Legislature(2009 - 2010)CAPITOL 106
03/23/2009 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB137 | |
| HB184 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 184 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 137 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
March 23, 2009
8:03 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Cathy Engstrom Munoz, Vice Chair
Representative Wes Keller
Representative Peggy Wilson
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
Representative Bryce Edgmon
COMMITTEE CALENDAR
HOUSE BILL NO. 137
"An Act relating to an interstate compact on educational
opportunity for military children; amending Rules 4 and 24,
Alaska Rules of Civil Procedure; and providing for an effective
date."
- MOVED HB 137 OUT OF COMMITTEE
HOUSE BILL NO. 184
"An Act relating to the debt authorization of the University of
Alaska."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 137
SHORT TITLE: COMPACT: EDUCATION OF MILITARY CHILDREN
SPONSOR(s): REPRESENTATIVE(s) COGHILL
02/16/09 (H) READ THE FIRST TIME - REFERRALS
02/16/09 (H) EDC, JUD, FIN
03/20/09 (H) EDC AT 8:00 AM CAPITOL 106
03/20/09 (H) Heard & Held
03/20/09 (H) MINUTE(EDC)
03/23/09 (H) EDC AT 8:00 AM CAPITOL 106
BILL: HB 184
SHORT TITLE: DEBT AUTHORIZATION FOR UNIVERSITY
SPONSOR(s): REPRESENTATIVE(s) KELLY
03/12/09 (H) READ THE FIRST TIME - REFERRALS
03/12/09 (H) EDC, FIN
03/23/09 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
LARRY LEDOUX, Commissioner
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 137.
EDDY JEANS, Director
School Finance
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 137.
DEREK MILLER, Staff
Representative Mike Kelly
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 184 on behalf of
Representative Kelly, prime sponsor.
REPRESENTATIVE MIKE KELLY
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the prime sponsor of HB 184.
MYRON DOSCH, CPA, Controller
University of Alaska
Fairbanks, Alaska
POSITION STATEMENT: During hearing of HB 184, answered
questions.
ACTION NARRATIVE
8:03:50 AM
CHAIR PAUL SEATON called the House Education Standing Committee
meeting to order at 8:03 a.m. Representatives Seaton, Keller,
Munoz, Wilson, Gardner, and Buch were present at the call to
order.
HB 137-COMPACT: EDUCATION OF MILITARY CHILDREN
8:04:26 AM
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 137, "An Act relating to an interstate compact on
educational opportunity for military children; amending Rules 4
and 24, Alaska Rules of Civil Procedure; and providing for an
effective date."
8:04:52 AM
CHAIR SEATON asked if there was further public testimony on HB
137. There being none, public testimony remained closed.
8:05:02 AM
LARRY LEDOUX, Commissioner, Department of Education and Early
Development (EED), related that his support for HB 137 is driven
by 30 years worth of experiences working in a school district
with a substantial military population.
8:05:40 AM
EDDY JEANS, Director, School Finance, Department of Education
and Early Development (EED), related his understanding that the
Anchorage School District supports HB 137. Mr. Jeans
highlighted that the fiscal note for HB 137 is for $22,300. He
explained that the interstate compact requires an annual
membership fee. The fee is $1 per military child in the state.
Alaska has approximately 16,200 students who are military
dependents. The remaining $6,100 would be for travel expenses
for the mini cabinet in Alaska that oversees the implementation
of the compact. The department, he related, would advise that
the cabinet consist of the commissioner of EED and the
superintendents of the Anchorage and Fairbanks School Districts.
The department would also recommend that a state legislator be
appointed to the council as well as the military advisor who is
currently appointed to EED. Mr. Jeans reminded the committee
that the interstate compact is a compact between state agencies
and governments. He explained that Section 1 outlines the
enactment of the compact at the state level. Article II, page
2, specifies the definitions the compact will use. Article III,
the applicability provision, outlines who is covered by the
compact, which is basically all of the military families.
Article IV, Educational Records and Enrollment, specifies the
timelines for record receipt.
8:09:03 AM
MR. JEANS informed the committee that although Alaska is already
performing 95 percent of what is included in the compact, there
are a few areas in the compact that are different than existing
state law. For example, existing state immunization records are
required to be provided prior to a child attending a public
school. However, HB 137 allows families up to 30 days to
produce immunization records. The state currently has an
agreement with the Department of Health and Social Services
(DHSS) that provides homeless children 30 days to produce
immunization records as well. Another difference is that
existing state law has a waiting period, 90 days, for students
wishing to participate in school athletic activities. The
[compact] includes a waiver provision for which districts can
apply. Through the waiver, military students would be allowed
to participate in school athletic activities immediately. In
response to Chair Seaton, Mr. Jeans relayed that the [athletic]
associations don't have any objections to that.
8:10:42 AM
REPRESENTATIVE GARDNER, referring to subsection (c) of Article
III, surmised that there is no prohibition against applying the
compact to those who aren't otherwise defined.
MR. JEANS stated his agreement. In further response to
Representative Gardner, related his belief that military
families likely have more readily available access to
immunization records.
8:12:02 AM
REPRESENTATIVE GARDNER related her understanding that the
existing prohibition against students being allowed mobility in
terms of athletics is an effort to discourage students from
moving simply because of athletics. Representative Gardner said
that she would have many of these provisions apply to all
students, save the athletic provision.
COMMISSIONER LEDOUX noted his agreement that generally transfer
rules are in place to prevent recruiting of students for high
school athletic teams. He commented that serving four years on
the State Athletic Board has illustrated to him that there can't
be enough rules to stop the aforementioned.
8:13:53 AM
MR. JEANS, continuing his review of differences between current
state practices and the proposed compact, explained that the
compact specifies that military students don't have to wait to
be placed in advanced classes. In fact, military students who
are said to have taken advanced placement courses at their prior
school will be placed immediately in the receiving school. The
other difference is that the compact specifies that those
students who have passed a High School Graduation Qualifying
Exam (HSGQE) in another state would be exempt from the receiving
state's test. Furthermore, those military students who are high
school seniors would be exempt from the receiving state's HSGQE.
He noted that the aforementioned is already in [EED's]
regulation. In response to Chair Seaton, Mr. Jeans related his
understanding that the compact wouldn't require athletic tryouts
to be redone when a military student arrives. The premise is
that the student would be accepted to the athletic team or the
advanced placement course, if space is available. If a position
became available at a later date, students would be able to
apply for the open position.
8:18:22 AM
COMMISSIONER LEDOUX noted that most schools have protocols
established to address transferring students and acceptance onto
athletic teams. The [compact] doesn't guarantee a spot above
other students.
8:19:04 AM
REPRESENTATIVE MUNOZ asked if military students entering schools
in Alaska have been hindered by current regulations. She noted
her support for HB 137.
COMMISSIONER LEDOUX provided an example of a student who arrived
five days prior to graduation at the student's prior school.
The sending district wouldn't grant credit to the student, and
therefore the student faced not graduating. Commissioner LeDoux
said that he chose to offer credit for all of that student's
classes. "That shouldn't have occurred," he opined.
Commissioner LeDoux characterized HB 137 as a law of common
sense. In fact, most Alaska schools follow the protocols in the
proposed compact. Therefore, he said he viewed HB 137 as a
statement of what Alaska wants other states to do in regard to
military youth.
8:21:30 AM
REPRESENTATIVE WILSON suggested that perhaps there was a lack of
communication between the family of the student who moved five
days prior to graduation and the school. She questioned why the
parents wouldn't have requested that the student be allowed to
take the final exams prior to moving.
COMMISSIONER LEDOUX said that the school knew exactly what it
was doing when it refused the student credit. He then related
that the stress on military families when they move is real.
Furthermore, sometimes the bureaucracy of a school becomes more
important than the student. This proposed legislation places a
higher value on the student.
8:22:56 AM
REPRESENTATIVE WILSON moved to report HB 137 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, it was so ordered.
HB 184-DEBT AUTHORIZATION FOR UNIVERSITY
8:23:48 AM
CHAIR SEATON announced that the final order of business would be
HOUSE BILL NO. 184, "An Act relating to the debt authorization
of the University of Alaska."
8:24:26 AM
DEREK MILLER, Staff, Representative Mike Kelly, Alaska State
Legislature, presented HB 184, paraphrasing from the sponsor
statement, which read as follows [original punctuation
provided]:
HB 184 adjusts the current bond debt cap for the
University of Alaska to reflect today's construction
prices. Current Alaska Statute allows the University
of Alaska to borrow money, issue debt, or enter into
long-term obligations for the purchase of facilities,
goods, or services without having to provide notice to
the legislature as long as the annual debt service
payment doesn't exceed $1.0 million. HB 184 bumps up
the threshold to $2.5 million.
The current bond debt cap limit of $1.0 million was
originally issued in 1990. At that time, $1.0 million
in annual debt service was the cost of financing a
$15.0 million capital project. Taking into account
construction inflation in Alaska, a $15.0 million
capital project build in 1990 would cost about $40.0
million today. Annual debt service on $40.0 million
is $2.5 million assuming a 4.5% interest rate and a
25-year straight line amortization.
The University has operated a viable debt program over
the last 18 years. It has issued 14 general revenue
bonds plus other financing arrangements that have been
critical in securing funding for capital projects.
The University has never suffered a rating downgrade.
In fact, in December 2007, Moody's Investor Service
upgraded the University credit rating to Aa3. The
University continues to monitor its debt capacity and
compliance with tax exempt bond covenants. Currently,
the amount of debt service outstanding is $11.2
million. This is less than half the Board of Regents'
policy limit of 5% of unrestricted revenues which is
$26.2 million for FY08. This equates to $127 million
in outstanding debt with the ability to issue a total
of $317 million in debt.
By increasing the bond debt cap approval level, the
administrative burden of compliance with the statute
for smaller bond issues would be reduced for both the
legislature and the University. At the same time,
legislative oversight would be retained for larger
financings.
I would appreciate your support for HB 184.
8:26:48 AM
REPRESENTATIVE BUCH asked if this cap would allow the
university's participation at the maximum level the university
is seeking.
MR. MILLER explained that HB 184 merely reflects the changing
construction environment. If the legislature were to authorize
receipt authority for a couple of the current projects that the
university is proposing, this legislation would impact that.
8:27:56 AM
REPRESENTATIVE WILSON said that she would view HB 184 as
problematic if it creates a tuition increase. She asked if the
sponsor would object to an amendment specifying the
aforementioned wouldn't happen.
REPRESENTATIVE MIKE KELLY, Alaska State Legislature, clarified
that the university oversight remains because no funds can be
expended without receipt authority, which the legislature
approves. "This [proposed legislation] merely makes the level
of bonding to accomplish the same chores current," he said. He
then pointed out that state funds to the university have reduced
from 60 percent to 40 percent. In answer to Representative
Wilson, Representative Kelly acknowledged that a project that HB
184 would support could result in an increase in tuition. For
example, at the Fairbanks campus students agreed to a tuition
increase in order to fund a recreation center. Representative
Kelly related his opposition to an amendment that would hinder
the Board of Regents' management of tuition rates as related to
the proposed debt cap. The legislation wouldn't cause/trigger a
tuition increase because HB 184 strictly permits the university
to bond for smaller amounts.
8:31:42 AM
REPRESENTATIVE WILSON inquired as to how many tuition increases
the university system has experienced.
MR. MILLER answered that since 2003 there has been a 10 percent
increase in tuition for four years in a row. He recalled that
after those four years, tuition increased by the higher tuition
price index plus a bit more, but not quite 10 percent.
REPRESENTATIVE WILSON expressed concern with such tuition
increases. She then stressed that the university must review
ways in which it can avoid tuition increases.
8:33:11 AM
CHAIR SEATON asked if the Fairbanks recreation facility impacted
the tuition across the university system or was it merely a
surcharge at the Fairbanks campus.
REPRESENTATIVE KELLY responded that it was a specific surcharge
for Fairbanks students.
8:33:41 AM
REPRESENTATIVE GARDNER commented that she was struck by the
thinness of the committee packet for HB 184. She expressed
interest in receiving backup.
MR. MILLER said that although he doesn't have a letter from the
university specifically, the Controller from the University of
Alaska is available online.
8:34:12 AM
REPRESENTATIVE MUNOZ related her understanding that the
university's opportunity to issue debt is about $317 million,
which won't change even with changing the cap. Therefore, she
opined that changing the cap wouldn't affect tuition rates.
MR. MILLER explained that the total outstanding debt the
university is authorized to issue is set by the Board of
Regents. Currently, that limit is set at 5 percent of
unrestricted revenue. The aforementioned is separate from the
university's annual debt service. He pointed out that if the
university needs to bond above the specified threshold, the
university will seek that funding from the legislature. In
further response to Representative Munoz, Mr. Miller confirmed
that changing the cap doesn't affect the university's ability to
bond that $317 million.
8:35:57 AM
REPRESENTATIVE BUCH inquired as to whether students have any
involvement in determining tuition costs.
MR. MILLER highlighted that the Board of Regents includes a
voting student representative on the board, which provides input
at that level. However, the decision is ultimately that of the
Board of Regents. With regard to the Fairbanks Student
Recreation Center, the Fairbanks students actually voted to
build that facility and impose a surcharge. In further response
to Representative Buch, Mr. Miller confirmed that students who
may not have been part of the decision to impose the surcharge
were faced with paying it.
8:38:06 AM
REPRESENTATIVE WILSON inquired as to the percentage of students
who pay their own tuition versus the percentage of students
whose parents pay their tuition.
MR. MILLER said it would be difficult to establish that number,
but offered to provide it if he could.
8:39:10 AM
CHAIR SEATON remarked that such information may not be
available, and in fact may be confidential.
8:40:40 AM
CHAIR SEATON, referring to page 1, lines 9-12 of HB 184, asked
if the language means that the university doesn't have to come
before the legislature unless the amount being sought is above
the $2.5 million financing debt cap.
8:41:55 AM
The committee took an at-ease from 8:41 a.m. to 8:43 a.m.
8:43:02 AM
REPRESENTATIVE KELLY related his understanding that the bonding
is separate from the approval. Therefore, the receipt authority
is generated by the legislative action. The bill merely states
that if the receipt authority is from bonds, the approval is not
required for the act of bonding itself. The language doesn't
affect the power of the legislature over projects; rather it
says that once the legislature approves a project, the
university has the ability to bond at a higher level than before
without coming before the legislature.
CHAIR SEATON pointed out that the discussion seems to be as if
the legislature has to approve the projects if the university
totally bonds for it and pays for it itself. However, existing
language on page 1, lines 9-13, says that the legislature only
has to approve the university's receipt authority if the amount
is more than the service debt of $2.5 million. Therefore, he
requested the sponsor have Legislative Legal and Research
Services check the meaning of this language.
REPRESENTATIVE KELLY agreed to do so.
8:46:31 AM
MYRON DOSCH, CPA, Controller, University of Alaska, offered to
answer any questions.
8:47:02 AM
CHAIR SEATON asked if the university has to obtain legislative
approval for bonded projects that are below the existing limit
of $1 million or the proposed $2.5 million limit.
MR. DOSCH answered that the university can issue debt if it's
below the specified limit. The legislature approves those
projects through the receipt authority.
8:48:10 AM
CHAIR SEATON posed an example in which the university decides to
issue debt for a project rather than go through a capital
project request. He asked if the university can do so if the
anticipated debt service would be less than $2.5 million.
MR. DOSCH replied yes.
8:49:01 AM
REPRESENTATIVE WILSON asked if the university could decide to
bond a project the legislature denied.
MR. DOSCH replied no, and explained that the university would
still need the receipt authority to issue debt if it's a capital
project.
8:49:43 AM
MR. DOSCH, in response to Chair Seaton, confirmed the
university's support for HB 184.
8:50:31 AM
REPRESENTATIVE KELLY offered to obtain a position statement from
the university.
8:51:00 AM
REPRESENTATIVE MUNOZ suggested that including clarifying
language referring to "projects greater than $2.5 million" on
page 1, lines 9-11, would be helpful.
REPRESENTATIVE KELLY related his agreement that HB 184 may
create an inconsistency with existing law. He pledged to have
the legislation scrutinized on the points the committee has
addressed. The intent, he said, is not to place unforeseeable
restrictions on the university.
CHAIR SEATON pointed out that the portion of HB 184 referring to
the $2.5 million limit is addressing an annual payment not the
cost of the project.
8:54:27 AM
CHAIR SEATON, upon determining no one else wished to testify,
closed the public hearing on HB 184. He announced that HB 184
would be held over.
8:56:43 AM
CHAIR SEATON discussed the agenda of the upcoming meeting and
materials the committee members should review in preparation.
9:00:46 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 9:00 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 184.pdf |
HEDC 3/23/2009 8:00:00 AM HEDC 3/25/2009 9:00:00 AM |
HB 184 |
| HB 184 Sponsor Statement.pdf |
HEDC 3/23/2009 8:00:00 AM HEDC 3/25/2009 9:00:00 AM |
HB 184 |
| HB137-EED-ESS-3-17-09.pdf |
HEDC 3/20/2009 8:00:00 AM HEDC 3/23/2009 8:00:00 AM |
HB 137 |
| HB0137A.pdf |
HEDC 3/20/2009 8:00:00 AM HEDC 3/23/2009 8:00:00 AM |
HB 137 |
| img-3191420-0001.pdf |
HEDC 3/20/2009 8:00:00 AM HEDC 3/23/2009 8:00:00 AM |
|
| img-3191549-0001.pdf |
HEDC 3/20/2009 8:00:00 AM HEDC 3/23/2009 8:00:00 AM |
|
| Sponsor statement HB 137.doc |
HEDC 3/20/2009 8:00:00 AM HEDC 3/23/2009 8:00:00 AM |
HB 137 |
| Sectional HB 137.doc |
HEDC 3/20/2009 8:00:00 AM HEDC 3/23/2009 8:00:00 AM |
HB 137 |
| UA Bond Debt Cap 1990 Statute.pdf |
HEDC 3/23/2009 8:00:00 AM HEDC 3/25/2009 9:00:00 AM |