HOUSE BILL NO. 106 "An Act relating to school bond debt reimbursement." 9:28:29 AM AT EASE 9:29:34 AM RECONVENED REPRESENTATIVE TAMMIE WILSON, SPONSOR, explained that House Bill 106 would extend the termination date for the school bond debt Co-Chair von Imhof explained that currently there was a moratorium on school bond debt reimbursement through 2020, the bill would extend it an additional 5 years. 9:31:08 AM 9:31:19 AM Co-Chair von Imhof OPENED public testimony. 9:31:35 AM JIM ANDERSON, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE (via teleconference), spoke in opposition to the bill. He explained that the current house budget already cut prior year bond debt reimbursement by 50 percent going back 20 years. He said that adding the additional burden on receiving no debt assistance through 2025 would put the onus on Anchorage taxpayers. He stated that shifting the states responsibility for bond debt did not decrease the requirement but shifted it to those living in incorporated areas. He stressed that supporting education meant supporting the operation of school, the people in them, and their capital needs. 9:33:06 AM Co-Chair Stedman understood that the bill would be a moratorium on adding new reimbursement requirements onto the state going forward. He did not think the bill impacted the accumulated school construction already undertaken. The state would still annually consider how much debt the state would be reimbursing. He wanted to clarify for the public that the bill would block new projects from being added until an alternative policy could be crafted. Co-Chair von Imhof affirmed that Co-Chair Stedman was correct, and the bill was a look forward and not a look back. She asked whether the Anchorage School District had done an excess capacity analysis on its 60 elementary schools. 9:34:24 AM Mr. Anderson answered in the affirmative and specified that the school board had been briefed in the fall. It had been recommended that the Mount Spur school should be closed, and some programs should be merged. He related that the recommendation had been based on the city planners assessments on sum population growth in certain areas over the next 20 years. He said that the analysis would be done annually in the future. He thought that closing schools was an emotional issue but believed that if membership continued to decrease more schools would be closed. Co-Chair von Imhof recalled that the body passed a bill the previous year allowing for school closures and holding harmless the revenue for a step-down of four years. The intent had been to encourage schools to have conversations about capturing capacity in schools. She thought that if emotions ran high and people did not want to close their local schools that was a choice that board would have to make, and the cost would be passed onto the local taxpayers. She asserted that the control was within the school district to make the decision whether to maintain 60 elementary schools, 8 middle schools and 8 high schools. 9:36:57 AM Senator Micciche looked at the table on the document titled "State Portion Reimbursement Principal and Interest," (copy on file). He was curious about the proportion related to major maintenance versus new school construction of the $800 million in bond debt. He noted the disparity between organized and unorganized boroughs. 9:38:35 AM NILS ANDREASEN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL LEAGUE, relayed that the Department of Education and Early Developments (DEED) 6-year plan showed $464 million in needs for FY20; $189 million in needs for FY21; and an average over the next 6 years of $231 million. For the 355 projects listed the total in upgrades was $1.4 billion. He said that the requests that had been submitted by school districts did not account for the full scope of need, only priorities relative to each budget year, and were not included in the states deferred maintenance numbers. For the school construction program DEED showed the average need between FY15 and FY20 was $234 million, with an average of $230 million paid over those years. He furthered that the number of schools funded by the $190 million in FY20 was approximately 6, the school bond debt reimbursement for that same year of under $100 million accounted for nearly 30 schools. He stressed that without the reimbursement those districts able to bond for the debt would have to compete with REA school districts for funding, or other municipal school districts that lacked the tax base to bond for a greater share of debt. He asked how the state identified the unaversive need and what was the plan to address the need. He believed that the proposed moratorium did not meet the states constitutional obligations. He thought that the 5-year extension was nothing but a recognition that the state did not have a plan to address new school construction. He believed that the legislature could seek other options that would benefit both the state and municipal districts. 9:42:34 AM 9:42:42 AM Co-Chair von Imhof CLOSED public testimony. 9:43:21 AM Senator Micciche thought the state could not afford new schools and he would likely support a moratorium of some kind. He asked what percentage of the debt had to do with new schools, and how much had to do with maintenance of old schools. ELWIN BLACKWELL, SCHOOL FINANCE MANAGER, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, said that he would get back to the committee with the information. 9:45:23 AM Senator Micciche guessed that there needed to be a separation of new construction and major maintenance of existing schools when it came to bond debt reimbursement. 9:46:10 AM Co-Chair von Imhof asked whether DEED travelled the state to inspect the condition of schools and how well the buildings were being maintained. She wondered whether there were degrees of differences with regard to maintenance. TIM MEARIG, FACILITIES DIRECTOR, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, stated that statute provided for the department to have an ongoing inspection process with districts to ensure that minimum standards of care were met. The division had an individual that travelled to ten school districts per year to evaluate the compliance with facility and maintenance practices and retain eligibility for bond reimbursement and grants. He had not seen a great deal of disparity in the condition of buildings of the same age. He admitted that older buildings were more challenging. 9:48:51 AM Co-Chair von Imhof assumed that the department had a list of all the buildings and a matrix through which the buildings were prioritized based on age and condition. Mr. Mearig stated that the state did not have a comprehensive facility evaluation tool or requirement. The state required a district to have an understanding and condition of facilities. He said that in the Capital Renewal portion of the Minimum Standards each district was required to understand the age and capital needs of their facilities that were over 1000 square feet. 9:50:23 AM Co-Chair von Imhof believed the state built a school for Healy Lake; after which the population dropped, and the school was not opened. Mr. Mearig replied that he did not have enough information to comment on the school at Healy Lake. Co-Chair von Imhof requested further information on whether the state was paying to maintain, heat, or insure the building, and whether there was a plan for the building. 9:51:06 AM Co-Chair Stedman wanted to know how many schools were close to the minimum count of 10 students. He agreed with Senator Micciche's request for a breakdown of the reimbursement requests. He wanted to add a request for a per capita numeric. He used examples of the debt carried by Sitka and Ketchikan. He asserted that his region needed students and not new schools, but the Mat-Su was the opposite. He reminded that K-12 education was a constitutional requirement. 9:54:33 AM Senator Shower appreciated the comments from the co-chairs and supported the concept of the bill. He agreed that the Mat-Su was growing. He had spoken to several individuals in the educational system. He discussed his educational background in the State of Florida. He thought that the committee needed more data in order to make decisions. 9:56:22 AM Senator Bishop remarked that the committee had had the same conversation thirty years previously. He mentioned Rampart School was closed for a period of ten years, after which population grew and the school reopened. He asserted that there was nothing static about the equation. 9:57:30 AM Co-Chair von Imhof thought it was important to use data to drive policy decisions. She suggested that if DEED wanted assistance from the committee, more data would be necessary. She asserted that school maintenance data should be entered into a database. She thought the age of a school building was irrelevant. She thought some schools fared better than others over time due to weather or other factors. She reiterated the need for DEED to provide further information. 9:59:36 AM Senator Bishop addressed FN 1 from Debt Service, OMB Component 153. The note had zero fiscal impact. Co-Chair von Imhof set the bill aside. HB 106 was HEARD and HELD in committee for further consideration. 10:00:27 AM RECESSED 2:35:24 PM RECONVENED