HOUSE FINANCE COMMITTEE May 2, 1994 8:30 A.M. TAPE HFC 94 - 150, Side 1, #000 - end. TAPE HFC 94 - 150, Side 2, #000 - #260. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 8:30 A.M. PRESENT Co-Chair Larson Representative Therriault Co-Chair MacLean Representative Martin Representative Foster Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representatives Hanley and Hoffman were not present for the meeting. ALSO PRESENT Representative John Davies; Representative Jerry Mackie; Sherrie Goll, Fairbanks Alliance for People, Anchorage In- Service Coalition, Juneau; Elmer Lindstrom, Special Assistant, Department of Health and Social Services; Wendy Redman, Vice President for University Relations, University of Alaska; Will Gay, (Testified via teleconference), Alaska Housing Finance Corporation, Anchorage; Alison Elgee, Budget Director, University of Alaska, Anchorage. SUMMARY SB 368 An Act relating to the human services community matching grant program; and providing for an effective date. SB 368 was reported out of Committee with "no recommendation" and with a zero fiscal note by the Department of Health and Social Services dated 4/08/94. HB 466 An Act authorizing the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; authorizing the issuance of bonds by the University of Alaska to pay for the costs of 1 repair and rehabilitation of facilities of the University of Alaska; amending powers of the Alaska Housing Finance Corporation; amending the definition of "public building"; relating to the Alaska debt retirement fund; and providing for an effective date. HB 466 was HELD in Committee for further consideration. SENATE BILL 368 "An Act relating to the human services community matching grant program; and providing for an effective date." Representative Therriault endorsed SB 368 introduced by Senator Bert Sharp. The Anchorage and Fairbanks Social Service Block Grants were created in the early 1980's to provide those communities with state assistance for needed social services. In addition to serving local residents, approximately 11% of the total clients and as many as 73% of clients served by some local providers would come from other areas within the State. He added, in 1992, a statutory basis was established for the Human Services Community Matching Grant Program. The program required an increased match rate, although previously no local match was required. Representative Therriault noted that local municipalities are seeing reductions of municipal assistance and revenue sharing, and that the proposed legislation would stabilize the matching grants at the 30/70 percent match rate which would bring the Human Services Community Matching Grant Program into line with other programs that require matching funds. Co-Chair MacLean questioned why the grant would cover only Fairbanks and Anchorage. SHERRIE GOLL, FAIRBANKS ALLIANCE FOR PEOPLE, THE ANCHORAGE IN-SERVICE COALITION, JUNEAU, explained that the statute was not written so that it would exclude other communities. It was written to address the greatest population baseline. The only communities which qualify in that baseline would be Anchorage and Fairbanks which are the only communities required to provide a match. She added that the other grants in the human service block, which are not state provided are in the BRU's for the various rural communities. There are not required to make a match. Representative Therriault commented that the block grants had statutory authority. The balance was then assigned to 2 departmental BRU's and the large municipalities did not participate in that funding. Co-Chair MacLean predicted that there would be a state fiscal impact. Representative Therriault replied that the request would match current fiscal year percentages. Representative Brown spoke in support of the Anchorage human service grant program which provides vital services to people in need. ELMER LINDSTROM, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, reiterated that there would be no fiscal impact to the State although the measure could have an effect of reducing the amount available for projects if the municipalities do not provide a higher match level. Representative Parnell MOVED to report SB 368 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SB 368 was reported out of Committee with "no recommendations" and with a zero fiscal note by the Department of Health and Social Services dated 4/08/94. HOUSE BILL 466 "An Act authorizing the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; authorizing the issuance of bonds by the University of Alaska to pay for the costs of repair and rehabilitation of facilities of the University of Alaska; amending powers of the Alaska Housing Finance Corporation; amending the definition of "public building"; relating to the Alaska debt retirement fund; and providing for an effective date." WENDY REDMAN, VICE PRESIDENT FOR UNIVERSITY RELATIONS, UNIVERSITY OF ALASKA, ANCHORAGE, explained that HB 466 would include authorization for $30 million dollars in bonds to construct student housing at the Anchorage campus. She added that student housing has been an UAA's capital request for a number of years. UAA's 384 beds can accommodate only 2.6% of the student needs. The current demand was measured by a student survey which indicated a need for an additional 2000 beds. The proposed funding would enable UAA to construct 600 dormitory beds as well as common areas for food service, study, lounge and laundry facilities. Ms. Redman continued, that the legislation would authorize 3 the Alaska Housing Finance Corporation to issue $30 million dollars in bonds for student housing repair and rehabilitation of other university facilities. The program would allow buildings to be constructed with the cost spread over the remaining life of the facilities. Ms. Redman provided Committee members with a list of priority projects. [Copy on file]. Repayment of the debt service will be made from annual legislative appropriations from the Alaska debt retirement fund (AS 37.05.011). Co-Chair MacLean inquired who would be responsible for the cost of the payment. Ms. Redman replied that the bill would direct that the Alaska debt retirement fund pay for the bond. Those payments would appear in the FY96 budget. She added that the total deferred maintenance need in Anchorage amounted to $22 million dollars. Representative Brown questioned the zero fiscal note. Ms. Redman noted there would be no payment in FY95. Discussion followed regarding the fiscal impact of the legislation. Ms. Redman explained that no revenue is generated on the facilities except for student housing and that revenue is placed into the costs of operations and maintenance of those facilities. Representative Brown asked the cost to the State without the legislation. Ms. Redman replied that it would total the cost of protecting the infrastructure. Co-Chair MacLean argued that additional costs would exist for any state facilities. Ms. Redman reminded the Committee that she spoke for the student body and that deferred maintenance was their number one priority. Co-Chair MacLean criticized the University's level of financial support in the FY95 budget. She did not feel they should be requesting additional funds. WILL GAY, (TESTIFIED VIA TELECONFERENCE), ALASKA HOUSING FINANCE CORPORATION, ANCHORAGE, noted that Alaska Housing Finance Corporation (AHFC) would support the bonding requested by the legislation. HB 466 would allow AHFC to exchange assets for a chance to have income to offset the transfer. Representative Brown asked how the bonding debt service would be paid. Mr. Gay responded the bill provided a section defining the special obligations originating from revenue and receipts derived under agreement with the University of Alaska as described and provided by the University's budget and student housing payments. Representative Therriault reiterated that deferred 4 maintenance was the number one priority of the University, stressing that it is a problem which will continue to grow if not addressed. The Board of Regents has guaranteed that once the problem is remedied, they will not allow it to occur again. (Tape Change, HFC 94-150, Side 2). Co-Chair MacLean provided the Committee with a handout itemizing the Department of Education's deferred maintenance project list requested statewide from K - University level. She suggested that these projects should be considered in addition to the University's projects. [Copy on file]. Representative Therriault strongly opposed the list as provided by Co-Chair MacLean. Co-Chair MacLean stated that this legislation would be a policy call. REPRESENTATIVE JOHN DAVIES deliberated on concerns impacting the University's deferred maintenance which have resulted in action by the University to request bonding. He recommended that adding Co-Chair MacLean's list would negatively impact the legislation's passage. Discussion followed regarding incorporation of the maintenance projects for K-12 to HB 466 and how that would impact the bills passage. HB 466 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 9:50 A.M. HOUSE FINANCE COMMITTEE May 2, 1994 8:30 A.M. TAPE HFC 94 - 150, Side 1, #000 - end. TAPE HFC 94 - 150, Side 2, #000 - #260. CALL TO ORDER Co-Chair Larson called the House Finance Committee meeting to order at 8:30 A.M. PRESENT Co-Chair Larson Representative Therriault Co-Chair MacLean Representative Martin Representative Foster Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representatives Hanley and Hoffman were not present for the 5 meeting. ALSO PRESENT Representative John Davies; Representative Jerry Mackie; Sherrie Goll, Fairbanks Alliance for People, Anchorage In- Service Coalition, Juneau; Elmer Lindstrom, Special Assistant, Department of Health and Social Services; Wendy Redman, Vice President for University Relations, University of Alaska; Will Gay, (Testified via teleconference), Alaska Housing Finance Corporation, Anchorage; Alison Elgee, Budget Director, University of Alaska, Anchorage. SUMMARY SB 368 An Act relating to the human services community matching grant program; and providing for an effective date. SB 368 was reported out of Committee with "no recommendation" and with a zero fiscal note by the Department of Health and Social Services dated 4/08/94. HB 466 An Act authorizing the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; authorizing the issuance of bonds by the University of Alaska to pay for the costs of repair and rehabilitation of facilities of the University of Alaska; amending powers of the Alaska Housing Finance Corporation; amending the definition of "public building"; relating to the Alaska debt retirement fund; and providing for an effective date. HB 466 was HELD in Committee for further consideration. SENATE BILL 368 "An Act relating to the human services community matching grant program; and providing for an effective date." Representative Therriault endorsed SB 368 introduced by Senator Bert Sharp. The Anchorage and Fairbanks Social Service Block Grants were created in the early 1980's to provide those communities with state assistance for needed social services. In addition to serving local residents, approximately 11% of the total clients and as many as 73% of 6 clients served by some local providers would come from other areas within the State. He added, in 1992, a statutory basis was established for the Human Services Community Matching Grant Program. The program required an increased match rate, although previously no local match was required. Representative Therriault noted that local municipalities are seeing reductions of municipal assistance and revenue sharing, and that the proposed legislation would stabilize the matching grants at the 30/70 percent match rate which would bring the Human Services Community Matching Grant Program into line with other programs that require matching funds. Co-Chair MacLean questioned why the grant would cover only Fairbanks and Anchorage. SHERRIE GOLL, FAIRBANKS ALLIANCE FOR PEOPLE, THE ANCHORAGE IN-SERVICE COALITION, JUNEAU, explained that the statute was not written so that it would exclude other communities. It was written to address the greatest population baseline. The only communities which qualify in that baseline would be Anchorage and Fairbanks which are the only communities required to provide a match. She added that the other grants in the human service block, which are not state provided are in the BRU's for the various rural communities. There are not required to make a match. Representative Therriault commented that the block grants had statutory authority. The balance was then assigned to departmental BRU's and the large municipalities did not participate in that funding. Co-Chair MacLean predicted that there would be a state fiscal impact. Representative Therriault replied that the request would match current fiscal year percentages. Representative Brown spoke in support of the Anchorage human service grant program which provides vital services to people in need. ELMER LINDSTROM, SPECIAL ASSISTANT TO THE COMMISSIONER, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, reiterated that there would be no fiscal impact to the State although the measure could have an effect of reducing the amount available for projects if the municipalities do not provide a higher match level. Representative Parnell MOVED to report SB 368 out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. 7 SB 368 was reported out of Committee with "no recommendations" and with a zero fiscal note by the Department of Health and Social Services dated 4/08/94. HOUSE BILL 466 "An Act authorizing the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; authorizing the issuance of bonds by the University of Alaska to pay for the costs of repair and rehabilitation of facilities of the University of Alaska; amending powers of the Alaska Housing Finance Corporation; amending the definition of "public building"; relating to the Alaska debt retirement fund; and providing for an effective date." WENDY REDMAN, VICE PRESIDENT FOR UNIVERSITY RELATIONS, UNIVERSITY OF ALASKA, ANCHORAGE, explained that HB 466 would include authorization for $30 million dollars in bonds to construct student housing at the Anchorage campus. She added that student housing has been an UAA's capital request for a number of years. UAA's 384 beds can accommodate only 2.6% of the student needs. The current demand was measured by a student survey which indicated a need for an additional 2000 beds. The proposed funding would enable UAA to construct 600 dormitory beds as well as common areas for food service, study, lounge and laundry facilities. Ms. Redman continued, that the legislation would authorize the Alaska Housing Finance Corporation to issue $30 million dollars in bonds for student housing repair and rehabilitation of other university facilities. The program would allow buildings to be constructed with the cost spread over the remaining life of the facilities. Ms. Redman provided Committee members with a list of priority projects. [Copy on file]. Repayment of the debt service will be made from annual legislative appropriations from the Alaska debt retirement fund (AS 37.05.011). Co-Chair MacLean inquired who would be responsible for the cost of the payment. Ms. Redman replied that the bill would direct that the Alaska debt retirement fund pay for the bond. Those payments would appear in the FY96 budget. She added that the total deferred maintenance need in Anchorage amounted to $22 million dollars. Representative Brown questioned the zero fiscal note. Ms. Redman noted there would be no payment in FY95. Discussion followed regarding the fiscal impact of the legislation. Ms. Redman explained that no revenue is generated on the 8 facilities except for student housing and that revenue is placed into the costs of operations and maintenance of those facilities. Representative Brown asked the cost to the State without the legislation. Ms. Redman replied that it would total the cost of protecting the infrastructure. Co-Chair MacLean argued that additional costs would exist for any state facilities. Ms. Redman reminded the Committee that she spoke for the student body and that deferred maintenance was their number one priority. Co-Chair MacLean criticized the University's level of financial support in the FY95 budget. She did not feel they should be requesting additional funds. WILL GAY, (TESTIFIED VIA TELECONFERENCE), ALASKA HOUSING FINANCE CORPORATION, ANCHORAGE, noted that Alaska Housing Finance Corporation (AHFC) would support the bonding requested by the legislation. HB 466 would allow AHFC to exchange assets for a chance to have income to offset the transfer. Representative Brown asked how the bonding debt service would be paid. Mr. Gay responded the bill provided a section defining the special obligations originating from revenue and receipts derived under agreement with the University of Alaska as described and provided by the University's budget and student housing payments. Representative Therriault reiterated that deferred maintenance was the number one priority of the University, stressing that it is a problem which will continue to grow if not addressed. The Board of Regents has guaranteed that once the problem is remedied, they will not allow it to occur again. (Tape Change, HFC 94-150, Side 2). Co-Chair MacLean provided the Committee with a handout itemizing the Department of Education's deferred maintenance project list requested statewide from K - University level. She suggested that these projects should be considered in addition to the University's projects. [Copy on file]. Representative Therriault strongly opposed the list as provided by Co-Chair MacLean. Co-Chair MacLean stated that this legislation would be a policy call. REPRESENTATIVE JOHN DAVIES deliberated on concerns impacting the University's deferred maintenance which have resulted in action by the University to request bonding. He recommended that adding Co-Chair MacLean's list would negatively impact the legislation's passage. Discussion followed regarding 9 incorporation of the maintenance projects for K-12 to HB 466 and how that would impact the bills passage. HB 466 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 9:50 A.M. 10