Legislature(2001 - 2002)
05/09/2002 09:37 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 451 am "An Act relating to municipal bond reimbursement for school construction; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. HEATH HILYARD, Staff to Representative Jeannette James, the bill's sponsor, informed the Committee that current State statute mandates that a five-point maintenance plan accompany school grant proposals; however he explained, there is no such requirement for school bond reimbursement proposals. He stated that this bill corrects that disparity by requiring a five-point maintenance plan accompany both components. Senator Austerman asked how school districts currently develop preventive maintenance plans and whether those plans are working. Mr. Jeans stated that the Department has "taken an incremental approach" to the five-step requirement whereby, through the regulatory process, districts could apply for waivers if they meet some, but not all five, of the steps. He informed the Committee that the Department has been allocated an additional position to monitor schools' implementation of their maintenance plans. He stated, that during site visits, implementation of the five-point plan is discussed; however, he noted, no district currently meets all five of the plan components. He asserted that progress is being made and that most districts would implement the five-point plan within a few years. Senator Austerman asked whether this legislation could assist in moving districts closer to that goal. Mr. Jeans asserted "it is a step in the right direction" as this legislation places the same eligibility requirement that exist for the grant program as a "qualification for the debt reimbursement program." He added that this directive only affects municipalities. Senator Leman communicated that one criticism of the current preventive maintenance plan is that it gets "bogged down in details," and that the school districts must spend time dealing with petty details such as the number of light bulbs required. He stressed that the intent of the original legislation was to develop plans to address, for instance, school roof maintenance, but not to delve into minutia. He stated that he is "hesitant to extend this interpretation" to other programs. Mr. Jeans voiced concern that the Department might have presented overly burdensome regulations to the State Board of Education regarding the interpretation of the original intent of the legislation. He further explained that recommendations are reviewed and submitted to the Board of Education through the bond reimbursement and grant program process. He stated that the Department has requested school districts to furnish reports regarding their preventative maintenance plans at an upcoming scheduled meeting, and he noted that, at that same meeting, bond reimbursement representatives would be present to listen to school district concerns. He anticipated that the State Board of Education would be presented with revised regulations that would loosen up some of the requirements. Senator Leman voiced appreciation for the Department's efforts to address concerns, and he recommended that changes should occur. Senator Austerman verified that numerous Legislators have heard these concerns. Senator Green asked whether Section 5 of the committee substitute removes the expiration date for available funds. Co-Chair Kelly responded that is correct; however, he noted that the proposed committee substitute was not yet been adopted. Senator Wilken moved to adopt HB 451, Version 22-LS1524\J as a working document. Senator Green objected. Co-Chair Donley asked what specific changes are included in the Version "J" committee substitute. Co-Chair Kelly noted the Version "J" removes the ending date regarding bond availability. Co-Chair Donley asked how the removal of this date would impact school districts. Mr. Jeans responded that this "would affect the unobligated balances under Senate Bill 11 to the Fairbanks North Star Borough School District and the unobligated balances under House Bill 281 for Fairbanks, Sitka and Petersburg" school districts. He continued that, "there is authorization on the books to issue debt for school construction" to these communities; however, those school districts have not, as of yet, submitted projects nor received local voter approval to issue that debt. Senator Green asserted that the removal of the ending date would extend this program and would result in allowing the funding "to sit there even if it is not being used and no one else has the opportunity to use that money." She stated that the original legislation was "date certain." Senator Green informed the Committee that a new school construction funding request is pending "for her school district which is continually in need and is willing to go to bond, and as long as this money is allowed to sit there and a district not use it, other districts would never be able to get a bond package put forward." Co-Chair Donley asked for further information as to how this situation would prohibit other school districts bond requests from being furthered. Senator Green responded that the likelihood of receiving voter approval of a school bond bill for a facility in "just one district" is slim. She stressed that statewide support is required to issue school bonds, and she voiced that allowing money to just "sit there and wait for a district that is not taking advantage of them" undermines the ability of other school districts to get support for their projects. Co-Chair Kelly ascertained that the funding allocated to the aforementioned districts is not connected to future school bonding proposals. Senator Green countered that they are. Co-Chair Donley qualified that as long as a large district has access to available funds, there would be no statewide support for funding projects in other regions of the State. Co-Chair Kelly asked for further information about how this amendment would affect future bonding packages. Senator Green reiterated that, in order to receive Legislative support, a bond package must include projects from a variety of statewide school districts. She exampled that a bond package might encompass five Municipality of Anchorage school projects, two Mat- Su Borough school projects in addition to projects from numerous other communities. She stressed that allowing districts to have unallocated funds "takes the issue off the table" for other districts because it undermines statewide support for future school bond packages. Co-Chair Kelly insisted that "some Legislators actually support other districts when they need things." Senator Green contended that the legislative process involved in a school bond package requires Statewide interest and support. She exampled various school district projects included in previous school bond packages. She stated that the Municipality of Anchorage usually fully funds their school projects with an expectation that State funding support would follow, and that the Mat-Su Borough traditionally supports "70/30 bonding proposals." Co-Chair Kelly commented that the Municipality of Anchorage traditionally has supported Statewide school bond packages even though they usually fund their own school projects. Senator Green clarified that while the Municipality of Anchorage does fund its own projects, the City anticipates that State funding would become available, and she informed the Committee that such funding did materialize in the majority of these instances. Senator Green voiced acceptance of a one-year extension for the expiration date, but stated that she could not support there being no ending date. She argued that a bond proposal package anticipates that all the specified monies would be used rather than set aside indefinitely for a district's project. She argued that the majority of State funded allocations are time-certain. Senator Wilken stated that money is not actually set aside for some districts, but rather that the authorization to expend monies is granted. Senator Green concurred. Senator Wilken voiced that school districts should not be "rushed" into a project because of a specified timeline. He stated that the Fairbanks North Star Borough School District has projects "in the cue waiting to be voted upon, knowing that this authorization is in place." He stated that he does not take issue with the open-ended dates. Co-Chair Kelly furthered the position that the un-spent monies allocated to some school districts has no "connection to other projects in the State." Co-Chair Donley confirmed Senator Green's understanding that the most recent Municipality of Anchorage school bond projects were approved by the city's voters with the expectation that the city would receive State bonding reimbursement. Co-Chair Donley additionally supported Senator Green's position that school districts "that have money available to them at any given time," might not necessarily provide the necessary consensus to support other school bond packages. He voiced support for a designated time-certain approach to the funding, and suggested that a one-year extension would be acceptable. Co-Chair Kelly concurred that a one-year extension would not be a problem as, he noted that the Fairbanks North Star School District would be voting on their school projects within that timeframe. However, he asserted, the ending date should not be an issue, and he questioned whether the need for an ending date is based "upon the internal politics of getting a bond package passed" or other reasons that are unclear. Senator Green asked whether a five-year sunset date is designated in State statute for most State programs, and she asked, were this the case, whether a project that extends beyond that time would require re-authorization. She asked why this authorizing and obligating of State funds should be treated differently than established procedures. Senator Wilken suggested that one difference is that the voters of the Fairbanks North Star Borough must approve 100 percent Borough funding for school projects that would subsequently be reimbursed by the State. He continued that the local voter authorization of a school bonding project provides "the filter" that it is "okay to spend the money" whether it is spent in two years or six years. He avowed that the State should only be concerned with the fact that local voters have agreed that the money should be spent in their community to provide better schools and education programs. Co-Chair Donley attested that the five-year sunset is to necessary to control the timeframe in which the State would be obligated to pay for the debt service. He stated that if the timeframe were unlimited, a local community might undertake a project at a time when the State could not afford the reimbursement. He stressed that specified sunset dates place reasonable timeframes on a community regarding the State's debt service obligations. Senator Wilken countered that, as the end of the five-year timeframe approaches, the State's obligations increase as communities rush to get their projects underway; whereas were there no specified ending dates, the State's obligations would level out over time. Co-Chair Donley contended that the Legislature "could not predict the State's fiscal situation in an unlimited future amount of years." He stressed that the five-year time limits were established in order to define the State's obligations rather than having other entities control the financial situation. Senator Leman asked the amount of the unused authorized funds in question. Mr. Jeans stated that approximately $42 million is authorized for the Fairbanks School District and that approximately $300,000 is authorized each for Sitka and Petersburg. Senator Leman commented that a sunset date does not seem unreasonable. He voiced support for allowing a timeframe that would permit the Fairbanks North Star School District to adequately address it projects. SFC 02 # 92, Side B 07:26 PM Senator Leman asked whether the Fairbanks North Star Borough school projects could be implemented within a two-year timeframe. Senator Wilken and Co-Chair Kelly concurred that this would be a manageable timeframe. AT EASE 7:27 PM / 7:36 PM Senator Wilken moved to withdraw the motion to adopt committee substitute, Version "J." There being no objection, the motion to adopt committee substitute, Version "J," was WITHDRAWN. Co-Chair Kelly ordered the bill HELD in Committee pending further discussion with the bill's sponsor.