Legislature(1999 - 2000)
05/06/1999 02:35 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE
May 6, 1999
2:35 p.m.
MEMBERS PRESENT
Senator Mike Miller, Chairman
Senator Pete Kelly, Vice-Chairman
Senator Gary Wilken
Senator Kim Elton
MEMBERS ABSENT
Senator Drue Pearce
COMMITTEE CALENDAR
SENATE BILL NO. 117
"An Act relating to property insurance required for school
districts."
-HEARD AND HELD
SENATE BILL NO. 167
"An Act relating to scholarships to attend the University of
Alaska; establishing the Alaska scholars program; and providing for
an effective date."
-MOVED SB 167 OUT OF COMMITTEE
SENATE BILL NO. 61
"An Act relating to licensure and professional discipline of
members of the teaching profession and providing for related
penalties; relating to grounds for dismissal of a teacher; relating
to the Professional Teaching Practices Commission; relating to
limited immunity for procedures under the Educator Ethics Act;
making conforming amendments; and providing for an effective date."
-HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
SB 117 - See HESS minutes dated 4/19/99 and 5/3/99.
SB 167 - No previous action.
SB 61 - No previous action.
WITNESS REGISTER
Wendy Redmond
University of Alaska
PO Box 755000
Fairbanks, AK 99775
POSITION STATEMENT: Presented SB 167
Sanna Green, Executive Director
Professional Teaching Practices Commission
344 W 3rd Ave., Ste. 127
Anchorage, AK 99501
POSITION STATEMENT: Supports SB 61
Teresa Williams
Department of Law
1034 W 4th Ave., Suite 200
Anchorage, AK 99501-1994
POSITION STATEMENT: Provided a sectional analysis of SB 61
Sue Mossgrove
Staff to Senator Taylor
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Presented SB 117
Mike Morgan, Facilities Manager
Department of Education
801 W 10th St., Ste. 200
Juneau, AK 99801-1894
POSITION STATEMENT: Answered questions about SB 117
ACTION NARRATIVE
TAPE 99-26, SIDE A
Number 001
CHAIRMAN MILLER called the Senate Health, Education and Social
Services (HESS) Committee to order at 2:35 p.m. and announced the
presence of Senators Pete Kelly, Kim Elton, and himself. He
informed participants the committee would take up legislation in
the following order: SB 167, SB 61 and SB 117.
SB 167-INFO ABOUT SCHOLARSHIP PROGRAMS
WENDY REDMOND, University of Alaska Fairbanks (UAF), explained the
idea for SB 167 came from the State of Georgia which provides free
tuition to every student who maintains a "B" average. SB 167
provides free tuition at the University of Alaska (UA) for four
years to the top ten percent of students in every Alaskan high
school. Governor Knowles introduced similar legislation last year.
The University thought it was such a good idea it proceeded with
the program using money from its natural resources fund. President
Hamilton reviewed nationwide statistics and discovered that Alaska
ranks last in the nation in its retention of high school graduates
who attend college. According to the national average, between 70
and 80 percent of the states' high school graduates go to colleges
in state. Alaska averages 40 percent. Alaskan students are not
attending better schools outside of the state; they are going to
400 colleges, many of which cannot hold a candle to programs
offered at UA campuses. The State is currently spending millions
of dollars to educate students here but it is not a good investment
to spend so much money to make our students smart for export.
MS. REDMOND said that although the scholars' program was initiated
internally, UA needs statutory authority to make the program fully
functional. Not all high schools are forthcoming with the
information necessary to allow UA to offer their top ten percent of
students free tuition; one problem being a federal law that
requires privacy. That federal law can be overridden if the state
has a law mandating that high schools provide the information. For
awards to be granted in a timely manner, it is important that this
legislation be passed this year. UA has been obtaining the names of
the top ten percent of students in their junior year so that it has
one year to recruit those students. Most students make their
college decisions early in their senior year. SB 167 provides that
the requested information be provided at the end of a student's
junior year.
MS. REDMOND pointed out that Ann Ringstad is administering the
program, and that the program has been designed to fit with the
Alaskan experience. Students can leave the State during their
freshman year of college and still get free tuition to UA in their
sophomore year. Students can also take one year off between high
school and their freshman year. Students who are home schooled,
not using the state's correspondence program, are not eligible at
this time.
Number 126
SENATOR WILKEN commended the bill and asked Ms. Redmond if the
University will be able to obtain the names of juniors this year if
the bill is delayed in the next few weeks due to fiscal problems.
MS. REDMOND replied UA is moving forward with the program. She
added that names are often obtained from parents who call the
University for information. She noted the Fairbanks school
district was the most problematic, however permission slips were
eventually obtained from parents for the release of students'
names.
SENATOR WILKEN recommended that committee members read the
scholar's sheet in committee packets. He noted 733 students are
taking advantage of the program, and that quality begets quality.
He stated this bill also signifies President Hamilton's desire to
interface State and University programs.
Number 164
SENATOR ELTON indicated he liked the Governor's proposal because it
provided new money to the University. He asked Ms. Redmond to
discuss what UA will lose by diverting resources to the scholars'
program.
MS. REDMOND replied that of course the University would like to
have more money for the scholars' program. The natural resources
fund is currently supporting natural resource research projects
which will have to be put on hold. She stated the University feels
comfortable considering young people as a natural resource.
SENATOR ELTON asked how the scholars program works in a school
district, such as Galena which has two high schools, and whether
students might be encouraged to attend different schools where they
have a better shot at being in the top ten percent.
MS. REDMOND said the answer to the Galena situation is that 10
percent of students from both the charter school and the public
school are offered scholarships. The second issue of "shopping for
schools" has not been discussed but she does not think that will
occur in huge numbers because people will actually have to move.
CHAIRMAN MILLER commended the University and Senator Wilken for
their work on the scholars' program.
There being no further discussion, SENATOR WILKEN reported SB 167
out of committee with individual recommendations and its HES fiscal
note. There being no objection, the motion carried.
SB 61-TEACHERS'LICENSES, DISCIPLINE & ETHICS
CHAIRMAN MILLER announced that several people were waiting to
testify on SB 61 via teleconference.
SANNA GREEN, Executive Director of the Professional Teaching
Practices Commission, made the following comments from Anchorage.
SB 61 is a housekeeping measure needed to update the statute that
established the commission in 1968. The bill also codifies some of
the commission's procedures, places some of the commission's
regulations in statute (recommended by the Department of Law), and
establishes new provisions common to the other licensing boards.
She asked Teresa Williams of the Department of Law to discuss the
specifics of SB 61.
TERESA WILLIAMS, Department of Law, informed participants she
provided an annotated version of the bill to the committee. She
noted she would be referring to Version B, as that is the bill [HB
85] that was adopted on the House side. She gave the following
sectional analysis.
Section 1 changes the word "certificate" to "license."
Section 2 addresses criminal history background checks. It will
allow the normal types of criminal history background checks and it
will specifically allow DOE to review records to determine if a
person was found not guilty of a charge for reason of insanity.
She pointed out that a conviction on a person's criminal record
would not necessarily be cause for licensure denial, however it is
reason to investigate further. Part C will allow background checks
if a teacher resides out of state or has been unemployed during
his/her previous licensure period.
Section 3 lists the grounds for the denial of a license and
contains a list of conditions that can be placed on a license.
Section 4 codifies the appeals procedure for appeals denial and
makes the Administrative Procedures Act (APA) applicable. The
portion of this section that dealt with disciplinary action has
been moved to another section specifically dealing with discipline.
Section 5 is a cleanup provision. The bases for terminating a
teacher are modeled on the bases for professional discipline and
that language is cross referenced.
Section 6 incorporates all provisions related to discipline and
reinstatement procedures. It also changes the name of the
Professional Teaching Practices Commission to the Educator Ethics
Commission.
Sections 7, 8, 9 and 10 make technical changes. Section 11
provides the exceptions to reinstatement and summary suspension.
Section 12 makes a change to the APA. Under that Act, an agency
must accept, in its entirety, the decision made by the hearing
officer, or the agency can reduce the penalty. However, if the
agency wants to increase the penalty, it has to call for the
record, have it transcribed, and then review the record itself.
Section 12 gives the agency the authority to adopt the proposed
findings of fact in their entirety and increase or change the
proposed disciplinary action.
Number 495
SENATOR ELTON thought a refresher course on the findings of fact
may be appropriate if the agency and hearing officer disagree on
the outcome. MS. WILLIAMS replied the agency would have to review
the findings of fact to decide whether the officer's recommendation
was appropriate. Section 12 would change existing law only in that
the agency would not have to have the entire proceeding transcribed
and read.
SENATOR ELTON asked Ms. Williams if the change is essentially a
cost-saving measure. He questioned how much the commission has
spent in the past to have transcripts prepared. MS. WILLIAMS said
she did not know the cost, however the hearings can take several
weeks and in fact, some of the boards and commissions will ask for
a record because it saves time and money.
Number 516
SENATOR ELTON asked Ms. Williams whether a transcript is public
record. MS. WILLIAMS said it is public record, and the hearing
itself is open to the public.
SENATOR ELTON noted one could argue that a transcript may not be of
benefit to the group, but it might be of benefit to the public.
MS. WILLIAMS replied the public can obtain copies of the tapes.
MS. WILLIAMS said in actuality, the Board realizes the cost of
transcription is passed on to the profession so it usually does not
request a transcript and instead leaves in place an inappropriate
outcome that does not protect the public.
MS. WILLIAMS continued with the sectional analysis.
Section 13 addresses confidentiality and the investigative files of
the commission, especially in regard to minors, and it establishes
when those files would be available to the public and other
parties.
Number 543
SENATOR ELTON asked if initials are used to refer to a minor during
a hearing rather than a name. MS. WILLIAMS said initials are used.
MS. WILLIAMS explained Section 14 is technical. Section 15 is new
and addresses the use of fraudulent certificates by teachers. The
commission currently has no authority over that activity. The
penalty section sets out civil and criminal penalties for a person
who obtains a teacher position for which the person did not have
the required certification. Section 16 contains definitions.
There being no questions of Ms. Williams, Chairman Miller called
John Cyr to testify.
CHAIRMAN MILLER informed committee members that Ms. Williams'
sectional analysis pertained to HB 85 which is now in the House
Rules Committee. He noted HB 85 will probably be used as the
vehicle for passage after the HESS committee finishes its review of
the measure.
JOHN CYR, President of NEA Alaska, expressed the following concerns
about HB 85. Section 14.20.375 reads:
(a) If the department files an accusation while a person is
licensed under this chapter, the commissioner may revoke or
suspend the person's license if the commissioner finds grounds
for discipline under AS 14.20.372.
NEA believes that language should be changed so that the
commission, rather than the commissioner, must find grounds for
license suspension or revocation. NEA would like to see a higher
standard used for license revocation.
Second, subsection (f) reads:
notwithstanding other provisions of this section, the
commission may not impose discipline on a member of the
teaching profession's license to act as administrator unless
the commissioner concurs in the commission's decision.
MR. CYR said that provision smacks of a double standard. Again,
the commission acts as a body, is made up of people from the
education profession and should be making the decisions on
licensure.
TAPE 99-26, SIDE B
NEA's final area of concern is Section 12 on page 13. To take
someone's license to teach is a far different standard than to lose
one's job. A teacher can lose a job because of philosophical
differences with a school district yet be successful in a different
school district. Section 12 should be changed so that the
commission is required to consider all of the facts. NEA would
argue that a de novo hearing would be appropriate before a person
loses his/her license.
MR. CYR informed committee members he would like to comment on a
proposed amendment. CHAIRMAN MILLER invited Mr. Cyr to speak to
the amendment, however said that the committee would not be dealing
with amendments until HB 85 reaches the committee.
Number 564
MR. CYR said he was referring to a proposed amendment by Senator
Donley that would insert, in the bill title, "relating to teachers
who have subject matter expertise." NEA has spent the last three
years working in concert with teachers across the state on the
subject of licensure. One suggested proposal establishes a tiered
system of licensure which would make fundamental changes to the
education system. All research indicates that the most important
factor in quality education is a well qualified teacher. Senator
Donley's amendment moves away from that and says that a person with
a degree in math can teach mathematics, etc. NEA does not believe
that is necessarily true, nor is it in the best interest of the
children of the state.
CHAIRMAN MILLER indicated that Senator Donley may offer that
amendment in the Senate Judiciary Committee, of which he is a
member.
SENATOR WILKEN asked Mr. Cyr to elaborate on NEA's concerns about
Section 12.
MR. CYR read Section 12:
(b) In addition to the options available under AS 44.62.500,
the Commission may adopt a hearing officer's proposed findings
of fact in their entirety and increase or change the proposed
disciplinary action authorized under AS 14.20.375 against the
person.
MR. CYR said, in most cases, the hearing officer is the school
board or an arbitrator. During a hearing, the officer listens to
the facts and makes a disposition. HB 85 allows the commission to
review the disposition and then decide whether the hearing officer
went far enough regarding the punishment. He maintained the
standard for losing a job and the standard for losing a license
should be markedly different. If the commission decides the
hearing officer did not go far enough, the case deserves a total
review.
SENATOR WILKEN asked if Mr. Cyr is saying the commission takes or
leaves the hearing officer's proposal, and when it does not accept
the proposal, it should remand the case to another hearing officer.
MR. CYR said "exactly." A hearing officer does not have the
ability to pull a license; the license is owned by the state and
only the commission can revoke it. If the commission is considering
license revocation, the teacher deserves to have a hearing in front
of the commission.
CHAIRMAN MILLER asked if NEA believes the first phase should be a
take it or leave it procedure, but in cases in which the decision
is not accepted, the commission should remand it back to another
hearing officer or hear the case itself.
MR. CYR said he thinks the commission should hear the case.
SENATOR WILKEN asked Mr. Cyr to prepare an amendment addressing
NEA's concerns.
SENATOR WILKEN questioned whether the term "mentally incapable" on
page 3, line 29, of HB 85, and pointed out the Fairbanks school
district has had trouble proving a person as such. He asked Ms.
Williams whether that term is defined anywhere.
Number 487
MS. WILLIAMS replied the definition would come from the Americans
with Disabilities Act. Such a person would not be able to perform
an essential function necessary to the job of teaching. The
conditional license would ease that process by designing conditions
that will enhance a person's ability to be in the profession if
they can safely carry out the essential duties of their profession.
SENATOR WILKEN felt the "mentally incapable" issue is a double-
edged sword. He stated he does not want an educator to hide behind
it, nor does he want a school board to be prevented from removing
an educator because of it. MS. WILLIAMS clarified the decision to
grant the initial license would rest with the Department of
Education rather than the school boards.
MS. WILLIAMS addressed NEA's concern about the proceedings that
take place before a hearing officer. The hearing officer acts on
behalf of the commission; he/she is appointed by the Governor to
conduct the hearing before the commission and make the proposed
decision to the commission. This procedure is independent of any
action by a school board. The section on procedures of school
boards or districts begins on page 8, line 18. That section sets
out the deference given a school district decision and how the
commission needs to state a good cause for rejecting a finding of
fact on a final decision before the school district. In that
situation, the commission would have the record before the school
district.
Number 438
SANNA GREEN clarified that a hearing officer for a school board is
completely separate from the hearing officer used by the commission
who is appointed by the Governor under the APA.
SENATOR WILKEN repeated that he is not comfortable with the way the
term "mentally incapable" is addressed in the bill. He asked Ms.
Williams if the committee should try to further define the term.
MS. WILLIAMS replied she does not think the committee needs to go
further because if a person is mentally incapable then licensure is
denied. If they can perform some functions, the license could be
limited.
SENATOR WILKEN asked how the term can be defined in legislation so
that it is not interpreted for different purposes at different
times.
MS. WILLIAMS explained the bottom line for teacher licensure is
whether one is able to carry out the duties of being a teacher.
The only purpose of this section is to allow conditional licenses
if a person can perform some, but not all, of the functions.
SENATOR WILKEN questioned who will define the mental capacity of
that teacher. MS. WILLIAMS replied the Department of Education.
SENATOR WILKEN asked under what guidelines. MS. WILLIAMS said from
information from previous employers, for example. Senator Wilken
and Ms. Williams discussed the problems associated with determining
that a person is mentally incompetent, and concluded there is no
easy statutory way to solve the problem because there is no test
that can be administered; each situation is fact-specific.
SENATOR WILKEN commended Ms. Williams for the format of the
comparison of bill versions she provided to members.
Number 365
SENATOR ELTON agreed with Mr. Cyr that the bill sets up a double
standard by making it easier to take action to revoke a teacher's
license than an administrator's license.
MS. WILLIAMS explained there has always been parallel authority to
act between DOE and the commission; SB 61 does not change that. In
reality DOE has never used its parallel authority. It has always
charged the commission to initiate and conduct proceedings.
SENATOR ELTON maintained that the parallel exists for
administrators but not for teachers.
MS. WILLIAMS explained the commission is comprised of 9 members, 5
of which must be teachers, one an administrator, one a principal,
one from DOE, and one from the University of Alaska.
Administrators noted they were vastly outnumbered on the commission
and requested that the make-up of the commission be changed. The
compromise reached in 1968 was to add a requirement that the
commissioner of DOE had to concur with any discipline against an
administrator. A second concern was that a commission made up
primarily of teachers would be less likely to initiate action
against other teachers. For that reason, administrators wanted to
create a stop gap by giving DOE the power to initiate actions. DOE
has never actually initiated any actions and the commission has
been zealous in its responsibility to enforce teaching ethics.
Alaska has the highest rate of revocation in the country.
SENATOR ELTON asked if the commissioner of DOE is required to have
an administrator's certificate. MS. WILLIAMS was unsure but did
not believe so. She added that the Alaska Association of School
Administrators has made it clear that it will revisit the issue of
the make-up of the commission if this provision is removed. The
Administration would prefer that this bill pass because it is a
necessary clean up and it gives the commission the authority to do
what it needs to do. It prefers that any discussion regarding the
make-up of the commission be addressed separately so as not to slow
down the bill.
Number 300
MR. CYR expressed concern that Ms. Williams insinuated that Alaska
has a high rate of teachers whose licenses are pulled for sexual
abuse activities and he finds that offensive. Of the 10,000
certificated teachers in Alaska, three hearings were held last
year; two of those cases were of a sexual nature. The other reason
teacher's licenses are revoked is for breaching a contract. He
noted teachers in rural Alaska do leave at times because they are
harassed by the local people. He still believes of the 10,000
teachers in Alaska, the vast majority are doing a very good job and
to characterize the situation any other way is unacceptable.
SENATOR KELLY agreed with Mr. Cyr but noted it is interesting that
the lobbyist for the NEA finds it distasteful when sweeping
characterizations are made about people. He asked Mr. Cyr to be
aware of that when NEA puts out its next pamphlet.
Number 272
CRAIG BAKER, a teacher from Kodiak and president of the local
union, stated he fully supports the fingerprint and criminal
background check requirement, however he pointed out that
requirement has created problems in Kodiak. Last year a teacher
from Idaho was hired in Kodiak and had her fingerprints taken at a
police station. The FBI rejected the fingerprints because they
were unclear, but by that time school was about to begin and she
did not yet have her certificate. He noted the time issue could
prevent people from not being hired at the last minute. He
indicated that a provision on page 2 of SB 61 allows temporary
certificates to be issued however he does not believe that is the
solution.
SENATOR WILKEN asked Mr. Baker if he is against issuing a temporary
teaching certificate. MR. BAKER said that is correct, however he
repeated the background checks need to be done in a more timely
manner.
BETH LAPE, Special Assistant at the Department of Education,
informed committee members she would like to testify on Senator
Donley's amendment when and if it comes before the committee.
CHAIRMAN MILLER stated that with no further testimony, the
committee will hold SB 61 and wait until HB 85 arrives in the
committee.
TAPE 99-26, SIDE B
Number 218
SB 117-INSURANCE FOR SCHOOL DISTRICTS
CHAIRMAN MILLER brought up SB 117 and a proposed committee
substitute (CS) for consideration, and invited Ms. Mossgrove to
testify.
MS. SUE MOSSGROVE, staff to Senator Taylor and to the
Administrative Regulation Review Committee, explained the bill is
the result of a problem identified in regulation. The CS clarifies
that if a school district is not in a flood plain or a flood prone
area, it does not have to purchase flood insurance. In addition,
language has been added to exempt schools from carrying earthquake
insurance unless they are in an active seismic zone. The
requirement to have earthquake insurance is left to the discretion
of the DOE commissioner. Clear seismic zones ranging from 0-4 have
been mapped out in Alaska. The CS also clarifies that this
amendment to Title 14 applies only to REAAs, not to schools that
are eligible for self-insurance. The CS adds definitions from CFR
44 of flood plain and flood prone areas; the same definitions in
the regulation as well.
SENATOR ELTON asked about earthquake zones and whether a zero
classification is inactive and 1 is active. MS. MOSSGROVE replied
a map exists with the zones laid out, zero being the lowest
potential for earthquake activity. The "ring of fire" is zone 4,
the highest. The zones 0-4 guidelines are set by the building
code.
SENATOR ELTON asked if an REAA school in a 1-4 zone will be
required to carry earthquake insurance while REAA schools in zone
0 will not. MS. MOSSGROVE replied that is correct but the final
decision is left to the commissioner's discretion. Schools in
zones zero and one do not need to carry insurance because no
earthquakes have ever been recorded in those zones.
SENATOR ELTON expressed hesitancy about whether to give different
commissioners the latitude to re-define seismic zones. Zone zero
is easy, but zone one and two are not as clear. He said he is
uncomfortable that the bill does not contain more specifics to
guide the commissioner's decisions.
SENATOR WILKEN agreed with Senator Elton's concern and noted that
Anchorage has 4 or 5 seismic zones within it and that a school
could straddle seismic zones. He suggested the committee re-think
who defines seismic zones, and whether the designation applies to
a school area or a district. He indicated the University of Alaska
has plenty of maps available.
Number 145
MS. MOSSGROVE said she got her information from the University's
website, DNR and the U.S. Geological Survey. The map she used lays
out the seismic zones quite clearly. She was unaware that Anchorage
has different seismic zones within it because it is shown only as
Zone 4 on her map.
SENATOR WILKEN said the Geophysical Institute is currently working
on defining the seismic zones in Anchorage for major structures so
they don't all pay at the Zone 4 level.
SENATOR ELTON asked Ms. Mossgrove to describe the net effect on the
REAAs.
MS. MOSSGROVE said Senator Taylor's intention is to clarify in
statute who has to have insurance, and to allow DOE to apply some
common sense, especially in times of revenue shortages. It is her
understanding that the state currently requires earthquake and
flood insurance for all REAAs. The insurance industry has combined
the two coverages and created a blanket policy to provide a cheaper
rate.
Number 101
SENATOR ELTON asked if that means the pooled insurance will be
higher for non-REAAs if some REAAs no longer have to purchase the
earthquake coverage. MS. MOSSGROVE deferred to DOE to answer that
question.
MR. MICHAEL MORGAN, Facilities Manager for DOE, explained that
current regulation requires flood insurance for all structures in
a flood plain or flood prone area. It also requires earthquake
insurance only for REAAs that are housed in state-owned buildings.
The change will lift the requirement that all REAAs in state-owned
buildings carry blanket earthquake and flood insurance. MR. MORGAN
said the practical effect should net zero, because almost all REAAs
are covered through the Alaska School Insurance Company's (ASIC)
program as part of its broad coverage policy offering earthquake
and flood coverage. When DOE did the regulation two years ago, it
talked to ASIC and AML. ASIC said because of the marketplace, no
cost savings would result if one or two districts wanted out of
earthquake and flood coverage. It should not really increase the
cost of the premium to districts.
Number 056
SENATOR ELTON asked whether, because of the insurance market the
pool is now working in, no net savings to any district wanting to
cancel earthquake coverage may occur. He questioned what will
happen if ASIC begins using another insurance market, and whether,
if this bill passes, the Juneau school district's insurance could
increase because another district dropped out of the pool.
MR. MORGAN replied that if any district pulls out of the pool the
insurance rates of the remaining members would be affected. He
could not say how that would balance out over the long term. Mr.
Morgan said DOE is uncomfortable being put in the position of
determining seismic zones, and he agrees with the comments made by
both Senators Elton and Wilken.
SENATOR ELTON asked if the risk that other districts' insurance
rates will increase if this bill is enacted is insignificant. MR.
MORGAN said he believes "this will have really no effect on other
districts."
SENATOR WILKEN asked if any REAAs are not in state-owned
facilities. MR. MORGAN said some REAAs have asked for title to the
land and buildings under AS 14.08.151 which requires DOE to convey
the title if requested. Some REAAs have already taken title to
land and buildings.
SENATOR WILKEN asked if the REAAs assume the maintenance and
operating costs when they take title. MR. MORGAN said REAAs do
that whether or not they have title.
SENATOR ELTON noted the issue raises an especially interesting
question because if a school building originally served 13 students
and now serves eight, the school building is no longer classified
as a school under the formula.
MR. MORGAN agreed that a student population must consist of more
than 10 students in order for a school to exist. Regarding the
question of what happens to the ownership issue when titles are
transferred, MR. MORGAN stated titles are transferred with their
underlying restrictions on deeds. Deeds acquired by the state from
the BIA usually contain a restriction requiring the land to be used
for school purposes. The REAA could probably rent or lease the
school building and keep the land.
CARL ROSE, Executive Director of the Association of Alaska School
Boards (AASB) and President of the Alaska Public Entity
Insurance Company (APEIC), formerly the Alaska School Insurance
Company (ASIC) until two years ago. ASIC was domiciled in Vermont
because it was created as a pool before the Alaska insurance
pooling laws were enacted; two years ago ASIC decided to domicile
in Alaska.
MR. ROSE discussed the background of this issue. In 1985, most of
the REAAs were unable to obtain insurance. The AASB created, under
its charter, a pool of property values within the REAAs and small
school districts, to take to market. At that time, AASB was
looking at premium prices in the area of $1.25 per $100 of
coverage. By the year 1991, AASB was able to drive that price down
to 21 cents per $100. As an insurance company, APEIC has suffered
over $36 million in losses as a result of total loss fire damage
and a few floods. After paying $36 million in damages, APEIC's
premium rates only increased to 41 cents per $100, and they
continue to decrease. At present, insurance companies are making
money on investments and the focus is not on underwriting but on
getting the premiums to invest. When the investment climate
begins to tail off, insurance companies will be forced to focus on
underwriting and the industry is cyclical. Regarding how APEIC
came up with the idea of providing earthquake and flood insurance,
REAAs were required, under their use permits, to provide that
coverage it they did not take possession of the buildings. That
scheme acted as the footprint for the APEIC so that the REAAs could
get coverage. As a result, APEIC was able to get the coverage at
a fairly low rate because it spread the cost to those outside of an
earthquake zone, similar to the Universal Service Fund in relation
to telephone rates. SB 117 will not have a net impact on the REAAs
that exist right now. The insurance industry looks at Alaska as an
active seismic area, although some areas of Alaska are not active.
APEIC differentiates between the two. With respect to REAAs, MR.
ROSE did not think SB 117 would have an effect. He said he
understood at one point in time, a group of people who did not need
earthquake coverage wanted to be exempted from the requirement.
Because of the state of the market, the insurance industry has
adopted a quality-added atmosphere: the industry is trying to
offer broad coverage for the lowest possible premium to attract
consumers. The net result is that if the Legislature segments the
market and no longer requires certain schools to have coverage, the
premium rates on those who do need the coverage would be driven up.
MR. ROSE repeated that regarding REAAs, he does not believe SB 117
will change anything in existence right now but he questioned
whether newly acquired buildings would be required to have the
insurance. Two insurance pools are available in the state: AML and
APEIC. Both are trying to provide broad areas of coverage. He
believes SB 117 does clarify what people will be required to do and
the industry is positioned to provide the coverage.
SENATOR ELTON asked if Yakutat no longer purchases flood insurance
because it is not in a flood plain, whether its insurance rates
will remain the same so that no other pool member's rates will be
affected.
MR. ROSE replied that is an accurate assessment. Yakutat is not an
REAA so it is not required to provide this coverage right now.
APEIC's broad policies include earthquake and flood coverage. He
noted Yakutat did not want that coverage, but it was part of the
broad package. He repeated that the quality-added approach taken
by the insurance industry is to provide as much coverage as
possible for the premium dollar. He noted the savings would be
minuscule if a specific coverage was broken out because purchasing
large quantities of insurance as a pool provides more buying power.
MR. MORGAN said his reading of the committee substitute is that the
current requirement in regulation that cities, boroughs and
municipalities in a flood plain or flood prone area carry coverage
would not change.
CHAIRMAN MILLER asked if Mr. Morgan's reading of the original bill
was that Yakutat would not have to purchase coverage. MR. MORGAN
said that is correct; if a school is not located in a flood plain
or flood prone area, it will not be required to be covered for
such.
SENATOR WILKEN moved to adopt CSSB 117(HES), Version H. There
being no objection, CSSB 117(HES) was adopted in lieu of the
original bill.
SENATOR ELTON stated he believes a definition of "seismic zone"
should be included in the bill. SENATOR WILKEN agreed.
MS. MOSSGROVE noted the drafter specifically included the word
"active" when referring to a seismic zone because Alaska as a whole
is considered to be a seismic zone.
CHAIRMAN MILLER thought the committee would be more comfortable
clarifying the different zones and their ratings to determine which
zones should and should not be covered.
SENATOR WILKEN suggested asking the drafter to define "active
seismic area" within the bill so that a reference exists.
CHAIRMAN MILLER suggested Senator Wilken, Senator Taylor, Mr.
Morgan and Mr. Rose get together and come up with a solution.
CHAIRMAN MILLER stated there being no other business to come before
the committee, the Senate HESS Committee was adjourned.
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