Legislature(1999 - 2000)
02/23/2000 01:35 PM Senate HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
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= bill was previously heard/scheduled
SB 228-PUBLIC SCHOOL CONSTR/MAINTENANCE FUNDING
MS. KAREN REHFELD, Director of Education Support Services for the
Department of Education and Early Development, made the following
comments on behalf of Commissioner Cross. SB 228 provides a
funding mechanism for school construction and major maintenance
projects over the next three years. With over $1 billion
investment in school facilities in this state, Alaska cannot afford
to neglect major maintenance needs or replacement of schools. DOE
has consistently advocated for a long term stable source of funding
for school construction and maintenance projects. SB 228 will
address three goals. First, it will provide adequate, safe places
to learn by clearing up the backlog of major maintenance projects
statewide. Second, it will address the needs of both urban and
rural school districts with an emphasis on addressing major
maintenance projects quickly to avoid more costly construction
costs in the future. Third, it will address the concerns brought
forward in the Kasayulie lawsuit.
The package totals $510 million, including $360 million in grants
for school construction and major maintenance, and $150 million for
school debt reimbursement. The projects included in the Governor's
package are funded in the order in which they are ranked on the
department's priority list. As proposed, all 86 projects on the
current major maintenance list and 40 of the 69 new construction
projects will be funded. The current list would be frozen over the
next three years while these projects are underway.
MS. REHFELD continued. The rationale behind the legislation is
based on these goals, and sticking to the priority list and
completing as many projects as possible over the next three years.
Adjustments to the amount of funding for particular projects and
the final listing will need to be made as a result of appeal
decisions that are currently before a hearing officer as it relates
to the priority list. The State Board of Education will be meeting
in March to finalize the school construction and major maintenance
list. As the State continues to address the issues raised in the
Kasuylie case, there may be further modifications needed. Funding
for major maintenance and school construction projects is critical
in both rural and urban Alaska. SB 228 goes a long way toward
addressing those needs.
SENATOR ELTON asked if the State Board of Education will have the
opportunity to change the list before it is frozen when it meets in
March.
MS. REHFELD explained school districts may appeal DOE's annual
ranking decision as it was released in December. Those appeals are
then reviewed by a hearing officer. The hearing officer's decision
is taken to the State Board of Education who finalizes the list.
DOE plans to bring those changes back to the Legislature to
incorporate into SB 228.
SENATOR ELTON asked if the only anticipated changes to the list
will be those modifications made under the appeal process.
MS. REHFELD replied yes, any of the specifics of the funding of
those projects as they are resolved by the hearing officer.
SENATOR WILKEN recalled that at the December Bond Reimbursement
Committee meeting, the major construction list totalled $199
million, and the major maintenance list totalled $49 million. He
asked if that list was added to since December.
MS. REHFELD said she did not recall the date of the December Bond
Reimbursement and Grant Review Committee meeting, but DOE issued a
list on December 15 that would have changed somewhat based on
reconsideration of its November list. By statute, DOE is required
to release its initial priority ranking by November 5. School
districts then have the opportunity to ask for reconsideration. A
new list is published on December 15 and it is that list the school
districts would formally appeal.
SENATOR WILKEN thought the Bond Reimbursement Committee met on
December 9. He asked Ms. Rehfeld the total of the school
construction projects in SB 228.
MS. REHFELD replied the bill authorizes $360 million for all of the
projects on the major maintenance list and a portion of the new
construction list.
SENATOR WILKEN said he would check but he recalls a total of $250
million. He asked Ms. Rehfeld to discuss the source of funds for
the projects in SB 228.
JIM BALDWIN, Assistant Attorney General, explained the bill
contains two sources of funding for bonds that would be issued by
the Alaska Housing Finance Corporation (AHFC). The first would be
the authority of the State to sell the right to receive a stream of
revenue generated by the tobacco settlement. That amount is
expected to be $260 million. The additional $100 million would be
generated from the general obligation bond capacity of AHFC. The
total in the bill equals $369 million because additional amounts
are needed for reserve funds and things of that nature in order to
make the bonds marketable. This is within the agreement that was
entered into with the Legislature in 1998. Another piece of
legislation that will be tied to this will be the capital budget.
DOE expects the Legislature will then go forward and appropriate
for these particular projects in the capital budget. Securing the
tobacco settlement stream is a device that has been used in other
jurisdictions. It will be helpful to the State's position in the
Kasuylie case if a large amount of financing is devoted for rural
schools. This type of financing device allows for more of a
concentration on rural schools.
Another element of this bill provides for further authorization for
the bond reimbursement program - that part of the package totals
$150 million.
SENATOR WILKEN suggested the Kasuylie case is not a reason for the
Legislature to be considering this legislation. He asked if the
Administration is doing anything to change the system so that the
REAAs can help participate in the construction of their schools.
MS. REHFELD said there is no proposal at this point that provides
for a bond capacity or some other mechanism for REAAs to
participate.
SENATOR WILKEN asked if SB 228 contains a provision to develop a
prototype school or school program.
ASSISTANT ATTORNEY GENERAL BALDWIN said nothing in SB 228 expressly
provides for prototype schools but nothing prohibits them.
SENATOR WILKEN asked if DOE would object if such a provision was
added.
ASSISTANT ATTORNEY GENERAL BALDWIN said from the perspective of the
lawsuit, he does not know whether that might complicate things.
TAPE 00-8, SIDE B
MS. REHFELD replied that has been an issue that the Bond
Reimbursement and Grant Review Committee has been looking at and
she is not sure that it has actually come up with an approach that
captures all of the aspects of dealing with prototype schools.
CHAIRMAN MILLER indicated a number of schools on the project list
are within organized boroughs and asked if the amount included in
the bill is the state's approximately 70 percent share.
MS. REHFELD said if the Chairman is speaking specifically to the
grant projects that are included in the proposal, all school
districts have a required participating share.
CHAIRMAN MILLER asked if these projects are funded with 70 percent
by the State.
MS. REHFELD said yes, or whatever the participation level is.
SENATOR ELTON asked Assistant Attorney General Baldwin whether he
feels reasonably assured that this approach will satisfy the
plaintiffs.
ASSISTANT ATTORNEY GENERAL BALDWIN said he is comfortable that the
amount of $360 million to address the projects included in the bill
is highly likely to resolve the problems in the claims in the case,
whether it be by settlement or whether it be by making the case
moot. He said he respects Senator Wilken's view on the Kasuylie
case, and that view is shared by the Governor, but in the
discussions he has had with the plaintiffs, they are in general
agreement on the dollar amount and on the projects. There is an
ongoing discussion, however on how much will be spent on each
project.
SENATOR ELTON said he thought the amounts were settled and equalled
100 percent of the new construction and major maintenance.
MS. REHFELD said in the Governor's proposal, several of the
projects from the December 15 meeting that were initially
recommended to be phased are recommended to be fully funded. To
the extent that one would be able to go farther down the list if
the projects were phased or, conversely, try to fully construct as
many projects as possible, that would affect how far down the list
one can go. Because the proposal would freeze the list for three
years, DOE believes it is better to get as many projects completed
as possible during that three year period. Under this proposal,
there would be nine projects in year three that would be phased.
After the first year, those projects would receive additional
points toward ranking because the planning and design phase would
be complete. The goal is to try and complete as many projects as
possible.
MS. PAT WEAVER, a PTA member from Mat-Su, stated support for SB
228. She supports funding the statewide projects from tobacco
settlement money, and she believes students need clean, safe water.
She also supports debt reimbursement of 70 percent. SB 228 is a "no
frills" bill.
MR. BOB DICKENS, Bering Straits School District, commented that SB
228 is a long-awaited development in addressing the public school
construction in rural and urban Alaska. The biggest problem he has
seen over the last seven or eight years is that there has been no
consistency in the funding, especially in rural Alaska. SB 228 is
a big step in that direction. In the long run, it will give rural
residents the hope they have been looking for during the past seven
or eight years.
SENATOR WILKEN congratulated Mr. Dickens for keeping the school in
Golovin in first class shape. He pointed out that the Bering
Straits School District has three schools on the list. He asked if
that school district would be amenable to having three prototype
schools constructed in those three villages.
MR. DICKENS noted that five schools would be constructed in the
Bering Straits School District over a three year period: Golovin,
Elim, White Mountain, Koyuk, and Teller. Regarding prototype
schools, Bering Straits School District is more in favor of
standardization of equipment and mechanical systems because each
location has a unique terrain.
CHAIRMAN MILLER thanked all participants for testifying on SB 228
and noted his intent to take more testimony next Wednesday and to
pass the bill from committee at that time.
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