Legislature(2013 - 2014)SENATE FINANCE 532
03/27/2013 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB17 | |
| SB56 | |
| SB62 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 17 | TELECONFERENCED | |
| += | SB 56 | TELECONFERENCED | |
| = | SB 62 | ||
SENATE BILL NO. 62
"An Act relating to grants for school construction."
Ms. Marasigan explained the new fiscal note. The new fiscal
note facilitated Fund Transfers from Designated Savings
(UGF) to the Regional Education Attendance Area School Fund
(REAA). She consulted with the Department of Education and
Early Development (DEED) finance director as well as the
Legislative Finance Division, which resulted in
restructuring the fiscal note to include the estimated
capital costs of $618.3 thousand instead of incorrectly
allocating operating funds to REAA since the fund was
already established. The legislation added five additional
schools to the REAA funds.
Vice-Chair Fairclough asked whether the $618.3 thousand was
appropriated from the REAA fund. Ms. Marasigan answered in
the affirmative and responded that the fiscal note analysis
reported that the $35.2 million REAA fund was already
included in the FY14 Governor's capital budget: therefore,
the allocation was removed from the fiscal note.
Vice-Chair Fairclough related that the $618.3 thousand was
allocated from the capitalization of the REAA fund versus
the general fund. Ms. Marasigan affirmed.
Co-Chair Kelly asked for a discussion on the ramifications
of the Kasayulie case. Senator Olson detailed that SB 62
allowed small municipal school districts to participate in
school aid for construction under REAA. School districts
with 300 or less students qualified under the guidelines.
Only five schools were eligible. Not all of the five
schools were requesting funding at this time.
DAVID SCOTT, STAFF, SENATOR DONNY OLSON, explained that
school construction occurred in two different ways in
Alaska. One way was through bonding and state reimbursement
split; 70 percent state and 30 percent municipality. Small
school districts without the economic capacity to bond were
able to obtain school construction funding through the REAA
fund. The fund was formula driven. Some small school
districts did not qualify for the REAA fund but lacked the
ability to bond. The legislation closed the gap by allowing
the five schools to obtain REAA funding.
Co-Chair Kelly questioned whether the five schools were
part of the Kasayulie Case. Mr. Scott answered that only
one school was a part of the Kasayulie case.
9:56:18 AM
Senator Hoffman confirmed that St. Mary's was part of the
Kasayulie case. He explained that St. Mary's was a first
class city and not an REAA. As a first class city, St.
Mary's was responsible for school replacement, but did not
have the capacity to bond. The city was left out of the
lawsuit, which only addressed REAA schools. He expounded
that two options existed to correct the situation. One way
changed how first class cities addressed school
construction funding by rescinding responsibility for
school construction but still required participation in its
school funding. The second option was the provision in the
legislation.
Co-Chair Kelly surmised that the construction money came
from the REAA fund.
Vice-Chair Fairclough clarified that the Kasayulie Case was
a claim against the state that rural schools were treated
unfairly and not adequately funded. The attorney general
negotiated an agreement that required the state to
contribute approximately $36 million each year, capped at
$70 million. The legislation mandated an additional $35
million deposit into the fund. She stated her support for
the legislation and wanted to clarify for the record that
SB 62 expanded the statute to allow more schools to
qualify.
Senator Hoffman interjected and cited the fiscal note
analysis, which defined that the current formula included
an increase of $35,818,300 and the additional funding of
$618,300 was added to address the non-REAA schools.
Vice-Chair Fairclough detailed that the Kasayulie Case
agreement generated a list of schools to receive top
priority funding from the state. The legislation was a
remedy to address the list.
Senator Olson commented that St. Mary's was an original
plaintiff in the case, but was removed during settlement
negotiations. The legislation added St. Mary's school back
as a priority. The $70 million cap to the REAA fund
remained.
Co-Chair Meyer added that whenever the 70 percent to 30
percent split was utilized for urban school construction a
specified amount from formula was appropriated to REAA
schools up to the $70 million cap.
Senator Olson asked whether the legislation was a
"reputable" solution to close the case. He requested an
explanation of why the first class cities, without the
capacity to bond, were removed from the case.
TOM BEGICH, POLICY DIRECTOR, CITIZENS FOR THE EDUCATIONAL
ADVANCEMENT OF ALASKA'S CHILDREN, ANCHORAGE (via
teleconference), responded that the legislation [SB 237] to
address the Kasayulie case in 2010, prior to the actual
settlement, authorized funding through the REAA fund for
simplicity's sake. The legislation in 2010 helped drive the
settlement. When the settlement occurred in 2012, it did
not include the single site school districts. St. Mary's
was originally third on the list, but not one of the five
included in the negotiated settlement. However, the
settlement did not specifically address REAA's; it spoke to
rural versus urban inequities in rural education funding.
The legislation legitimately rectified the oversight and
allowed access to the REAA funds. The small school
districts, even though they were first class cities, did
not possess the economic capability to finance school
construction. He noted the REAA school districts support of
the legislation. He added that SB 62 provided a "fair and
equitable" mechanism to fund rural schools consistent with
the Kasayulie decision.
10:06:33 AM
Senator Olson asked what the advantage was to receive
funding now through the legislation rather than waiting
several more years.
DAVE HERBERT, SUPERINTENDENT, ST. MARY'S SCHOOL DISTRICT
(via teleconference), commented that the five
municipalities listed in the bill did not have the capacity
to bond for school construction and were not REAA schools.
The legislation provided a funding source through the REAA
funds to the five schools. He urged for support of the
legislation.
Co-Chair Kelly communicated that he would offer a
conceptual amendment to the title of the bill.
JOHN DAVIES, SENIOR RESEARCHER, COLD CLIMATE HOUSING
RESEARCH CENTER, explained the amendment. He stated that
Ryan Junior High School in Fairbanks was in disrepair and
renovation due to structural issues cost $46 million; $9
million more than new construction. The problem lied in the
bonding used to finance school renovation construction,
which called for a 60 percent/40 percent split between the
state and municipality. He believed the split made passage
of the bond problematic. The school was deemed unsafe and a
delay in construction was unadvisable; the bonding measure
needed to pass as soon as possible. He delineated that the
proposed amendment specified that only in circumstances
when new construction was less expensive than renovation
the project became eligible for 70 percent/30 percent
bonding instead of 60 percent/40 percent.
Co-Chair Kelly explained that the reason he chose to amend
the title as the mechanism to address the issue was timing
for the bond. He did not want to slow passage of the bill
and would change the title in the Senate and work with the
house to add the specific language.
Co-Chair Meyer thought that if new construction was more
cost effective than renovation, more flexibility should
already exist in statute.
ELIZABETH SWEENEY NUDELMAN, DIRECTOR, SCHOOL FINANCES AND
FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT,
explained that the statute addressed the amount of space
that the State of Alaska wanted to devote to school
construction, based on a calculation using membership and
square footage. The two methods accessible for new school
construction were grant lists and the debt program. The
grant list allowed for repair and remodel under the major
maintenance list. Eligibility for the construction list was
based on space criteria. The Ryan School project was
submitted under the major maintenance list because it did
not meet the space requirements for new construction. The
grant program did not provide options for replacement. The
second option available to Fairbanks was the debt program.
The 70 percent reimbursement was based on the space
criteria; if not met the 60 percent reimbursement applied.
She concluded that the 70 percent option was not available
to Fairbanks for the Ryan project.
10:16:21 AM
Vice-Chair Fairclough wondered if the proposed square
footage of the Ryan project added capacity. Mr. Davies
responded that the replacement structure was approximately
100 square feet larger, but the intent of the project was
replacement of the existing building and not to add
capacity. He reiterated that the cost to rebuild was $9
million cheaper than to renovate.
Ms. Nudelman restated that the current program prohibited
new school construction in this instance. The existing
school's space was counted towards total space in the
calculation.
Vice-Chair Fairclough questioned whether the existing
structure could be condemned or not counted. Ms. Nudelman
replied that space could be removed from the calculation,
and the school could be removed from the Fairbanks School
District's space allocation under certain conditions.
Vice-Chair Fairclough wondered who determined what schools
were removed from the list. Ms. Nudelman answered that the
school would have to provide evidence to the department as
to why the school was no longer in use.
Vice-Chair Fairclough wondered whether the issue was a
regulation rather than a state statute. Ms. Nudelman did
not know, but agreed to provide further information.
Senator Hoffman guessed that eliminating the space would
not solve the problem. He thought that once eliminated it
cannot be replaced. Ms. Nudelman agreed and wanted to
review the space allocation for Fairbanks.
Co-Chair Kelly surmised that the building would have to be
made available for another purpose to qualify for the 70
percent reimbursement. Ms. Nudelman replied that the space
would have to be removed but was unsure if removal would
solve the problem.
Mr. Davies reported that the other criterion for new
construction besides space was increased enrollment and the
school did not qualify under that criterion.
Vice-Chair Fairclough wondered if the existing school would
be demolished. Mr. Davies responded that demolition was
included in the cost.
Co-Chair Kelly described the seismic issue. The school had
seismic "issues" and the roof was constructed of concrete.
An earthquake would cause serious harm. Mr. Davies
responded in the affirmative. He added that the city
building official notified that the district "not use the
building."
Senator Hoffman asked if condemning the school and
requiring new construction built with additional space
solved the problem. Ms. Nudelman intended to examine the
issue and discuss it further. She could not answer the
question without additional review.
10:26:13 AM
Senator Dunleavy commented that the legislation might not
be the best way to solve the problem, especially if the
issue was regulatory and not statute driven. The Fairbanks
issue was very different than what SB 62 addressed.
10:27:04 AM
AT EASE
10:28:43 AM
RECONVENED
Co-Chair Meyer felt that the situation was unique to
Fairbanks and did not feel SB 62 was the correct vehicle to
address the situation.
Vice-Chair Fairclough MOVED to REPORT SB 62 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SB 62 was REPORTED out of committee with a "do pass"
recommendation and with a new fiscal impact note from the
Department of Education and Early Development.
| Document Name | Date/Time | Subjects |
|---|