable classroom spaces. In one case, the legislature provided an amount $690,000 for two portable classroom facilities in western Alaska. The bid that had just come in on those two were over $800,000. Co-chair Frank asked if these relocatables would be considered permanent. Mr. Guiley said that most states use relocatable units that were pre-manufactured, installed on a axle assembly, and it allowed them to be moved to another location. Co-chair Frank felt there should be some consistency when building relocatables and portables. Mr. Guiley said the most expensive relocatables were built on site and the district chose to call them relocatables even though DOE did not define them as such. In answer to Co-chair Frank, Mr. Guiley believed that DOE was focusing on "temporary" facilities (pre-manufactured, etc.) rather than those built on site with post and pad construction. In answer to Senator Jacko, Mr. Guiley said that sometimes in the past, the state had given grants to provide cash to districts to build temporary classroom facilities, or, at least, to what districts referred to as portable classrooms. What DOE was attempting to do was come up with a definition of a temporary classroom facility that would be excluded from the available gross square footage therefore not disadvantaging a district that helped themselves. Mr. Guiley said that the issue of a district building with cash was separate from this relocatable issue. In answer to Senator Frank, Mr. Guiley said that relocatables were eligible for reimbursement. Senator Kelly stated that temporary housing was not such a bad solution since student population sometimes shifted between districts. Co-chair Pearce invited him to Sandlake School which had 165 percent population for the original school and the rest were housed in relocatables. Those relocatables had become permanent and would remain with that school until a new school was built. Senator Kelly asked if a bond issue had taken care of that situation. Co-chair Pearce said it might be solved but she felt that all districts in the state should have their projects looked at with the same discretion by DOE for grants. Senator Kelly said that it did not make any difference to a student if he/she was in a temporary building. He went to a school that had temporary classrooms and forty years later they were still there. To everyone's amusement, he said he was not a good example, but there were some good students to come out of that school. Senator Kerttula said he went to school in a freight car in Palmer, Alaska. Co-chair Frank said he spent seventh grade in a portable. Senator Rieger said that the amendment he had offered with Senator Kerttula spoke to AS 14.11.013, and that was the only place in the statutes he could find any criteria for prioritizing. He wanted to know if it would apply to debt reimbursement and the grant program equally. Mr. Guiley said it did not apply to the bond reimbursement program but only to the grant program. Senator Rieger asked where identical language could be added for bond reimbursement. Mr. Guiley turned Senator Rieger's attention to AS 14.11.100 (j) 4. which currently dealt with adequate housing of students for the bond debt reimbursement program. In answer to Senator Rieger, Mr. Guiley agreed that parallel language would be needed to give DOE authority to treat them both the same. Senator Rieger asked for an at ease so he could draft an amendment. Recess 10:13am Reconvene 10:23am Senator Rieger WITHDREW amendment 2. Senator Rieger MOVED amendment 3. Senator Kelly OBJECTED. Senator Rieger explained the amendment. Co-chair Frank spoke to substandard housing for students. He objected to the idea that a $200,000-400,000 facility would be paid for by the state and then later another facility would be built. He knew it was hard to draft legislation in order to avoid this situation. Senator Rieger said that districts chose the word temporary instead of portable because a portable could become permanent. This legislation was just asking DOE to consider the fact that portables exist. A problem arose because an earlier interpretation kept DOE from considering these situations. This would not mandate that every temporary or portable facility be replaced. Senator Kelly estimated that this could cost the state up to $300M. He felt the definition of temporary facilities applied only to those that were found to be substandard. He MOVED that after the words "temporary facility" the words "found to be substandard by the department" be added to amendment 3. Co-chair Frank agreed with this change to amendment 3. He wanted to know if the word "substandard" had been defined by DOE or another more appropriate word could be used. Mr. Guiley said that DOE had not defined "substandard." He said that code violations and other violations made a facility substandard. He also pointed out the temporary housing issue also went beyond the facility, and took into consideration the core areas of the main facility. There was a problem when core areas, like the gym or cafeteria, were stressed with overpopulation. Co-chair Frank stated that good language should be drafted to achieve the real purpose and that was not to rebuild temporary facilities when they were adequate. He was frustrated that the committee was attempting with these amendments to solve several problems. Co-chair Frank asked that SB 312 be held. Senator Rieger did not object to holding the bill. Senator Kerttula mentioned that temporaries were sometimes moved around in bigger districts. Co-chair Frank felt there should be a policy that handled temporaries well, since they were an effective tool. Co-chair Pearce announced that SB 312 would be HELD in committee. She ask DOE to find out the fiscal impact relating to amendment 1. Senator Sharp asked the report be listed in individual amounts in order to place a cap, if necessary, on the amendment. Co-chair Pearce asked Co-chair Frank and Senator Rieger to draft new language for SB 312. Senator Sharp asked Mr. Guiley if any new bonds were floating around in order to finance new schools carrying a rate of 9 percent or over, tax free. Since the bonds were being sold at $115 premium, in effect, a $10M issue was a $1.5 free money paid back in the form of the 9 percent interest over a four year period. He asked if the state paid that percent and, if it did, he had a problem with it. Mr. Guiley said that once a project was improved for bond reimbursement, districts were only required to present ballot language to DOE for approval. Once the ballot language was approved, the district was free to sell the bonds whichever time period the district felt was most appropriate for their cash flow needs. The state reimbursed those bonds, some outstanding at 100, 90 and 80 percent, none at 70 percent. Typically, there must be at least a 1 percent spread in the new interest versus the old interest rate for it to be feasible for the district to refund those bonds. Districts can use the interest received off the principle of those bonds invested to pay for cost overruns or reduce the amount of bond reimbursement received from the state. So, if the district made money off the bonds, in theory, they could ask for less from the state for reimbursement towards the bond principle. Senator Sharp wanted to know if the state analyzed the rate of interest carried on the face of the bonds where it was obvious that the interest rate subsidized the premium on the bonds. Mr. Guiley said that DOE had no opportunity to analyze the interest rates on the face of the bonds. Once they were approved, the interest rates were determined at the time of sale. Senator Sharp said that the state could pay up to 200 percent of the tax free bond rate or more. Mr. Guiley said, based on the current program, the state could find itself in that situation. Senator Kelly said DOE should know where those bonds were. In answer to Co-chair Frank, Mr. Guiley said the only opportunity for DOE to review the actual elements of a bond sale was in the ballot issue that went to the voters. He went on to say that the district was required to notify their voters of the total cost of the project including interest over life of the bonds in the ballot language, and that was an estimate at the time it went to the voters. The actual interest was unknown until the bonds were sold. Senator Rieger was surprised DOE interpreted it that way. It seemed to him that statutes were filled with references to school construction and he thought it spoke to eligible costs of school construction. For an example, if a bond was floated for a $100M, and cost of school construction which was approved by DOE was $80M, there was statutory authority to reduce the amount of your reimbursement to only pay for the amount that the issue was used to pay the $80M. Mr. Guiley agreed to this point. Senator Rieger went on to say that if a bond was floated to raise $115M and of that $115M that was raised, only $80M was used to pay the eligible cost of school construction and the rest went to something else, the state would reimburse whatever that fraction was - $80M over $115M or whatever the prorated reimbursement each period figured out to be. Mr. Guiley agreed again with this statement. He went on to say that if the district did not use the extra proceeds on that project and did not receive DOE approval for an additional project, the state would not reimburse for those extra costs. Senator Rieger then asked Mr. Guiley to comment on a project submitted to DOE in the context that it would cost $80M, but there were overruns which took the total cost to $90M. Mr. Guiley said under the old program, it would have been reimbursed $90M over $115M. Under the current program it would be reimbursed $80M over $115M because the district must receive an allocation request in advance. In answer to Senator Rieger, Mr. Guiley said that actual proceeds were tracked. In answer to several members, Mr. Guiley said the department prorated the interest as well as the principle. He went on to say that the state paid 70 percent of financing costs including the actual interest premium paid by the district. If the district was paying a higher premium than market and was not aware of that, currently the state would be paying 70 percent of the debt service that the district had indebted itself to. In answer to Co-chair Frank, Mr. Guiley agreed that the state could be taken advantage of in this example. Discussion continued with Senators Rieger, Sharp, Kerttula, and Co-chair Frank regarding the interest rate and premiums on bonds. Co-chair Pearce said this subject should be addressed in the subcommittee and again announced that SB 312 would be HELD. End SFC-94 #45, Side 2 Begin SFC-94 #47, Side 1 CSSB 312(HES): An Act relating to school construction grants and to interscholastic school activities; and providing for an effective date. Amendment 3 pending from a prior Senate Finance meeting was withdrawn. Senator Rieger MOVED amendments 4 and 5. Discussion was had between Senators Rieger, Kerttula, Sharp, Co-chairs Frank, Pearce, and Duane Guiley, Director, School Finance, Department of Education, regarding reimbursement to schools for school construction debt, portable and temporary housing, and interest rate ramifications on bonds. Amendment 5 was amended on page 4, line 2, after "bond sells..." and before the words "...premium to par value", the words "an original issue" were added. In answer to information requested by Senator Jacko, Mr. Guiley provided Attachment A, dated April 15, 1994. Discussion followed. CSSB 312(FIN) was HELD in committee until March 24, 1994. CS FOR SENATE BILL NO. 312(HES): An Act relating to school construction grants and to interscholastic school activities; and providing for an effective date. CO-CHAIR PEARCE announced that SB 312 was before the committee. She said amendments 4 and 5 were proposed by Senator Rieger. She also noted that an April 1991 report from the Department listed portable units used in Alaska (see Attachment A, copy on file in the committee minute book). At that time, 16 of the 54 school districts reported having portable units in use. Anchorage had 98, 50 of which were over 20 years old. Matsu had 54. Fairbanks had 28, 17 of which were over 20 years. Kenai had 22, Craig and Unalaska, only one. Her objection to bringing in so many portable units was that it overpopulated a school, and the children did not have access to adequate library facilities, restrooms, etc. Schools would still be eligible for bonding even if portables met the per student square footage requirement. She asked Senator Rieger to move amendment 4. Senator Rieger MOVED amendment 4. He went on to explain the amendment. He called attention to the language "materially substandard," and said he would be comfortable with or without this in the amendment. Some examples of "materially substandard" could be an uncovered walkway from the portables to the rest of the school, inadequate plumbing, or inadequate heating. Senator Kerttula agreed that the department would need some leeway in judging this area. DUANE GUILEY, Director, School Finance, Department of Education, said that the amendments proposed were in-line with the bond reimbursement and grant review committee who had discussed the future. It also was in line with a request from the Department of Education Anchorage caucus suggesting that in all situations regarding portables, the population of students enrolled at the facility should not exceed 110 percent of the design capacity of the core area of the building. Senator Kerttula voiced his opinion that, with a rare exception, all new construction paid for by the state would be rural or in the bush because there were no existing basements in churches to house students. When a large number of students begin to be housed in portables, the Department of Education (DOE) should look at the reasons. He felt there had been a rapid shift in population in some districts and too large a percentage of students were being housed in portables. He wanted to solve and prioritize the problem. Co-chair Pearce reminded the committee that there was a motion on the floor to ADOPT amendment 4. No objection being heard, amendment 4 was ADOPTED for incorporation into CSSB 312(FIN). Senator Rieger said there had been concern about bonds issued that sold at a premium. He said amendment 5 would put a penalty on payback. He believed that there should be some kind of general dis-incentive for a district to issue bonds at premium. Senator Rieger MOVED amendment 5. Mr. Guiley understood the amendment to say that bonds might be available at 115 percent as compared to par, and would require the department to reduce the eligible reimbursement to the District by 200 percent of that 15 percent increase over par which would be a 30 percent reduction in the 70 percent reimbursement rate. That would provide a penalty for selling the bonds over par keeping in mind that the state reimbursed 70 percent of the principle amount as well as 70 percent of the interest amount. If the interest amount was higher than necessary, the district would be making themselves eligible for a greater level of reimbursement by the state. That would deter this from happening. Senator Rieger confirmed that the new higher debt service was what would be reduced by the additional 30 percent. Mr. Guiley said that was correct under the current statutory definition of cost of school construction. In answer to Senator Sharp, Mr. Guiley said he read the amendment to mean it would apply to all of the eligible reimbursement which would include the reimbursement of the principle amount as well. Everyone was amused when Senator Sharp said he felt that was a little severe. Senator Rieger MOVED an amendment to amendment 5 changing the wording on page 4, line 2, to read "by which a bond sells at an original issue premium to par value". No objection being heard, it was ADOPTED. At the request of Senator Sharp, Mr. Guiley turned the committee's attention to page 3, Section 3 (o). He read that section to mean that the total reimbursement to the district would be reduced by that fraction. Under current statutes, districts were eligible to receive 70 percent reimbursement of principle and associated financing costs. He would read this to mean the department would calculate the fraction. For example, a 30 percent reduction to the 70 percent reimbursement would result in a 21 percent reduction of the 70 percent, if he was reading it correctly. As stated earlier, the reimbursement amount of the principle would remain unchanged. The state's obligation on the interest for bonds that carry a higher interest rate than market value would place a greater obligation on the state at the point to which there would be a break even. Discussion continued by Senators Rieger, Kerttula and Sharp regarding reimbursement, school districts and bonding. Co-chair Pearce reminded the committee that there was a motion on the floor to ADOPT amendment 5. No objection being heard, amendment 5 was ADOPTED for incorporation into CSSB 312(FIN). In answer to Senator Rieger, Mr. Guiley said, to his knowledge, none of the old programs (2, 5, 7 year old bonds) had been sold with no material premium at all. Co-chair Pearce commented that amendment 3 had been pending and it was replaced with amendment 4 (which was adopted). Co-chair Pearce asked if Mr. Guiley had the answer to a question raised by Senator Jacko. Senator Jacko had wanted to know the dollar amount expended for local capital improvement projects by districts throughout the state. Mr. Guiley said he researched the most recent school district audits to determine how many dollars were recorded in school district audits for local cash expenditures of capital projects in fiscal year 1993. Based upon that analysis, there was a recording of $9,908,651 of local school construction projects not currently being reimbursed by the state through either a bond reimbursement or grant process. That was an estimate of what existed on the actual school district audits in one year of the three year suggestion for cash reimbursement process. The list included all 54 school districts under current statute. The ARA school districts would not be eligible for such reimbursement. He took three specific school districts and looked at three fiscal years. Of those three districts, the total was $1,061,863. He said he provided brief descriptions of the projects. Mr. Guiley went on to say that the old cash reimbursement program ended with projects that had to be approved prior to July 1, 1990. Therefore, there was a potential of double payment for projects incurred during the time period of April 30, 1990 through June 30, 1990. The issues he brought forth previously related to the two year lag process whereby expenses incurred by the district in 1990 under current programs would have been eligible for reimbursement in 1992. That fiscal year was currently closed out. Based on the wording under current statute, excluding the proposed amendment, the only expenses eligible for reimbursement would be those incurred in FY93 prior to April 1993. This would exclude any capital projects that were recorded on the city or borough books. He had requested the information but did not have access to those books. Co-chair Pearce asked if $10M in unreimbursed cash expenditures was a good estimate for 1993. Mr. Guiley said that was a conservative number in that the cities and boroughs were not required to actually record capital projects related to schools on the school audit. They were allowed to record them on their own audit because under state statute, they had responsibility for the buildings. This number would be understated by the amount of projects recorded in city and borough audits, and overstated in relation to the projects incurred by the REAAs. In answer to Senator Jacko, Mr. Guiley said that he had included all projects of all dollar amounts recorded in local capital projects. Discussion was had by Co-chairs Pearce, Frank and Mr. Guiley regarding projects in his report and different cities and boroughs relating to school districts. In answer to Co-chair Frank, Mr. Guiley said that this legislation could have an immediate impact on the general fund. Co-chair Frank remarked that more information was needed. Co-chair Pearce agreed with Senator Rieger to HOLD CSSB 312(FIN) for at least another day.
| Document Name | Date/Time | Subjects |
|---|