Legislature(2001 - 2002)

05/09/2002 09:37 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                                             

Document Name Date/Time Subjects