Legislature(2021 - 2022)SENATE FINANCE 532
02/16/2022 09:00 AM Senate 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.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Department of Education & Early Development Fy23 Capital Request | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 164 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 16, 2022
9:02 a.m.
9:02:48 AM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 9:02 a.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
MEMBERS ABSENT
Senator David Wilson
ALSO PRESENT
Heidi Teshner, Acting Deputy Commissioner, Department of
Education and Early Development; Tim Mearig, Facilities
Manager, Department of Education and Early Development.
SUMMARY
SB 164 APPROP: CAP; REAPPROP; SUPP
SB 164 was HEARD and HELD in committee for
further consideration.
PRESENTATION: DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT
FY23 CAPITAL REQUEST
SENATE BILL NO. 64
"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
shellfish enhancement project permits; allowing the
Alaska Seafood Marketing Institute to market aquatic
farm products; and providing for an effective date."
^PRESENTATION: DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT
FY23 CAPITAL REQUEST
9:04:07 AM
HEIDI TESHNER, ACTING DEPUTY COMMISSIONER, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT, introduced herself.
9:04:34 AM
Ms. Teshner discussed the presentation "State-Aid for
School Capital Projects: Grant and Debt" (copy on file).
Ms. Teshner looked at slide 2, " Our Mission, Vision, and
Purpose":
OUR MISSION
An excellent education for every student every day.
OUR VISION
All students will succeed in their education and work,
shape worthwhile and satisfying lives for themselves,
exemplify the best values of society, and be effective
in improving the character and quality of the world
about them.
Alaska Statute 14.03.015
OUR PURPOSE
DEED exists to provide information, resources, and
leadership to support an excellent education for every
student every day.
9:04:59 AM
Ms. Teshner spoke to slide 3, "Historic School Capital
Funding":
1. Federal
2. State Funding Mechanisms (General Fund)
Grants (~1970)
General Obligation (G.O.) Bonds (2003, 2011)
AHFC Revenue Bonds (1999, 2001, 2002)
Debt Reimbursement (1971)
School Fund AS 43.50.140 (FY1999-present)
Others (i.e.: Insurance Fund AS 22.55.430)
3. Local Educational Agency (LEA)
Capital Reserves
Municipal Debt
Ms. Teshner relayed that the debt reimbursement program had
been housed under the Department of Revenue (DOR) until
1983 when it was moved to the Department of Education and
Early Development (DEED). She said that the program had
always been a proportion of the local debt that had been
reimbursed annually and the funds came through the states
operating budget.
9:07:30 AM
TIM MEARIG, FACILITIES MANAGER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, referenced slide 4, "Recent Funding (SB
237 Report)":
• SB 237 (Chapter 93 SLA 2010) AS 14.11.035
Annual report on school construction and major
maintenance funding
First report completed in February 2013
• $1,445,438,000 in funding
Total project value for Debt projects
State share value for Grant projects
• Supplementary handout
February 2021 AS 14.11.035 (SB 237) Report
Project Funding by District (report Appendix A)
Project Listing by District (report Appendix B)
Mr. Mearig referenced Handout 1, entitled "School Capital
Project Funding Under SB 237" (copy on file). He said that
the current report would be completed at the end of the
month.
Mr. Mearig stated that there was a detailed list of funding
provided by each district in Handout 1. There was also a
detailed list of projects contained in an appendix. He
added that there was a couple of new projects that would be
in the forthcoming report.
9:10:21 AM
Mr. Mearig turned to slide 5, "Current Funding Options":
1. School Construction Grant Fund (1990) AS 14.11.005
2. Major Maintenance Grant Fund (1993) AS 14.11.007
3. Regional Educational Attendance Area (REAA) and
Small Municipal School District School Fund (2010) AS
14.11.030
- Indexed Fund
- DR Funding / % of C/B schools *.244 AS 14.11.025
4. School Debt Reimbursement (DR) Funding AS 14.11.102
Co-Chair Bishop welcomed the department to the committee.
9:13:19 AM
Mr. Mearig considered slide 6, "Current Project Categories
(AS 14.11.013)":
(School Construction and Major Maintenance)
(A) avert imminent danger or correct life-threatening
situations;
(B) house students who would otherwise be unhoused;
for purposes of this subparagraph, students are
considered unhoused if the students attend school in
temporary facilities;
(C) protect the structure of existing school
facilities;
(D) correct building code deficiencies that require
major repair or rehabilitation in order for the
facility to continue to be used for the educational
program;
(E) achieve an operating cost savings;
(F) modify or rehabilitate facilities for the purpose
of improving the instructional program;
(G) meet an educational need not specified in (A)
(F) of this paragraph, identified by the department
Mr. Mearig relayed that the slide was an overview of the
capital project priority list placement process. He relayed
that the items in red (A) were School Construction, and the
items in blue (B) were Major Maintenance.
9:14:43 AM
Senator Hoffman referenced funding the Napakiak school,
which was in imminent danger of falling into the Kuskokwim
River. He asked which category the school fell under, A or
B.
Mr. Mearig stated that the application for the Napakiak
School showed the box checked for B, or Major Maintenance.
Senator Hoffman asked what type of projects would fall
under project type A, if the Napakiak School did not. He
asked whether there had been any projects funded under that
category since 2010.
Mr. Mearig replied that districts were asked to check the
box most closely related to the primary purpose of the
project. He said that there had been projects submitted
that fell under the A category. He added that sometimes
small repair projects that addressed a code condition were
better placed on the A list because it was less competitive
for funding. He said that schools with serious issues, and
needed to be on the Major Maintenance grant fund list,
would check box C or D.
9:18:17 AM
Senator Hoffman wanted to express that the SB 257 was
introduced by the Senate Finance Committee in 2010 because
of the Kasayulie v. State of Alaska lawsuit. He shared that
the funding in the settlement included funding for SB 257
as part of the agreement. He said that if the projects were
not funded according to the legislations formula the state
would be non-compliant with the settlement and vulnerable
to lawsuits.
9:19:20 AM
Co-Chair Stedman asked about major maintenance at Mt.
Edgecumbe High School. He noted that the housing for the
boys at the school were from WWII.
Mr. Mearig stated that the information on slide 6 was for
the 53 public school districts in the state.
9:20:48 AM
Ms. Teshner addressed Co-Chair Stedman's question. She
explained that Mt. Edgecumbe HS did not fall under AS
14.11.013. She said that the school produced a deferred
maintenance list each fall, which was then added to the
statewide deferred maintenance list. She said that DEED
worked with OMB to get the school appropriations every year
to address their maintenance backlog.
Co-Chair Stedman recognized that the school was an anomaly
in that it was a state boarding school. He pointed out that
most of the students came from Northern and Western Alaska.
He shared concerns that the enthusiasm for dealing with the
schools deferred maintenance was weak. He thought it would
be beneficial for the department to return to the committee
with photos of the deferred maintenance and clean-up needed
at the school. He was concerned the department would not
bring forward a request for new dormitories for students.
He did not know the condition of the girls dorm, but he
knew they had also been built in WWII. He was concerned
about the advocacy base for the school and did not think
that the department was advocating as strongly for the
school.
Co-Chair Stedman continued his remarks. He did not think
the department had advocated strongly enough for the school
or as much as a community would have. He requested a status
update on the condition of the boys dorm and the girls
dorm, and that the department return to the committee with
a major maintenance list for the school addressing some
specific structures.
Co-Chair Bishop suggested that the report to include
information about the $1.8 million that had been
appropriated the previous year for major maintenance at the
school. He noted that the governor had vetoed $100,000 of
the appropriation.
9:24:30 AM
Senator Hoffman had the same concerns as Co-Chair Stedman.
He stated that most of the Mt. Edgecumbe students came from
Regional Educational Attendance Areas (REAAs). He suggested
that the committee ask the Legislative Finance Division if
it would be legally possible to modify the law so that the
students could have adequate facilities and receive the
proper education due to them by the state of Alaska as laid
out in the Kasayulie settlement. He reminded the committee
that the passage of SB 257 had been a struggle. He stressed
that the students at Mt. Edgecumbe were academically
exceptional and should be afforded adequate learning
facilities.
Senator Hoffman continued his remarks. He argued that
people in Urban areas of the state build new schools when
they needed them. He thought there was a strong argument
for modifying SB 257 to address the concerns faced by Mt.
Edgecumbe.
9:27:19 AM
Senator Olson thought that because Mt. Edgecumbe was
independent from the public school district, the priorities
of the school were farther down the list than would be
normal.
Ms. Teshner answered "yes and no." She relayed that the
school was prioritized over libraries, archives, and
museums because there were students at the school. She said
that the school had been able to receive a number of
appropriations through statewide deferred maintenance over
the past few years for both the boys and girls dorms as
well as other items. She asserted that the department tried
to prioritize the school so that the facility was adequate
for students
Senator Olson shared that he was concerned that the school
had a high achievement rate, but the conditions were poor.
He strongly recommended that the school be a higher
priority for maintenance dollars.
9:29:18 AM
Mr. Mearig displayed slide 7, "Fund Category Entity
Relationships," which showed a table that showed a matrix
of how different projects were eligible for different types
of funding. He pointed out the example of the 19 REAA
districts that were eligible for the funding through the
REAA fund the School Construction and Major Maintenance
funds but not Debt Reimbursement. Similarly, under the
REAA Fund, both school construction projects and major
maintenance projects were listed as able to access the
funds. He noted that the 30 City Borough Districts were not
eligible for REAA funds. He thought that the slide was a
handy reference for the state funding mechanisms.
9:31:32 AM
Co-Chair Bishop noted that the legislature had funded the
Major Maintenance Fund the previous year at $21.6 million,
$7.9 million to Mt. Edgecumbe for dormitory repairs. He
noted that the governor vetoed the funding from the capital
budget, on top of the $100,000 veto in the operating budget
for day-to-day maintenance expenses at the school. He
lamented that the only item left in was the Huston Middle
School appropriation of $9 million.
9:32:20 AM
Co-Chair Stedman asked the location of the Houston Middle
School.
Co-Chair Bishop thought the school was in the Mat-Su
valley.
9:32:36 AM
Mr. Mearig highlighted slide 8, "Capital Improvement
Project (CIP) Eligibility":
1. Six-year capital improvement plan
2. Functioning fixed asset inventory system (FAIS)
3. Proof of required property insurance
4. Certified Preventive Maintenance and Facility
Management Program
5. Capital project and not maintenance
6. Participating Share
Mr. Mearig explained that all districts were eligible for
capital improvement projects, but there were certain
criteria that needed to be met to apply.
9:33:55 AM
Co-Chair Bishop asked about eligibility criteria for
capital improvement projects. He explained that some
districts were more equipped than others to complete an
application. He asked if the department offered services to
assist with the application process.
Mr. Mearig shared that the department did formal training
each spring and had an active and vested interest in
getting as many districts to participate as possible. He
said that limited funding in recent years could have make
the application process seem unrewarding as there are
limited resources to go around.
9:35:58 AM
Co-Chair Bishop queried whether Mr. Mearig had enough
assets to help rural school districts in submitting a
completed application for the CIP eligibility.
Ms. Teshner wanted to expand on Mr. Mearig's comments. She
noted that the department could not write applications but
could review applications and guide districts through the
process.
Co-Chair Bishop thought that school improvements would help
with academic performance.
9:37:07 AM
Senator Hoffman knew his district wanted to exercise its
self-determination in designing and building their school.
He asked why the department had fought the district on the
issue over the last decade.
Mr. Mearig stated that his framework for the process was
different than that Senator Hoffman had described. He
recounted that he had worked in the Lower Kuskoquim School
District in the past and had been successful in achieving
alternative delivery on projects on the area. He stated
that personally he was a proponent of alternative methods.
He did not feel like the department set up roadblocks but
did have a series of guidelines to help districts
understand which methods would be best for their area. He
supported alternative delivery methods and believed that
the process was reasonable for districts.
9:40:11 AM
Senator Hoffman felt that schools should not have to ask
for alternative delivery. He felt that the alternatives
should be offered as an option for districts to choose
from. He noted that the Northwest Arctic Borough had been
very happy with design/build delivery.
9:41:42 AM
Co-Chair Bishop asked Mr. Mearig to explain the acronym
CMGC.
Mr. Mearig explained that CMGC denoted a construction
manager/general contractor, who was one method of project
delivery.
Co-Chair Bishop asked for the main benefit of CMGC.
Mr. Mearig relayed that earlier contractor involvement
helped to recognize anticipate change conditions that would
require a constructor responsible for construction methods
and means. He said that contractor involvement in the
design phase could assist districts in fine tuning the
design. He said that there were several other reasons, such
as scheduling, that could benefit from the CMGC
involvement.
Co-Chair Bishop added that an additional benefit was
lowered costs and lowered claims and change orders.
Mr. Mearig agreed.
9:43:28 AM
Senator Olson asked about the Northwest Arctic School
Borough. He asked whether Mr. Mearig was the last word on
whether a project moved forward or not.
Mr. Mearig stated that the department did make the
determination and approve of any alternative delivery
methods.
Senator Olson interpreted that the department was the
ultimate authority on whether a project moved forward.
Mr. Mearig replied in the affirmative.
Senator Olson commented that the guidelines and regulations
were subject to interpretation, and to cut down the
dissatisfaction in some areas of the state, the
recommendations of people residing in those communities
should be weighed heavily against the departments
recommendations for delivery. thought the interpretation
He cautioned Mr. Mearig to use his discretion that the
students in certain areas werent compromised by decisions
made by the department.
9:45:13 AM
Senator von Imhof observed in her district that there had
been a standardization of elementary schools for efficiency
and cost savings. She thought districts should be able to
participate in the process. She felt if districts stayed
within guidelines, and budget, they should have the freedom
to design their buildings as they see fit.
9:46:47 AM
Mr. Mearig looked at slide 9, "Grant Participation and
Eligibility":
1. Capital Improvement Project (CIP) Grant Application
Due from school districts on or before September
1 (annually)
CIP Application materials are posted on our
website
(https://education.alaska.gov/facilities/faciliti
escip)
2. Project Ranking
Ranked in accordance with criteria in AS 14.11
and 4 AAC 31
3. Eligibility
Districts must have a six-year plan, a fixed
asset inventory system, adequate property loss
insurance, and a preventive maintenance and
facility management program certified by the
department
4. CIP Priority Lists
Initial lists are released on November 5
Final lists are released after any appeals for
reconsideration are finalized
Co-Chair Bishop asked Mr. Mearig to expand on the appeals
process and address the timeline.
Mr. Mearig explained that the reconsideration period was
th
between the issuing of the list on Nov. 5 and the end of
November. At that point scores could be revisited. A list
was produced in November based on reconsideration, the list
th
usually changed between Nov. 5 and the December list. He
stated that after December the opportunity to appeal would
be limited to projects that had ben raised in
reconsideration. He said that an independent hearing
officer would then consider the appeals.
9:49:39 AM
Mr. Mearig addressed slide 10, "Grant Participation and
Eligibility FY2013 FY2023," which showed a bar graph
entitled 'TOTAL CIP GRANT APPLICATIONS.' He pointed out
that there was generally a downward trend from FY 13 to FY
20. He noted that there had been some rebound in
participation after FY 20. He stated that the 2020 number
was low but that the number had never dropped below the FY
20 numbers. The small green portion of the bars denoted
ineligible projects.
Co-Chair Bishop asked whether Mr. Mearig had any studies on
the 50 percent increase from 2020 to 2021. He wondered what
was driving the participation rate.
Mr. Mearig thought there was a combination of factors that
drove the increase, including an anticipated increase in
funding and encouragement from the department.
Co-Chair Bishop asked about the fee for applying for Major
Maintenance funding.
Mr. Mearig stated there was no fee for the application. He
estimated that the cost of participation was difficult to
determine. He had heard of threshold numbers of $2,000 to
$3,000, and consultant costs could be seen as a cost of
applying but could be reimbursed.
9:53:35 AM
Co-Chair Bishop discussed Major Maintenance in REAA
districts. He asked whether applications had to be approved
by an engineer.
Mr. Mearig answered in the negative. He added that the
department provided series of tools available to districts
for generation of an application without any outside help.
9:54:38 AM
Mr. Mearig advanced to slide 11, "Grant Awards FY2013
FY2022," which showed a table of funds that had been
appropriated into different categories: School Construction
Grant Fund (AS 12.11.005); Major Maintenance Grant Fund (AS
14.11.007); REAA & Small Municipal School District School
Fund (AS14.11.030). The slide listed the grant awards from
FY 13 to FY 22.
9:55:33 AM
Senator von Imhof commented that when Governor Dunleavy was
a senator he often spoke of public/private partnerships
with schools, utilizing schools beyond traditional use. She
referenced the Kasayulie case and wanted to see an effort
whereby the state utilized fund to the best use for every
village and every community. She believed that this meant
fully utilizing the building year-round, partnering with
other local agencies, after hours and during the summer.
She had been to several small communities, particularly in
Senator Olson's district, and had noticed that schools were
closed. She emphasized that students needed a place to
meet, use the internet, play basketball, and other
activities. She asked if there was a way to combine
entities to help utilize the space and offset costs. She
wondered whether the opportunity for collaboration had been
considered by the department.
Mr. Mearig relayed that there was an opportunity within the
current statute to have combined facilities, however the
funding could not come through these funds, under statute.
He said that the opportunity to have a combined facility
was there. He relayed that there was not a formalized
process to engage in discussion with districts and
communities. He thought collaboration would have to start
at the grassroots level.
9:59:50 AM
Senator von Imhof thought, based on the governor's comments
in the beginning of entering office, that DEED would
mention the possibility to communities. She added that
teacher housing should be a priority when developing school
construction projects.
10:01:31 AM
Senator Hoffman thought there were people in his region
that wanted to the things mentioned by Senator von Imhof.
He considered that roadblocks were financial. He lamented
that there were two gymnasiums in the region that were shut
down during the summer months. He hoped the department
could take the initiative to think outside the box rather
than leaving the solution to the legislature. He referenced
the Bristol Bay Borough, which had remodeled its school. He
shared that during remodeling, the project had encountered
extensive dry rot and asbestos. He said that stopping the
project would have interfered with the education of
students. He thought the total additional cost overage to
the borough to deal with the dry rot and asbestos was
significant. He questioned how the department addressed
cases such as the borough found, which he thought was not
an isolated case.
Senator Hoffman continued his remarks. He asked how the
department would support areas that were not first-class
cities or boroughs and could not afford to build
facilities.
10:06:43 AM
Mr. Mearig was aware of the project that Senator Hoffman
had referenced and acknowledged that the project had run
into some unforeseen problems. He relayed that funding for
the project had been allocated in 2019 when the legislature
appropriated $24 million. He said that the department hoped
for contingencies when executing projects, but in the case
described by Senator Hoffman there had been none. He said
that the district could come back to the department for
additional funding or seek out another entity to help
shoulder the cost. He said that 65 percent of the overruns
were eligible to be paid covered by the state, but there
had not been any money available.
10:08:33 AM
Senator Hoffman wondered why the funding for the overrun
was not brought before the legislature in a supplemental
request.
Mr. Mearig understood that a supplemental request would
have been a possibility.
Senator Hoffman asked why the supplemental request was not
made and asked whether the department had requested that
the administration make the request.
Mr. Mearig replied that he had no knowledge of the request
for supplemental funding for the Bristol Bay Borough
project.
Senator Hoffman thought that if the cost was eligible for
state support the department should have worked to support
that community by requesting the supplemental funds.
Mr. Mearig thought Senator Hoffman's questions and remarks
might be beyond his per view. He acknowledged that the
department would be helping the district in understanding
what the override costs were as they closed the project
down. He said that the department would evaluate which
costs were eligible for state aid and whether a
supplemental would be supported.
10:10:48 AM
Co-Chair Bishop asked about any lessons learned by the
project mentioned by Senator Hoffman. He wondered whether
any additional inspection could have prevented, or
anticipated, the problem of the dry rot and asbestos.
Mr. Mearig relayed that the district was very proactive in
trying to assess the needs of the facility and had funded
for assistance from design professionals. He acknowledged
that lessons were learned but that projects had faced
issues of this nature before. He thought such issues had
happened before and would happen in the future.
10:12:51 AM
Co-Chair Bishop asked whether there was language that could
be added to guiding documents for communities that could
alert them to consider these factors in their project
planning.
10:13:10 AM
Senator Hoffman asked whether legal costs incurred by the
borough in litigation with the state could be recouped in a
supplemental request.
Mr. Mearig responded that legal expenses related to a
project were eligible for supplemental funds.
10:13:46 AM
Senator Olson thought it was troublesome that communities,
particularly for REAA's, were discouraged to seek funding
for projects due to the complexity of acquiring funding. He
believed that it was incumbent of the department to make
sure communities had guidance and support to navigate the
supplemental funding request process. He noted that in his
region the school gym was often the biggest facility in
town and doubled as a venue for community events.
10:16:02 AM
Co-Chair Stedman considered that many projects around the
state faced difficulties. He encouraged the department to
request the supplementals. He emphasized that schools were
a fundamental obligation of the state and ranked high on
the list of funding priorities.
Ms. Teshner stated that the department would consider
bringing supplemental requests for projects that had
overrun their appropriated budget.
10:17:36 AM
Mr. Mearig looked at slide 12, "Total Eligible Grant
Projects and Actual Grant Funding by Fiscal Year," which
provided more detail on the number of project applications
and the funding provided by year. He drew attention to the
bottom of the slide, which showed there were 17 projects on
the construction list for FY 22, two of which were funded.
He noted that there were 108 maintenance projects of which
none were funded in FY 22.
10:18:39 AM
Senator Hoffman commented that the zero listed under FY 21
and asked if it was because the governor had vetoed 50
percent of the funding appropriated by the legislature. He
thought that work could had at least been done on design.
Mr. Mearig stated that it was true there was zero funding
because of the governor's veto. He relayed that the general
rule of thumb for advancing design was that if sufficient
funding could be expected in the subsequent year, design
would be done. He said that if it did not look like funding
would be available in the year following design, the design
would not be done since designs quickly became outdated.
10:20:46 AM
Co-Chair Stedman asked for refresher as to appropriations
in FY 22. He wondered what the appropriation request had
been and why the number on the slide showed zero.
Ms. Teshner clarified that in 2021, the 50 percent veto was
for school debt reimbursement. She stated that there had
been no appropriation to the School Construction Fund.
Co-Chair Bishop believed that the lack of appropriation had
been due to the truncated legislative session resulting
from the Covid-19 pandemic.
Co-Chair Stedman asked about the zero in FY 22 for
maintenance.
Ms. Teshner said that no maintenance funding had been
appropriated in the FY 22 budget.
10:21:31 AM
Co-Chair Stedman asked whether any requests had been made
by the administration for the FY 22 maintenance funding.
Ms. Teshner could not recall whether there had been a
request in the governors FY 22 budget request. She said
she could get back to the committee with the information.
10:22:10 AM
Co-Chair Bishop asked whether he mis-spoke earlier
regarding the governors veto of FY 22 maintenance funds.
Ms. Teshner did not recall. She agreed to follow up with
the committee.
10:23:22 AM
Mr. Mearig showed slide 13, "Appropriations into the REAA
and Small Municipal School District Fund," which showed a
table depicting a history of appropriations into the REAA
and Small Municipal School District Fund.
10:24:02 AM
Mr. Mearig referenced slide 14, " Allocations from the REAA
and Small Municipal School District Fund," which showed a
table listing all the allocations from the REAA and Small
Municipal School District Fund over the last 8 years.
10:24:33 AM
Mr. Mearig turned to slide 15, "Debt Reimbursement and
Eligibility":
1. Debt Reimbursement program is established in AS
14.11.100
2. Capital Improvement Project (CIP) Debt Application
a. May be received at any time the Debt
Reimbursement program is open.
b. CIP Application materials are posted on our
website(https://education.alaska.gov/facilities/f
acilitiescip)
3. Project Ranking
a. Projects are not ranked or evaluated for
prioritized need
4. Eligibility
a. All types of Cities, except 3rd Class
b. All types of Boroughs
c. Districts must have a six-year plan, a fixed
asset inventory system, adequate property loss
insurance, and a preventive maintenance and
facility management program certified by the
department
10:26:33 AM
Mr. Mearig considered slide 16, " Debt Reimbursement
Trends":
• Percentage of Annual Debt Service
FY1971 FY1977 100%
FY1978 FY1983 90%
FY1984 FY1994 80%
FY1995 FY1999 70%
FY2000 FY2015 70% / 60% *
? SB64 (Chapter 3 SLA 2015) implemented a moratorium
on additional debt reimbursement through FY2020
? HB106 (Chapter 6 SLA 2020) extended the moratorium
on additional debt reimbursement through FY2025
FY2026 FY20xx 50% / 40% **
*Northwest Arctic Borough at 90% for bonds between
1990-2006
**Rates shown are reflective of current statute after
the moratorium is lifted
10:27:29 AM
Mr. Mearig displayed slide 17, "Debt Reimbursement Trends,"
which showed a bar graph showing total dollars, over time,
distributed through debt reimbursement. He cited that the
bulk of projects had fallen into the 70 percent
reimbursement rate.
10:28:06 AM
Ms. Teshner highlighted slide 18, "Debt Reimbursement
Trends," which showed the outstanding state liability. She
stated that if the moratorium were lifted, and there were
no additional bonds approved by voters, FY 2040 would be
the last projected year for state payment under the
program. She cited Handout 2, which provided the numbers
behind the graph (copy on file).
10:29:03 AM
Senator Hoffman considered lower interest rates and thought
school districts had been refinancing. He asked about the
pros and cons to the state for refinancing.
Ms. Teshner stated that an upcoming slide would cover the
issue.
10:29:41 AM
Co-Chair Stedman mentioned that several members had
requested a calculation of arrears in school bond debt
reimbursement over the years. He wanted to ensure that the
arrears for the REAA fund made it into the record. He
believed that the legislature had never agreed to short-
fund municipalities. He reiterated that educating the
children of the state was one of the legislature's top
responsibilities.
10:31:22 AM
Ms. Teshner looked at slide 19, "Debt Reimbursement
Trends," which showed a table providing information on how
the school debt reimbursement program had been funded each
year since 1976. The program had been fully funded for 32
of the past 47 years, with significant shortfalls in the
1980s. She noted that some adjustments had been made in the
1990s, with veto adjustments in 2019 and 2020. She added
that the program had been fully vetoed in FY 21. She cited
Handout 3, (copy on file), which provided the numbers in a
larger font. She relayed that the governors FY 23 budget
proposed fully funding the debt reimbursement program. In
Handout 4 (copy on file) there was a breakdown of FY 23
anticipated debt totals by municipality. She shared that
there were 18 municipalities that were projected to receive
funding in FY 23.
10:32:31 AM
Ms. Teshner addressed slide 20, " Debt Proceed and
Refundings":
Initial Bond Sales
After bonds are sold, the department identifies
how much of approved projects are funded by the
new bond.
Establish any proration's for bonds based on
approved project reimbursement rate. (AS
14.11.100(a))
Refunding of Bonds
Refunding of current bonds must follow the
requirements in AS 14.11.100(j)(2).
Department evaluates refundings by comparing
the annual debt service of the refunding package
to the original annual debt service of the
bond(s) that are refunded. The refunding must
show an annual savings.
Ms. Teshner explained that the refunding could not extend
the timeline of paying off the loan.
10:34:49 AM
Ms. Teshner advanced to slide 21, "Funding Comparison,"
which showed a table with a comparison of eligibility of
funding programs:
REAA/Small Muni
Available to REAA and 4 small municipal districts
Funds state share of actual project
costs
Projects are funded by priority from DEED lists
Specific eligibility requirements:
1. No new space for MM
2. Only eligible space for SC
3. Priority to school construction
Participating share:
REAAs 2%
Small Muni 10% - 20%
State funding is tied to annual appropriation for debt
reimbursement
SC/MM Grant Funds
Available to all school districts
Funds state share of actual project
costs
Projects are funded by priority from DEED lists
Specific eligibility requirements:
1. No new space for MM
2. Only eligible space for SC
Participating share required between 2% and 35%
State funding is by legislative appropriation to the
funds
Debt Reimbursement
Available to any municipality that has the ability to
bond
Funds portion of annual municipal debt payments
Local government sets own priorities
Could fund projects that are not eligible for grants
those not eligible for space
Participating share currently at:
40% if not eligible for space
30% all others
State funding is based on when the bond was passed
10:36:16 AM
Senator Hoffman discussed school construction. He asked
about the FY 23 capital improvement projects, which had
funding for a track improvement. He asked how a track
improvement qualified under SB 257. He did not believe it
has been the intent of the legislature to fund track
improvements.
Mr. Mearig stated that the type of project fell under
school infrastructure and outdoor recreation. He said that
such projects were typically a lower priority but were
eligible for funding.
Senator Hoffman thought such items complicated the issue
and drew focus and energy away from more meaningful
projects.
10:38:32 AM
Ms. Teshner continued to address slide 21. She cited that
the participating share listed under each column.
Co-Chair Bishop asked whether Ms. Teshner knew the names of
the four small municipal districts.
Ms. Teshner agreed to follow up with the information.
Mr. Mearig listed Klawock, Hydaburg, Kake, St. Mary's and
Tanana as the small municipalities.
10:40:24 AM
Ms. Teshner looked at slide 22, "Additional Handouts and
Resources":
Supplementary handouts
FY2023 School Construction Grant Fund List
FY2023 School Construction Project Descriptions
FY2023 Major Maintenance Grant Fund List
FY2023 Major Maintenance Project Descriptions
DEED's Facilities website:
https://education.alaska.gov/facilities
School Facility Database
https://education.alaska.gov/doe_rolodex/schoolcalenda
r/facility
Preventive Maintenance & Facility Management Program
https://education.alaska.gov/facilities/PM
CIP Application and Support
https://education.alaska.gov/facilities/facilitiescip
CIP Grant Priority Lists
https://education.alaska.gov/facilities/facilitiespl
Ms. Teshner showed to slide 23, "Contact Information":
? Heidi Teshner, Acting Deputy Commissioner
[email protected]
(907) 465-2875
? Tim Mearig, Facilities Manager
[email protected]
(907) 465-6906
? Kollette Schroeder, Legislative Liaison
[email protected]
(907) 465-2803
Co-Chair Bishop expressed appreciation for the work done by
the department.
10:41:33 AM
Senator Hoffman thanked the department for considering the
school in Napakiak. He thanked the governor for travelling
to the YK Delta and viewing the school personally. He
commented that schools were high priority and that the
intent of SB 257 had been to provide high quality education
in rural Alaska, which included quality facilities.
SB 164 was HEARD and HELD in committee for further
consideration.
Co-Chair Bishop relayed that the afternoon meeting was
cancelled.
ADJOURNMENT
10:42:48 AM
The meeting was adjourned at 10:42 a.m.