Legislature(2019 - 2020)SENATE FINANCE 532

05/06/2019 09:00 AM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved SCS CSHB 14(FIN) Out of Committee
Moved CSSB 91(FIN) Out of Committee
HOUSE BILL NO. 106                                                                                                            
     "An Act relating to school bond debt reimbursement."                                                                       
9:28:29 AM                                                                                                                    
AT EASE                                                                                                                         
9:29:34 AM                                                                                                                    
REPRESENTATIVE TAMMIE WILSON,  SPONSOR, explained that House                                                                    
Bill 106  would extend the  termination date for  the school                                                                    
bond debt                                                                                                                       
Co-Chair  von Imhof  explained that  currently  there was  a                                                                    
moratorium on  school bond debt reimbursement  through 2020,                                                                    
the bill would extend it an additional 5 years.                                                                                 
9:31:08 AM                                                                                                                    
9:31:19 AM                                                                                                                    
Co-Chair von Imhof OPENED public testimony.                                                                                     
9:31:35 AM                                                                                                                    
JIM  ANDERSON,  ANCHORAGE  SCHOOL DISTRICT,  ANCHORAGE  (via                                                                    
teleconference),  spoke  in  opposition   to  the  bill.  He                                                                    
explained that  the current house  budget already  cut prior                                                                    
year bond  debt reimbursement  by 50  percent going  back 20                                                                    
years.  He  said  that  adding   the  additional  burden  on                                                                    
receiving  no debt  assistance through  2025  would put  the                                                                    
onus  on Anchorage  taxpayers. He  stated that  shifting the                                                                    
states  responsibility  for bond  debt did not  decrease the                                                                    
requirement but  shifted it to those  living in incorporated                                                                    
areas.   He  stressed   that   supporting  education   meant                                                                    
supporting the operation of school,  the people in them, and                                                                    
their capital needs.                                                                                                            
9:33:06 AM                                                                                                                    
Co-Chair  Stedman  understood  that  the  bill  would  be  a                                                                    
moratorium  on adding  new  reimbursement requirements  onto                                                                    
the state going forward. He  did not think the bill impacted                                                                    
the accumulated school  construction already undertaken. The                                                                    
state would still annually consider  how much debt the state                                                                    
would be  reimbursing. He wanted  to clarify for  the public                                                                    
that  the bill  would block  new projects  from being  added                                                                    
until an alternative policy could be crafted.                                                                                   
Co-Chair  von  Imhof  affirmed  that  Co-Chair  Stedman  was                                                                    
correct, and  the bill  was a  look forward  and not  a look                                                                    
back. She  asked whether the  Anchorage School  District had                                                                    
done  an  excess  capacity analysis  on  its  60  elementary                                                                    
9:34:24 AM                                                                                                                    
Mr. Anderson answered in the  affirmative and specified that                                                                    
the school board  had been briefed in the fall.  It had been                                                                    
recommended  that the  Mount Spur  school should  be closed,                                                                    
and  some programs  should be  merged. He  related that  the                                                                    
recommendation  had   been  based  on  the   city  planners                                                                     
assessments on  sum population growth in  certain areas over                                                                    
the next 20  years. He said that the analysis  would be done                                                                    
annually in the future. He  thought that closing schools was                                                                    
an  emotional   issue  but   believed  that   if  membership                                                                    
continued to decrease more schools would be closed.                                                                             
Co-Chair von Imhof recalled that  the body passed a bill the                                                                    
previous  year  allowing  for school  closures  and  holding                                                                    
harmless  the revenue  for a  step-down of  four years.  The                                                                    
intent had  been to encourage schools  to have conversations                                                                    
about  capturing capacity  in schools.  She thought  that if                                                                    
emotions ran  high and  people did not  want to  close their                                                                    
local schools    that was a choice that board  would have to                                                                    
make,  and  the   cost  would  be  passed   onto  the  local                                                                    
taxpayers.  She asserted  that the  control  was within  the                                                                    
school district to make the  decision whether to maintain 60                                                                    
elementary schools, 8 middle schools and 8 high schools.                                                                        
9:36:57 AM                                                                                                                    
Senator Micciche looked at the  table on the document titled                                                                    
"State Portion Reimbursement  Principal and Interest," (copy                                                                    
on file).  He was  curious about  the proportion  related to                                                                    
major  maintenance versus  new  school  construction of  the                                                                    
$800 million  in bond debt.  He noted the  disparity between                                                                    
organized and unorganized boroughs.                                                                                             
9:38:35 AM                                                                                                                    
NILS   ANDREASEN,  EXECUTIVE   DIRECTOR,  ALASKA   MUNICIPAL                                                                    
LEAGUE, relayed  that the Department of  Education and Early                                                                    
Developments   (DEED) 6-year  plan  showed  $464 million  in                                                                    
needs  for FY20;  $189 million  in  needs for  FY21; and  an                                                                    
average over the  next 6 years of $231 million.  For the 355                                                                    
projects listed the  total in upgrades was  $1.4 billion. He                                                                    
said that  the requests  that had  been submitted  by school                                                                    
districts did not  account for the full scope  of need, only                                                                    
priorities  relative  to  each  budget year,  and  were  not                                                                    
included in  the states   deferred maintenance  numbers. For                                                                    
the  school construction  program  DEED  showed the  average                                                                    
need  between  FY15  and  FY20 was  $234  million,  with  an                                                                    
average of $230 million paid  over those years. He furthered                                                                    
that the  number of  schools funded by  the $190  million in                                                                    
FY20   was   approximately   6,   the   school   bond   debt                                                                    
reimbursement  for  that same  year  of  under $100  million                                                                    
accounted for  nearly 30 schools.  He stressed  that without                                                                    
the reimbursement those districts able  to bond for the debt                                                                    
would  have  to  compete  with   REA  school  districts  for                                                                    
funding,  or other  municipal school  districts that  lacked                                                                    
the tax base  to bond for a greater share  of debt. He asked                                                                    
how the  state identified the  unaversive need and  what was                                                                    
the plan to address the  need. He believed that the proposed                                                                    
moratorium   did  not   meet   the  states    constitutional                                                                    
obligations.  He  thought  that  the  5-year  extension  was                                                                    
nothing  but a  recognition that  the state  did not  have a                                                                    
plan to  address new school  construction. He  believed that                                                                    
the legislature could seek other  options that would benefit                                                                    
both the state and municipal districts.                                                                                         
9:42:34 AM                                                                                                                    
9:42:42 AM                                                                                                                    
Co-Chair von Imhof CLOSED public testimony.                                                                                     
9:43:21 AM                                                                                                                    
Senator  Micciche thought  the  state could  not afford  new                                                                    
schools and  he would  likely support  a moratorium  of some                                                                    
kind. He  asked what percentage of  the debt had to  do with                                                                    
new schools, and how much had  to do with maintenance of old                                                                    
ELWIN  BLACKWELL,  SCHOOL  FINANCE  MANAGER,  DEPARTMENT  OF                                                                    
EDUCATION  AND EARLY  DEVELOPMENT,  said that  he would  get                                                                    
back to the committee with the information.                                                                                     
9:45:23 AM                                                                                                                    
Senator  Micciche   guessed  that  there  needed   to  be  a                                                                    
separation  of new  construction  and  major maintenance  of                                                                    
existing schools when it came to bond debt reimbursement.                                                                       
9:46:10 AM                                                                                                                    
Co-Chair von  Imhof asked whether  DEED travelled  the state                                                                    
to  inspect  the  condition  of schools  and  how  well  the                                                                    
buildings were being maintained.  She wondered whether there                                                                    
were degrees of differences with regard to maintenance.                                                                         
TIM  MEARIG, FACILITIES  DIRECTOR,  DEPARTMENT OF  EDUCATION                                                                    
AND EARLY DEVELOPMENT, stated that  statute provided for the                                                                    
department  to  have  an  ongoing  inspection  process  with                                                                    
districts  to ensure  that minimum  standards  of care  were                                                                    
met. The  division had an  individual that travelled  to ten                                                                    
school districts  per year to  evaluate the  compliance with                                                                    
facility  and maintenance  practices and  retain eligibility                                                                    
for bond reimbursement  and grants. He had not  seen a great                                                                    
deal of disparity in the  condition of buildings of the same                                                                    
age.   He   admitted   that  older   buildings   were   more                                                                    
9:48:51 AM                                                                                                                    
Co-Chair von  Imhof assumed that  the department had  a list                                                                    
of  all  the  buildings  and  a  matrix  through  which  the                                                                    
buildings were prioritized based on age and condition.                                                                          
Mr.  Mearig   stated  that   the  state   did  not   have  a                                                                    
comprehensive facility  evaluation tool or  requirement. The                                                                    
state  required  a district  to  have  an understanding  and                                                                    
condition  of  facilities.  He  said  that  in  the  Capital                                                                    
Renewal portion  of the Minimum Standards  each district was                                                                    
required to  understand the age  and capital needs  of their                                                                    
facilities that were over 1000 square feet.                                                                                     
9:50:23 AM                                                                                                                    
Co-Chair von  Imhof believed  the state  built a  school for                                                                    
Healy  Lake; after  which the  population  dropped, and  the                                                                    
school was not opened.                                                                                                          
Mr. Mearig replied  that he did not  have enough information                                                                    
to comment on the school at Healy Lake.                                                                                         
Co-Chair von Imhof requested  further information on whether                                                                    
the  state  was paying  to  maintain,  heat, or  insure  the                                                                    
building, and whether there was a plan for the building.                                                                        
9:51:06 AM                                                                                                                    
Co-Chair Stedman wanted to know  how many schools were close                                                                    
to the minimum count of  10 students. He agreed with Senator                                                                    
Micciche's  request for  a  breakdown  of the  reimbursement                                                                    
requests.  He wanted  to  add  a request  for  a per  capita                                                                    
numeric. He used  examples of the debt carried  by Sitka and                                                                    
Ketchikan. He  asserted that his region  needed students and                                                                    
not  new  schools,  but  the Mat-Su  was  the  opposite.  He                                                                    
reminded   that   K-12   education  was   a   constitutional                                                                    
9:54:33 AM                                                                                                                    
Senator Shower  appreciated the comments from  the co-chairs                                                                    
and supported  the concept of  the bill. He agreed  that the                                                                    
Mat-Su was growing. He had  spoken to several individuals in                                                                    
the  educational   system.  He  discussed   his  educational                                                                    
background  in the  State of  Florida. He  thought that  the                                                                    
committee needed more data in order to make decisions.                                                                          
9:56:22 AM                                                                                                                    
Senator Bishop remarked that the  committee had had the same                                                                    
conversation thirty  years previously. He  mentioned Rampart                                                                    
School was  closed for  a period of  ten years,  after which                                                                    
population grew  and the school  reopened. He  asserted that                                                                    
there was nothing static about the equation.                                                                                    
9:57:30 AM                                                                                                                    
Co-Chair von Imhof  thought it was important to  use data to                                                                    
drive policy  decisions. She suggested  that if  DEED wanted                                                                    
assistance   from  the   committee,  more   data  would   be                                                                    
necessary. She asserted that  school maintenance data should                                                                    
be entered into a database. She  thought the age of a school                                                                    
building  was irrelevant.  She  thought  some schools  fared                                                                    
better  than  others  over  time due  to  weather  or  other                                                                    
factors.  She  reiterated  the  need  for  DEED  to  provide                                                                    
further information.                                                                                                            
9:59:36 AM                                                                                                                    
Senator Bishop addressed FN 1 from Debt Service, OMB                                                                            
Component 153. The note had zero fiscal impact.                                                                                 
Co-Chair von Imhof set the bill aside.                                                                                          
HB 106 was HEARD and HELD in committee for further                                                                              
10:00:27 AM                                                                                                                   
2:35:24 PM                                                                                                                    

Document Name Date/Time Subjects
HB106 ver A Sponsor Statement 3.26 (1).pdf HFIN 4/1/2019 1:30:00 PM
SFIN 5/6/2019 9:00:00 AM
HB 106
HB106 ver A Back Up Information - School Debt Spreadsheet 4.17.19.pdf SFIN 5/6/2019 9:00:00 AM
SFIN 2/14/2020 9:00:00 AM
HB 106
SB 91 CS SB 91 (FIN) v. S work draft.pdf SFIN 5/6/2019 9:00:00 AM
SB 91
SB 91 CS SB 91 (FIN) v. S Explanation.pdf HRES 5/8/2019 1:00:00 PM
HRES 5/10/2019 1:00:00 PM
SFIN 5/6/2019 9:00:00 AM
SB 91
HB 14 SCS CSHB 14 (FIN) v. H Statutory References.pdf SFIN 5/6/2019 9:00:00 AM
HB 14
HB 14 SCS CSHB 14 (FIN) v. H.pdf SFIN 5/6/2019 9:00:00 AM
HB 14
HB 14 SCS CSHB 14 (FIN) v. H Explanation.pdf SFIN 5/6/2019 9:00:00 AM
HB 14