Legislature(2005 - 2006)SENATE FINANCE 532
05/03/2005 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB46 | |
| HB187 | |
| SB102 | |
| SB22 | |
| SB192 | |
| HB178 | |
| SB125 | |
| SB46 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 187 | TELECONFERENCED | |
| += | SB 46 | TELECONFERENCED | |
| += | SB 102 | TELECONFERENCED | |
| *+ | SB 192 | TELECONFERENCED | |
| + | SB 22 | TELECONFERENCED | |
| + | SB 78 | TELECONFERENCED | |
| + | SB 125 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | HB 178 | ||
SENATE BILL NO. 192
"An Act relating to reimbursement of municipal bonds for
school construction; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Green, the bill's sponsor, explained that this bill would
extend the original January 1, 2005 termination date applicable to
the public school construction dept reimbursement program to July
1, 2006. This one and a half year program extension would allow
schools to bond and solicit State assistance in building and
renovating schools. While the Sponsor Statement primarily addressed
school expansion needs in the Mat-Su Valley area, which is the
State's "most problematic area", for over population in its
schools, many school districts have similar expansion needs. Were
the current student growth trend to continue in the Mat-Su area, a
new school would need to be constructed each year. "It is very
difficult to keep up and keep our classrooms, not only in sizes,
but to provide for enough services ? for all our students." She
noted that areas of the Mat-Su Valley that had previously
experienced little growth are now being developed. Other districts
throughout the State are also experiencing construction and
renovation needs.
10:48:45 AM
EDDY JEANS, Director, Division of School Finance, Department of
Education and Early Development, stated that "the Department is
opposed to the extension" of this program "at this time". When the
Legislature authorized the debt reimbursement program in the year
2002, they had included a provision requiring that the Department
provide a report by February 1, 2006 that would review the
effectiveness of the school construction grant and school
construction debt reimbursement program.
Mr. Jeans reminded the Committee that a separate State General
Obligation (GO) bond package was authorized in the year 2002 that
provided funding for Rural schools. The citizens of the State had
approved the school construction debt reimbursement program, and
approximately $728,000,000 in school construction projects have
been authorized throughout the State. The Department is requesting
that it be provided time to review the resulting financial impacts
on the State and develop a report that would convey to Legislators
what the anticipated annual debt would be under this program.
$84,000,000 in debt expenses would be included in the FY 06 budget
with the anticipation for that number increasing were additional
bonds sold.
Senator Dyson appreciated the Department's desire to undertake the
study. He asked regarding any specific school construction projects
that could be affected by this legislation.
10:51:22 AM
Mr. Jeans identified that the Mat-Su School District would have
some needs. The Anchorage School district has also identified needs
they would like to present to their voters. The Department would
appreciate being able to review "the effectiveness" of that program
before an extension occurred.
10:51:57 AM
Senator Olson asked whether this bill would affect school
construction in Bush Alaska.
10:52:13 AM
Mr. Jeans clarified that the debt reimbursement program "is only
available to municipal school districts" such as the Northwest
Arctic Borough and the North Slope Borough. Areas such as the Lower
Kuskokwim/Lower Yukon school areas would not be affected by it.
10:52:32 AM
Senator Olson asked therefore for an example of how this
legislation would affect the Northwest Arctic Borough and the North
Slope Borough.
Mr. Jeans responded that those Boroughs could develop a proposal
for local voter approval. A proposal approved by the local voters
would either qualify for the 70-percent or 60-percent
reimbursement. He pointed out that this legislation, like the
legislation that was passed in the year 2002, would not impose "any
limits by region."
10:53:16 AM
Co-Chair Wilken recalled that either a provision in SB 155-APPROP:
SCHOOLS/UNIV/VIROLOGY LAB/MUSEUM or the FY 06 Capital Budget bill,
would allow projects in organized Alaska to be funded at a 70-
percent State/30-percent local funding ratio "under the grant
provision". Therefore, he understood that this legislation would be
required in order to conduct a community vote on local school
projects in, for instance, the Mat-Su Borough or the Fairbanks
North Star Borough.
Mr. Jeans asked for further clarification of the question.
Co-Chair Wilken expressed that a provision of SB 155 or in the
Capital Budget would apply to named projects in organized Alaska.
Those projects would be included in the list of the traditional
70/30 reimbursement funding mechanism. Therefore absent this
legislation, an organized borough would be unable to develop a
proposal for local voter consideration.
10:54:42 AM
Mr. Jeans replied, "that is not correct". The grants specified in
SB 46-BUDGET: CAPITAL & OTHER/ BRF are grant projects through the
Department of Education and Early Development. The projects and
their funding levels as identified in that bill "are the State's
share at 70-percent." The municipality would be responsible for "a
30-percent local match on top of that".
10:55:11 AM
Co-Chair Wilken asked regarding the procedure were the municipality
to desire to fund their 30-percent match with bond money;
specifically whether this legislation would be required in order to
conduct a Statewide vote.
Further Committee discussion in this regard ensued.
In order to clarify the funding mechanism at hand, Mr. Jeans
clarified that there are two different programs. One is grant
program in which "the Legislature lists out the grant projects in
the State's share". AS 14.11.008 specifies the participating share
for that grant program. The program being discussed in this
legislation refers to AS 14.11.100, which is the debt reimbursement
program. Were this legislation adopted, "then a municipality would
take before their voters the entire project, issue bonds for the
entire project, and the State would either reimburse them at 70 or
60 percent, depending on the individual project's legibility." This
funding mechanism "is quite a bit different than the grant
program."
Co-Chair Green opined that the programs "are similar but
different."
Mr. Jeans replied that they "are similar in terms of what the
participating share is."
Co-Chair Green acknowledged.
Mr. Jeans continued that under the grant program, "the State is
providing the 70-percent up front".
Co-Chair Green surmised therefore that the school district would
not be required to expend money and then get reimbursed.
Mr. Jeans affirmed.
10:57:02 AM
Co-Chair Green understood that "the authority to go to bond is
implied in the Capital bill".
10:57:14 AM
Mr. Jeans responded that in the capital bill, municipalities could
bond for their local share. "Municipalities could bond for 100-
percent of a project right now; it would simply not be reimbursable
by the State at any rate."
10:57:30 AM
Co-Chair Wilken therefore, questioned the need to further this
legislation prior to the Department's report being developed, since
$120,000,000 in school construction needs would be included in SB
155 or in the capital budget. He understood that that amount of
money would address districts' needs.
10:57:53 AM
Co-Chair Green responded that those bills would provide less than
one-half of the Mat-Su School District's needs. However, she
allowed that, based on increased enrollment, the Mat-Su District
might be alone in their situation. Other districts might desire
this funding mechanism and might be eligible, depending on what is
passed or offered. Were the capital bill in its current form to
pass, it would provide funding for the next year, but not for the
Mat-Su District's anticipated future needs. Again, she qualified
that the Mat-Su District might be unique in its population growth.
She asked the Department to elaborate on this issue.
10:58:53 AM
Mr. Jeans expressed that the population of "the Mat-Su Borough is
growing at tremendous rate" and its schools "are operating at
capacity". However, some schools in the State are currently
operating at 200 percent capacity.
Co-Chair Green understood therefore that other schools have similar
needs.
Mr. Jeans affirmed.
10:59:21 AM
Senator Hoffman recalled the original legislation as being a "very
contentious issue." The crux of that dialogue is that, while areas
such as the Mat-Su Valley are experiencing tremendous growth, the
Legislature acts on behalf of the whole State. Without Legislative
action, nothing would occur in regards to the unorganized areas of
the State. All areas of the State should benefit from the oil and
gas revenues generated from the North Slope; quality education
opportunities should be provided to children under the age of 17 in
all areas of the State. This was an issue during the debate on the
original legislation. A list for school construction projects has
been developed that amounts to approximately $527,000,000. In the
past, a percentage of schools would be built in Rural areas of the
State. A formula must be developed that would consider the
education needs of the entire State. He suggested that the
Department address this issue in its report. An amendment was
discussed during the development of the original authorization that
addressed this issue.
Senator Hoffman stated that the advent of a Gas Pipeline would
result in more and more school needs throughout the State. This
issue must be discussed and resolved on a long term basis rather
than being "piecemealed" in legislation such as this. The majority
of the Rural projects addressed in the Capital Budget are major
maintenance needs rather than new school construction needs.
11:02:42 AM
Senator Hoffman asked therefore whether the scope of this
legislation could be limited to specifically address the needs of
the Mat-Su Valley.
11:04:01 AM
Co-Chair Green agreed that a "valid discussion" must be had. She
noted that the FY 06 Capital budget is totally different from
previous budgets in regards to its "huge investment Statewide".
11:04:34 AM
Co-Chair Wilken provided an overview of pending school construction
legislation: approximately $260,000,000 would be specified through
either SB 155 or the Capital Budget including $118,000,000 for
school construction and $141,000,000 for major maintenance.
$69,900,000 would be provided to "people that don't pay a nickel
for their schools"; organized Alaska would be provided $72,000,000.
He doubted that a formula could be developed that would be any
fairer as the funding is fairly evenly divided. A formula would be
a matter of importance only when everyone in all parts of the State
contributed equally to education. That should be a consideration.
11:06:22 AM
KIM FLOYD, Representative, Mat-Su School District, testified via
teleconference from an offnet site and voiced appreciation for the
Committee's discussion on this legislation. Continuing, she spoke
to the fact that the Mat-Su District is experiencing "unprecedented
enrollment growth" and is the fastest growing school district in
the State. This growth is projected to continue. State
demographers' projections were incorrect and "have been revised to
reflect reality." Currently all classrooms are overcrowded and
portable classrooms are being utilized. 28 portables in addition to
the current 48 would be required to meet enrollment needs next
year. However, the District has only enough funding to construct
five. While she acknowledged the Department's desire to complete
their report, she characterized the District as being "out of
time". While the District has compiled a 20-year plan that is
updated annually, its construction needs are a "day late and a
dollar short". Voters understand the situation and would "support
critically essential projects". She asked that the Committee
approve the extension of the bond debt reimbursement program. She
also spoke in support of SB 155. The District is considering every
opportunity thought which to address its student growth needs.
Co-Chair Green ordered the bill HELD in Committee.
Co-Chair Green announced that the Committee would reconvene at
approximately 4:00 PM in order to address amendments to SB 46.
Other legislation would also be considered.
RECESS TO CALL OF THE CHAIR 11:10:03 AM / 4:26:40 PM
| Document Name | Date/Time | Subjects |
|---|