Legislature(2019 - 2020)ADAMS ROOM 519
04/08/2019 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB41 | |
| HB106 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 41 | TELECONFERENCED | |
| += | HB 106 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 8, 2019
1:30 p.m.
1:30:05 PM
CALL TO ORDER
Co-Chair Wilson called the House Finance Committee meeting
to order at 1:30 p.m.
MEMBERS PRESENT
Representative Tammie Wilson, Co-Chair
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
Representative Dan Ortiz, Vice-Chair
ALSO PRESENT
Liz Harpold, Staff, Representative Dan Ortiz; Sam Rabung,
Director, Division of Commercial Fisheries, Department of
Fish and Game; Elizabeth Nudelman, Audit Supervisor, Tax
Division, Department of Revenue; Heidi Teshner,
Administrative Services Director, Department of Education
and Early Development, Office of Management and Budget;
Elwin Blackwell, School Finance Manager, Department of
Education and Early Development; Tim Mearig, Facilities
Manager, Department of Education and Early Development.
PRESENT VIA TELECONFERENCE
Representative Kelly Merrick; Timothy Koeneman, Self,
Petersburg; Nancy Hillstrand, Pioneer Alaskan Fisheries,
Seldovia.
SUMMARY
HB 41 SHELLFISH ENHANCE. PROJECTS; HATCHERIES
HB 41 was HEARD and HELD in committee for further
consideration.
HB 106 SCHOOL BOND DEBT REIMBURSEMENT
HB 106 was REPORTED out of committee with a "do
pass" recommendation and with a new zero fiscal
note by the Department of Education and Early
Development.
Co-Chair Wilson reviewed the meeting agenda for the day.
HOUSE BILL NO. 41
"An Act relating to management of enhanced stocks of
shellfish; authorizing certain nonprofit organizations
to engage in shellfish enhancement projects; relating
to application fees for salmon hatchery permits; and
providing for an effective date."
1:30:39 PM
LIZ HARPOLD, STAFF, REPRESENTATIVE DAN ORTIZ, introduced
herself.
SAM RABUNG, DIRECTOR, DIVISION OF COMMERCIAL FISHERIES,
DEPARTMENT OF FISH AND GAME, introduced himself.
Ms. Harpold thanked the committee for hearing the bill. She
explained that many stakeholders and participants in
Alaska's commercial fishing industry came together to
identify shellfish enhancement restoration as something
that would, over time, help improve the state's shellfish
fisheries and expand the economic opportunities in Alaska's
coastal communities. Currently, large scale shellfish
enhancement was not allowed in Alaska, but HB 41 provided
the regulatory framework for the Department of Fish and
Game (DFG) to manage shellfish enhancement and restoration
projects. The statutes the bill would implement were
modeled off of the current salmon hatchery statutes laid
out in AS 16.10.
Ms. Harpold continued that there was a difference between
what was currently being discussed, shellfish enhancement
restoration, and aquatic farming. Mariculture involved all
three. However, with aquatic farming, a private business
such as an oyster or kelp farm, regulations were already in
place, and the industry was already taking off and growing.
The bill did not have to do with those - it had to do with
the public benefit aspects of mariculture development which
were enhancement and restoration.
Ms. Harpold expounded that enhancement was intended to
create a greater abundance of shellfish for the public to
harvest for those that were legally able to harvest whether
for commercial fisheries, sport fisheries, subsistence, or
personal use. Restoration also played a role. It came about
when there was a need after a decline in a certain
shellfish stock, such as crab stock. The department had to
manage them more conservatively. She indicated that HB 41
and the needed regulatory framework would help to enhance
or restore some of the depleted stocks. She reported groups
around the state that could take small research projects
and spread the information for the greater good of Alaska.
She reiterated that HB 41 played an important role in the
development of mariculture in Alaska by providing a method
to increase the available harvest of shellfish for public
use in an environmentally safe manner and should ultimately
improve Alaska's overall fishing economy. She offered to
walk through the sectional analysis.
Co-Chair Wilson responded, "Please do."
1:34:14 PM
Ms. Harpold reviewed the sectional analysis:
Sec. 1: Provides the Alaska Board of Fisheries
authority to direct the department to manage
production of enhanced shellfish stocks, beyond brood
stock needs, for cost recovery harvest.
Sec. 2: Increases the permit application fee for new
private nonprofit salmon hatcheries from $100 to
$1,000.
Ms. Harpold interjected that the only statute change was
reflected in Section 3.
Sec. 3: Adds a new Chapter 12 to Title 16, "Shellfish
Stock Enhancement Projects."
AS 16.12.010: Provides direction to the
commissioner of the Department of Fish and Game
on issuance of permits for private nonprofit
shellfish fishery enhancement projects and
establishes a $1,000 permit application fee. This
section directs the commissioner to consult with
technical experts in the relevant areas before
permit issuance;
AS 16.12.020: Provides for a hearing and public
notification and input process prior to issuance
of a permit;
AS 16.12.030: Describes terms and conditions for
permit holders to conduct their work, including
cost recovery fisheries, harvest, sale, and
release of enhancement project produced
shellfish, and selection of brood stock sources;
AS 16.12.040: Describes the revocation process
should a permit holder fail to comply with the
terms and conditions of the permit;
AS 16.12.050: Specifies that shellfish produced
under an approved enhancement project are a
common property resource, with provision for
special harvest areas by permit holders. This
section also specifies the Board of Fisheries to
establish regulations relating to this chapter;
AS 16.12.060: Directs the department to advise
and assist permit holders in their planning,
operations, and construction of facilities to a
reasonable and appropriate extent;
AS 16.12.070: provides department authority to
approve source and number of shellfish taken for
use as broodstock.
AS 16.12.080: places restrictions on how monies
receives from sale of shellfish may be used only
for operating costs associated with their
facilities;
AS 16.12.090: Relates to Cost Recovery Fisheries
and provides a means by which a shellfish
hatchery may contract to either harvest and sell
shellfish, or to implement a self-assessment from
amongst its membership, for purposes of
recovering operational costs associated with the
hatchery;
AS 16.12.100: Gives the department authority to
inspect facilities at any time while the facility
is in operation;
AS 16.12.110: Requires a permit holder to submit
an annual report to the department;
AS 16.12.199: provides definitions for
"enhancement project," "facility," "genetically
modified shellfish," "hatchery," and shellfish;"
Sec. 4: Provides the Commercial Fisheries Entry
Commission authority to issue special harvest area
entry permits to holders of private nonprofit
shellfish rehabilitation, or enhancement project
permits.
Sec. 5: Defines legal fishing gear for special harvest
area entry permit holders.
Sec. 6: Exempts shellfish raised in a private
nonprofit shellfish project from the farmed fish
definition. Sec. 7-8: Establish state corporate income
tax exemption for a nonprofit corporation holding a
shellfish fishery enhancement permit.
Sec. 9: Exempts shellfish harvested under a special
harvest area entry permit from seafood development
taxes.
Sec. 10: Establishes an effective date for the salmon
hatchery permit application fee described in sec. 2.
Sec. 11: Authorizes the Department of Fish and Game to
adopt implementing regulations.
Sec. 12: Establishes an immediate effective date for
sec. 11 pursuant to AS 01.10.070(c).
Sec. 13: Establishes an effective date for sec. 8
concomitant with sec. 2, Chapter 55, SLA 2013.
1:39:07 PM
Representative Sullivan-Leonard referred to Page 2, line 10
of HB 41. She asked about the fee being waived, the reason
for waiving the fee, and by what method.
Mr. Rabung explained that AS 16.10.480 was the section of
the salmon fishery enhancement or salmon hatchery statute
that pertained to contracting out the operation of state
hatcheries to the private sector. Alaska owned 12
hatcheries and the department contracted their operations
out to the private sector at no cost to the State of
Alaska. They operated on behalf of the state at their own
expense. In the case of operating permits for the state-
owned hatcheries, the commissioner could waive the
application fee.
Representative Knopp was curious about Section 6 and the
farmed fish exemption. He asked for the definition of
farmed fish versus hatchery fish.
Mr. Rabung replied that farmed fish was never released into
the wild. It was maintained and reared under positive
control from the time it was seed until it was harvested.
It was a private ownership. It was akin to terrestrial
farming where the farmer bought seed, planted it, and grew
a product. The state had an aquatic farming program for
oysters and kelp. He continued that the state also had the
salmon fishery enhancement program. It was about the
fishery rather than the fish. It was more of a service
program. He explained that they were designed to create
additional harvestable surplus of a common property
resource that could be legally harvested by anyone who
could obtain a fishing permit or fishing license. They were
not owned until they were harvested. House Bill 41 was
modeled after the salmon enhancement program where
juveniles were created in a protective environment then out
planted in the wild where they became a common property
resource. The resource was not owned until it was
harvested.
Representative Carpenter asked how the special harvest area
locations were identified, created, or changed. He wondered
about the process.
Mr. Rabung responded that during the permitting process the
commissioner of DFG identified where the special harvest
area would be. A special harvest area was the only place a
permit holder could harvest the organisms to recover their
costs. Otherwise, there was no place they could harvest -
there had to be a special harvest area. The department also
issued individuals a special harvest area permit which
authorized them to harvest stock, a common property
resource. He suggested that by providing a special harvest
area and the right to harvest the area, it was akin to an
exclusive right of fishery in a specific location. The
issue was specifically addressed in the Alaska
Constitution. It was amended in 1972 in Article VIII,
Section 15 which allowed for an exclusive right of fishery
for the efficient development of aquaculture in the state.
He reported that without that provision in the constitution
it could not be done. He continued that it started in the
constitution. The Alaska Board of Fish also had the
authority to amend, change, or otherwise modify a special
harvest area.
1:44:09 PM
Representative Carpenter asked if there were existing
fishermen of shellfish who were already fishing natural,
wild production who would be subject to a fee.
Mr. Rabung responded that the department would typically
require the release to be in a location where, if possible,
there was already an existing fishery. It was designed to
benefit existing fisheries. In order to pay for production
there were two models in the bill. He elaborated that one
of them was a fishery assessment where the common property
fisherman would pay a percentage of what they harvested in
the designated areas to pay for the cost of the project.
The other model was a direct cost recover fishery by the
project permit holder. Typically, if someone did direct
cost recovery harvests, it was done on a much smaller
scale. A person only needed a small percentage of a normal-
sized project to pay for it. It would provide a permit
holder the opportunity to specify when they would be
fishing. The rest of the time the resource would be
available as common property.
Mr. Rabung indicated that the state had a rotational
fishery for salmon in a special harvest area. The special
harvest area entry permit holder would be allowed to fish
and typically had a goal to cover their costs each year.
The rest of the time there was a common property rotation
in place by gear groups, such as seiners or gillnetters, to
have a turn at the harvest. Only common property fishing
took place outside of special harvest areas. In the case of
salmon, they were intercepted on their way into the special
harvest areas. The only remaining areas left for harvest by
the hatchery operators was what made it through the
existing fisheries.
Mr. Rabung reported that it was slightly different with
invertebrates. They did not have the same life cycle or the
same homing mechanisms as salmon. It would not be as clear
cut how the department would approach the issue. It would
have to be on a case-by-case basis based on the life
history of the species being enhanced. King Crab would be
handled differently than sea cucumbers or Geoducks. Each
species would be custom fit. He believed the assessment
option would be most widely used.
Representative Carpenter asked who decided when or where a
particular species needed to be replenished on an
artificial basis. Mr. Rabung replied that the program was
stakeholder-driven and based on the desires of the
fisheries stakeholders. It would have to be driven by the
fishery participants just like salmon.
Representative Tilton asked if introducing artificial
species posed a threat to wild species. Mr. Rabung replied
that they were not artificial species. The department was
requiring the use of local stocks. They were naturally
indigenous stocks in the location from where they would be
harvested. He provided an example of Sea Cucumbers.
Currently, the common property fisheries had rotating
fisheries. Every three or four years permit holders would
fish an area. It took 3 or 4 years for the cucumbers to
replenish themselves. In the model that the department
would be using, it would collect a sampling of the species,
raise them in the hatchery speeding up the rehabilitation
process before being replenished in the wild. He provided
an additional example with Razor Clams in the Cook Inlet.
He elaborated on the Razor Clam model.
1:50:20 PM
Representative Carpenter referred to Mr. Rabung's example
of Razor Clams in the Cook Inlet. He did not believe there
was a commercial operation existing for Razor Clams. They
would likely fall under a personal use fishery. He spoke of
the user group restriction because of low populations. He
wondered how the process would be financed without
commercial interest involvement. Mr. Rabung suggested that
it was easiest to find funding for the commercial fisheries
model. It did not preclude any non-profit organization from
participating as long as they were able to obtain funding
such as grants or membership fees for organizations. The
main limitation was how a commercial fishery could provide
funding. There was not a mechanism in the bill to assess
users to pay for the programs.
Representative Carpenter wondered if it was correct to say
that the funding mechanism for non-profits to engage in the
enhancement program would be outside of state government,
and the bill was addressing only the permitting. Mr. Rabung
responded affirmatively. The state use to have a division
that did the work up until the mid '90s. Since then, it had
been a user-pay program.
1:52:57 PM
Co-Chair Wilson asked about the fee of $1,000 and whether
it would pay for all of the costs associated with the
permitting process. Mr. Rabung explained that it was an
application processing fee. He did not think the fee would
cover the cost of the entire program. However, it would
cover processing the permit application.
Co-Chair Wilson understood that the fishery was done by the
user group. She thought the only responsibility of the
department would be to process the permit applications. She
wondered if she was accurate. Mr. Rabung responded that the
department would continue managing the fisheries. The state
would still be involved in managing any fisheries that
would result from these projects. Co-Chair Wilson wanted to
know the costs associated with managing the fisheries. She
thought further discussion would be needed.
ELIZABETH NUDELMAN, AUDIT SUPERVISOR, TAX DIVISION,
DEPARTMENT OF REVENUE, indicated the department had a
fiscal note related to HB 41.
Co-Chair Wilson asked Ms. Nudelman to clarify the fiscal
note she was referring to, as DOR had three of them for
HB 41. Ms. Nudelman was speaking to the fiscal note with
OMB component number 2476 (copy on file). Co-Chair Wilson
referenced FN2.
Ms. Nudelman explained that DOR collected the fisheries tax
and assessments. The cost recovery for the common property
fisheries would be collected by the Tax Division and would
be dispersed as required. The fiscal note covered costs
related to DOR collecting the assessments. It would also
cover the necessary costs required to update the division's
tax management system and to finalize any additional paper
forms or instructions that might be needed.
Co-Chair Wilson referred to page 2 of the fiscal note and
the implementation costs. She read directly from the fiscal
note. She asked about the cost of $50,000 to update the
department's system. She wondered if DOR already had
$50,000 or whether the department required additional
funding for the program. Ms. Nudelman replied that the
fiscal note asked for additional funding for the program.
The request for the funding could be found on page 1 of the
fiscal note. She pointed to the estimated supplemental
request for FY 19 in the amount of $50,000.
Co-Chair Wilson commented that the legislation had not
passed yet. She wondered why FY 19 funds would be used
rather than FY 20 funds. She thought the regulations would
not be put into place until FY 20. Ms. Nudelman explained
that when the fiscal note was drafted, the placement into
the FY 19 supplemental was based on the date that the bill
would become law. It would become law immediately. At the
time the fiscal note was drafted the department was looking
to make sure it was ready to go alongside the legislation.
Co-Chair Wilson conveyed that although she appreciated the
information, she thought a new fiscal note would be needed.
She did not believe the legislature would approve the
supplemental amount for the item. She asked Ms. Nudelman to
take her request back to the department. Ms. Nudelman
indicated she would do so.
Co-Chair Wilson reported that there was no one from the
Department of Administration to speak to FN1 and FN3. The
committee would come back to review them at a later date.
1:58:36 PM
Co-Chair Wilson OPENED Public Testimony.
1:58:52 PM
TIMOTHY KOENEMAN, SELF, PETERSBURG (via teleconference),
spoke in opposition to the bill. He retired from DFG after
being an employee for 26 years within the Division of
Commercial Fisheries. His primary responsibilities had to
do with research and the management of shellfish fisheries
in Southeast Alaska in Yakutat. He opposed adding shellfish
to the private non-profit (PNP) statutes, as he thought
there were already existing problems within the law. He
relayed that shellfish were different species with very
complex life histories and fit in different portions of the
trophic pyramid and the food web. He provided an example
regarding reproduction and the status of many different
stocks. He suggested that prior to embarking in a
significant change and enhancement the state needed to
strictly evaluate where it had been. He recommended looking
at the management plans in place to evaluate whether they
were adequate or adequately funded. Otherwise, the state
was likely to make some of the same mistakes it had already
made. Moving forward, he suggested that shellfish species
deserved and required a different set of statutes and
regulations than salmon. There were some similarities but
also some tremendous differences, particularly in their
life history. He had questions how the private non-profit
stakeholders became the owners of the resource. He wanted
to better understand the meaning of common property. He
also commented that $1,000 would not allow for enough
research on any of the species, much less properly evaluate
a permit. He thought more money was needed to support the
program.
2:02:22 PM
NANCY HILLSTRAND, PIONEER ALASKAN FISHERIES, SELDOVIA (via
teleconference), spoke in opposition to HB 41. She asked
the legislature to focus on a step-by-step rehabilitation
program - not on enhancement. She suggested that only
professionals should investigate the shellfish experiment
to the next level, not late-exposed open to costly
production. She continued that from an economic business
perspective self-perpetuating wild stocks provided the most
efficient business model. She supported finding the cause
of depressed shellfish rather than applying a hatchery band
aide. She believed HB 41 did not promote self-perpetuating
stocks. It used 45-year old statutes with flaws. She
brought up the issues of oversight and state-wide
perspective. She posed several questions the committee
should be asking. She continued to speak on the reasons the
bill needed perfecting. She mentioned that shareholders did
not have a means to weigh in. She thanked the committee.
2:05:43 PM
Co-Chair Wilson CLOSED Public Testimony.
Mr. Rabung reviewed the other two fiscal notes for HB 41.
He relayed that FN3 [OMB 2171] was indeterminate. He
explained that in the previous session the fiscal note had
been zero. There was potential for unseen costs if
something grew substantially. In his estimation, he thought
it would increase incrementally. The department had staff
in place that conducted similar permitting, management, and
research activities. The department was not willing to ask
for an increment until necessary.
Co-Chair Wilson asked if the department allocated
personnel's time. She wondered if he had some statistics.
Mr. Rabung replied that the division received very few
permit applications. Some years the division received 3 or
4 applications, and in other years it received none. In the
history of the salmon program there had been 50 permits
issued, a large number of which were re-permits of the same
facility under new ownership. There was not a large volume
of applications, and they were funded with user pay
dollars. The location sideboards limited permitting as
well. The division would absorb the cost of processing the
permits because of a lack of volume. No additional
personnel would be needed.
2:09:22 PM
Co-Chair Wilson asked if the department had authority. She
suggested it might simplify the process by not having to
make additional requests to the legislature. Mr. Rabung
responded that there were several unknown factors about
potential volume. The division had staff in place that
already did related work and would be involved in
developing a new permit. He suggested that if there was an
increase in the volume of applications, the timeframe would
be longer for processing. He did not anticipate adding any
staff.
Representative Carpenter asked how many employees were in
place dealing with the permitting process. Mr. Rabung
replied that there were 3 year-round employees. He also
noted that they handled other permits as well.
Representative Carpenter mentioned mission creep which
caused him concern. He thought to say that it would not
cost the state anything fiscally when the permits took 6
months to 1 year to complete was unreasonable. Co-Chair
Wilson agreed. She directed Mr. Rabung to address FN1 (copy
on file).
Mr. Rabung spoke to FN1 [OMB 471]. He indicated that the
note was from the Commercial Fisheries Entry Commission
(CFEC). A Commercial Fisheries Entry Commission permit was
required for anyone to participate commercially in the
existing fisheries. He reported there would not be any new
permits other than a cost recovery fishery for a shellfish
enhancement project. It would require a special harvest
area entry permit and was limited to one per project. There
was a one-page application. He did not anticipate any
significant additional work.
Co-Chair Wilson thought additional information was needed
before calling for amendments. She would bring up the bill
later in the week when the sponsor of the bill was
available.
HB 41 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 106
"An Act relating to school bond debt reimbursement."
2:14:04 PM
REPRESENTATIVE TAMMIE WILSON, BILL SPONSOR, invited
testifiers to the table. Her intent was to discuss a change
from how the program operated historically to make things
more efficient and effective for school districts.
HEIDI TESHNER, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF EDUCATION AND EARLY DEVELOPMENT, OFFICE OF MANAGEMENT
AND BUDGET, had Elwin Blackwell and Tim Mearig with her to
provide as much information as possible about the debt
reimbursement program. Mr. Blackwell would start off by
providing a history of the program.
2:15:26 PM
ELWIN BLACKWELL, SCHOOL FINANCE MANAGER, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT, explained that the program
dated back to the early '70s when it was first enacted. In
the early days of the program the state was paying 100
percent in a reimbursement back to municipalities. It was
being done on a 2-year lagging basis. The municipality
would make the payment and 2 years later the state would
reimburse their payment. In the mid '70s the state changed
the statute providing less than 100 percent reimbursement.
The percentage of reimbursement decreased to 90 percent and
remained on a 2-year lagging basis. In the late '70s there
was a cash reimbursement portion of the program in which
municipalities could appropriate money for a project rather
than issuing debt. Municipalities could pay out of their
current resources and be reimbursed for their expenditures
by the state on a 2-year lagging basis. The cash
reimbursement portion of the program was shut down in the
late '80s.
Mr. Blackwell continued that in the early '90s the program
went to a 70 percent reimbursement, and the legislature
started putting some parameters on how much principle the
department could approve. Municipalities would issue
projects to the state, and once the principle threshold was
reached, the state would not accept any other projects. The
money was divided based on the enrollment sizes of a
municipality. The state decided to place a cap on the
amount of reimbursement. In 1983, the state shifted to a
current year reimbursement.
He reported that the state remained at 70 percent
reimbursement, and at different times the legislature would
open up the statute incorporating a new section with new
limits. Changes occurred 3 or 4 times. He reported that in
1999, the program was opened up and there was a slight
change. Prior to the change, a school would have to qualify
for space in order to receive reimbursement. For example,
if a municipality was adding additional space to its school
facilities, it had to show it had an unhoused student
population to qualify for the need for additional space.
For schools that did not qualify but wanted to develop
additional space, the state would help participate on a 60
percent basis. The program stayed in place but had
different amendments including different sunsets.
2:19:47 PM
Co-Chair Wilson asked Mr. Blackwell to define "unhoused."
She also asked why the state agreed to the 60-40 ratio if a
district could not demonstrate the need for additional
space. Mr. Blackwell responded that the "unhoused" question
had to do with the state's space guidelines. He expounded
that the size of a state school was determined by its
student population. If a student population was greater
than the size of a school, students were considered
"unhoused." A school would qualify for additional square
footage to provide adequate space based on the state's
space guidelines.
Mr. Blackwell recalled some schools that wanted to do
remodeling also wanted to add more space. The legislature
approved a lower split of 60/40 for schools without
unhoused students.
Vice-Chair Johnston thought the 60/40 ratio implementation
had to do with projected overcrowding. She asked if she was
correct. Mr. Blackwell responded in the negative. If a
municipality could not show that they would have an
unhoused student population but wanted more space, they
would qualify for the 60/40 reimbursement ration. It
allowed municipalities to add more space than they needed.
Co-Chair Wilson commented, "I am pretty sure we did it to
ourselves."
Representative Knopp recalled about 5 or 6 years ago the
department set new standards for square footage per student
driving up construction costs. He asked if the department
could comment.
2:23:04 PM
TIM MEARIG, FACILITIES MANAGER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, relayed that the space allocation
guidelines had not been revised since 2002. He was not
familiar with any change occurring within the timeframe the
representative referenced. He was happy to discuss space
guidelines - the legislature's primary way of allocating
resources for school projects and limiting the resource
allocations to where they were needed. There were
significant regulations and statutory language around the
topic.
Representative Knopp thought the timeframe might have been
longer. He queried the criteria for a new construction
project per square foot per student. Mr. Mearig relayed
that the state had 3 different measures. He indicated that
the square foot formula equated to approximately 165 square
feet per student. The state had one square footage for
elementary students (Kindergarten through 6th grade) of 124
square feet. The measures were spelled out in the state's
regulations. He continued that each had a base student
allocation with a supplemental allocation that helped to
account for things required by code like circulation
elements and mechanical spaces. The way the space standards
were applied made a difference. He mentioned long-term
storage needs in remote locations with limited barge
service. Generally, the system was robust and had been
looked upon with favor. Some constituent groups had
recommended a review of the space guidelines.
Representative Tilton asked about the changes made in 1999
regarding qualifications for space for unhoused students
and the 60/40 ratio. She asked what percentage applied to
schools that did qualify for space for the unhoused
students. Mr. Blackwell replied that if a school qualified
for additional space, the department would participate at
70 percent reimbursement with the municipality.
Representative LeBon had been on the school board at a time
when the municipality renovated the Hutchinson Career
Center into a traditional stand-alone high school in 1998.
He recalled that the discussion revolved around expanding
the foot print of the building. The request the school
district made was to add a gymnasium. He thought it was a
good reason to ask for a waiver and expand a foot print.
Co-Chair Wilson interjected wondering whether the project
would fall under the 70/30 guidelines.
2:27:38 PM
Mr. Mearig responded that Representative LeBon's example
was appropriate. He referenced the Hutchinson Career
Center, a preexisting building, and the desire to repurpose
the space. There was a significant amount of space that was
not anticipated. Similar projects led the legislature to be
flexible with its limitations. He mentioned an area in
statute that defined 4 standards that had to be met in
order for a project to qualify at a higher percentage.
Co-Chair Wilson mentioned Ryan Middle School and indicated
that the project was essentially made into a 70/30 split
with the help of a grant from the legislature.
Representative Tilton spoke about eligibility for
reimbursement versus state aide provided. She noted it went
from 100 percent from 1991 through 2016 down to 80 percent
in 2017 and back up to 100 percent. She wondered what
happened in 2017.
2:30:18 PM
Co-Chair Wilson guided the committee to start in 1999
moving up to 2017 first before addressing Representative
Tilton's question.
Mr. Blackwell picked up where he had left off in 1999. The
state had limits on the amount of principle it could
approve for reimbursement. In 2006, the program added 2
sections that included 60 percent and 70 percent
reimbursements under the same kind of criteria. At the
time, there were no limits on the amount of principle the
department could approve. Originally, it was scheduled to
sunset in 2008. However, the legislature extended the
sunset date to 2010. In 2010, the sunset was removed
altogether leaving the program open to whatever projects
the municipalities could get the voters to approve, and
they began to grow substantially.
Mr. Blackwell continued that in 2014 the legislature was
looking to sunset the 60 percent portion in statute and add
a new section making the percentage 50 percent. In 2015,
SB 64 [Legislation regarding school bond debt
reimbursement] passed repealing 50 percent and shut down
the program until July 1, 2020. For a little over 5 years
the program would be shut down. He furthered that when the
program came back online, sections were added that gave
qualifying municipalities a 50 percent reimbursement, and
those that did not qualify received 40 percent. Looking
ahead, when the program reopened, the state would decrease
the reimbursement by 20 percent for municipalities falling
under either category.
Mr. Blackwell returned to Representative Tilton's question
about why the state dropped in 2017. He explained that 2017
was the year that Governor Walker vetoed 25 percent of the
debt reimbursement program. He further explained that the
reason it did not show as 75 percent and only 79 percent,
was that when districts provided their figures of
anticipated debt reimbursement for the following year, they
included items such as anticipated bond sales. Sometimes
the bonds were sold for less than they thought, the
interest rates were better, or because of timing issues
with the municipalities. Sometimes there was a small amount
of money in the program left over due to changes. The
department prorated the additional money the result of
which left a 25 percent cut, but municipalities received 79
percent of what would have been due had the program not
been cut at all.
2:34:48 PM
Representative Josephson asked if the legislature ever
declared it would not cover the amounts that had already
been promised.
Co-Chair Wilson relayed that it was Governor Walker who did
not cover the promised amounts. She wondered if the bond
reimbursement had not been paid at any other time in
history. Mr. Blackwell responded that in the 80s, when the
state had similarly challenging fiscal times, there were
conscious reductions to the program. He recalled that
Governor Cooper underfunded the program during his
administration. He had not asked for 100 percent of what
would have been needed. There were periods where the
reimbursements were less than 100 percent. In those
instances, they were conscious budget reductions. The
program was underfunded, and the state prorated it out to
the municipalities.
Co-Chair Wilson mentioned SB 64 that passed. It was her
understanding that the bill had a taskforce to talk about
options for streamlining designs. She asked about design
restraints and other sideboards prior to 2015. She wondered
what had been done since the passage of SB 64 and the
inception of the taskforce.
Ms. Teshner replied that it was actually HB 278 [An omnibus
education bill passed in 2014] that initiated the
prototypical design study by the department. The report
came out in October 2015. She asked Mr. Mearig to
elaborate.
Mr. Mearig added that the department had initiated a
taskforce through a bill [SB 87 offered in 2017] that never
passed. There had been some activities around the same
themes with the current statutory committee put in place in
1993 by the legislature, the Bond Reimbursement and Grant
Review Committee. He spoke of the committee being active
every year which had worked to establish and improve the
application process for school capital grants and bond debt
reimbursement. The committee also reviewed the cost
effectiveness of school construction and did some work in
prototypical analysis. Over the prior 2 years the state had
experienced a significant uptick in some of the areas
including cost-effective school construction likely due to
the introduction of SB 87. He was happy to answer any
additional questions.
2:39:42 PM
Co-Chair Wilson asked if the department was looking at how
the state had done business. She suggested cost savings
such as standardizing certain equipment. She wonder about
the department's efforts in revamping the program.
Mr. Mearig relayed that the department previously had a
couple of initiatives. Throughout is tenure the department
had an active process in implementing legislative
parameters for controlling costs and getting the best value
with state dollars. The department had the ability to
review all applications and to adjust project requests in
order to achieve cost-effective school construction. The
department did an annual review of all applications that
came before the department for major maintenance and school
construction. The department had a qualified staff capable
of reviewing systems and design. However, it did not have
an active process in standardizing designs.
Representative Josephson asked how other jurisdictions
handled facilities management and construction. Mr. Mearig
had been with the National Council of School Facilities.
His membership had exposed him to the practices being used
in other parts of the nation. He would be happy to provide
information regarding other states' processes. The State of
Washington had a state level contribution to school
construction. The majority of the funding for schools in
Washington came through county-level government and bonds
passed in support of schools at the county-level.
Mr. Mearig continued that school districts in Washington
had their connection with those counties and autonomy and
had responsibility for schools within each district. Each
of them, much like in the State of Alaska, had autonomy to
operate and make decisions for their school districts. The
state had some standards in Washington that they had
implemented. They had developed a high-performance school
design criteria. The state had studied Washington's design
model. In 1994, the State of Washington had been invited to
help the Bond Reimbursement and Review Committee establish
and application and statewide need basis. Alaska had
partnered with Washington over the years.
2:44:57 PM
Representative Tilton wondered what type of criteria was
applied in districts losing or gaining population. Mr.
Mearig answered that the state required all applicants
wanting to add space to provide the department population
projections. The department allowed for those projects that
needed space additions to perform a 5-year post-occupancy
projection. The State of Alaska was very aware when the
information was not being provided. There could be growth
or decline in a district that the department was not aware
of because of a district not recently participating in the
annual cycle of submitting grant applications to the
department. The department had various tools to look at the
demographics around the state.
Representative Carpenter wanted to understand the
difference between qualifying and non-qualifying ratios
under SB 64. He wondered if it had to do with the unhoused
student population criteria from earlier in the discussion.
He asked for a definition for qualified and unqualified.
Mr. Blackwell responded that the representative was
correct. It would be based on whether a person qualified
for the space. It would determine whether the ratio would
be 40 percent or 50 percent - once the program reopened
again.
Representative Carpenter asked if there were figures
regarding the status of unqualified or qualified. He
wondered about the preponderance of need - unqualified or
qualified.
Co-Chair Wilson asked if the committee should be referring
to the report by the Department of Education and Early
Development.
Mr. Blackwell would have to look at how many projects were
splitting out at 60 percent and how many were splitting out
at 70 percent currently. He pointed to a handout in
member's packets showing estimated state aid with October
15th at the top of the page.
Ms. Teshner asked if Co-Chair Wilson had the handout.
2:49:28 PM
AT EASE
2:49:54 PM
RECONVENED
Co-Chair Wilson indicated that the information would be
posted on basis. She asked Mr. Blackwell to answer
Representative Carpenter's question.
Mr. Blackwell reported that about 75 percent of the open
reimbursements were at 70 percent and about 25 percent were
at 60 percent.
Ms. Teshner added that there was one district that had an
80 percent reimbursement and one district had a 90 percent
reimbursement under the old percentages. However, the
majority of them were under 70 percent.
Co-Chair Wilson relayed that the only change reflected in
HB 106 was to extend the moratorium to 2025. She hoped the
department would provide additional information about
whether it supported the legislation. She wondered if new
sideboards should be added. She referred to a report over
100 pages that provided additional information. She
conveyed that the bill had a zero fiscal note.
Vice-Chair Johnston MOVED to report HB 106 out of Committee
with individual recommendations and the accompanying fiscal
note.
Representative Josephson OBJECTED for discussion. He
thought the bill made sense based on the current fiscal
challenges. He noted speeches made on the House floor in
the current day about new revenue. He advocated new
revenues. He thought a 10-year moratorium was a long
duration but thought HB 106 was a good bill.
Vice-Chair Johnston thought it was important for policy
makers to have time to adequately review its policies.
Representative Josephson WITHDREW his OBJECTION.
There being NO OBJECTION, it was so ordered.
HB 106 was REPORTED out of committee with a "do pass"
recommendation and with one new zero fiscal note by the
Department of Education and Early Development.
Co-Chair Wilson reviewed the agenda for the following day.
ADJORNMENT
2:55:04 PM
The meeting was adjourned at 2:55 p.m.