Legislature(1993 - 1994)
02/09/1993 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
TAPE 93-12A, SIDE A
Number 000
CHAIR BUNDE called the meeting to order at 3:04 p.m. and
noted members present. He announced the meeting would be
teleconferenced as listen-only to Delta Junction, Soldotna,
Ketchikan, Kenai, Tok, Valdez, Juneau and Anchorage.
CHAIR BUNDE announced the committee would hear presentations
on HB 82 and HB 83, but to gather information only, not to
take action on the bills.
HB 82: SCHOOL CONSTRUCTION & MAINTENANCE GRANTS
Number 020
COMMISSIONER JERRY COVEY, OF THE DEPARTMENT OF EDUCATION
(DOE), began his overview of HB 82 and HB 83. He introduced
Gary Bader, director of Educational Finance and Support
Services for the DOE.
COMMISSIONER COVEY began his discussion of HB 82, regarding
school construction and major maintenance grants. He said
that many people involved in the Alaska 2000 committee
process focussed on school construction issues. The
committee included legislators, school facilities officials
from urban and rural Alaska, architects, engineers,
estimators, plus facilities officials from some school
districts or borough governments managing school facilities.
Over four months, the committee arrived at 12
recommendations on facilities, which the department
evaluated through public hearings and developed into HB 82.
Number 118
COMMISSIONER COVEY said the bill is aimed at developing a
practical plan to address school facilities' needs across
Alaska and to gather support for such plans. The department
is required by statute and regulation to follow the current
facilities funding process, known as the HB 37 process.
They want to identify two grant categories: major
maintenance and school construction. Major maintenance
grants, currently included in priority levels three and four
of the HB 37 process, would address buildings violating
building codes. School construction grants, currently
included in priority levels one and two of the HB 37
process, would address life, safety and safety issues raised
by overcrowded schools, he said.
COMMISSIONER COVEY stated the current process requires the
department to start at the top priority item and fund
projects in descending order of priority as long as funding
holds out. The problems with this process are demonstrated
by the allocation of $25 million for capital school projects
and the presence of at least $75 million in priority one
projects alone. He said the process which has been in place
for the last three years has not worked because there is not
enough money to fund any more than the top 15 projects,
while the increasing numbers of priority level two projects
to ameliorate overcrowded schools never get funded. Also,
it encourages school facility administrators to inflate
their maintenance and code violation problems into health,
life and safety problems in order to get greater priority.
COMMISSIONER COVEY said the process in place has not worked
in part because it has not been funded. His department's
solution is to increase funding and to spread it out around
the state. He said there are reasons why some school
districts do not show up on the construction projects wish
list. One reason is that, because the process has been
inadequately funded, some districts do not consider it a
serious source of construction funds when they can get money
from legislative grants. Other districts do take it
seriously and follow through with the process. The
department can only deal with the projects on the list, he
said.
Number 200
COMMISSIONER COVEY stated that HB 82 would require each
district to share the cost of any school construction or
maintenance project, to the extent it can afford to do so.
The bill includes a matching spending formula, which
establishes a ratio of taxable real personal property value
per student, derived by comparing the taxable property in a
school district with the district's average daily
attendance. The bill also allows a way to gradually phase
in a local contribution from the Rural Education Attendance
Areas (REAA). It set the maximum local contribution from an
REAA at 75 percent of the assessed value of the state's
poorest organized community, which is St. Mary's. That
maximum level of contribution, which comes to 3.8 percent of
any request, would be phased in over four years.
Number 240
CHAIR BUNDE thanked Commissioner Covey, and voiced his
support for local contributions from school districts. He
asked how proposals to establish minimum student populations
for maintaining a rural school district would affect the
proposed bill HB 82.
COMMISSIONER COVEY said the DOE is considering addressing
the problem of small districts, but not in statute. He said
the department is considering raising the minimum number of
students in a district from five, a number which was set
arbitrarily, to ten students in five years.
CHAIR BUNDE asked whether consolidating schools would affect
the department's list of capital improvement requests.
COMMISSIONER COVEY answered that he suspected the list would
change considerably because with more local funding
districts will pay more attention to their construction
grant requests, focussing less on what they would like if
the state bore the entire cost.
Number 278
CHAIR BUNDE asked if there was support from smaller
districts for the plan, and asked when he expected the
reprioritization of the list to occur.
COMMISSIONER COVEY answered that support among smaller
districts was mixed, with some feeling they should not have
to make any local contribution at all. He said that, if HB
82 were to pass, then changes in the districts' funding
request lists would likely begin showing up in the requests
this fall for FY95, as school districts start their six-year
plans this spring with the understanding that the funding
process is going to be significantly changed. He said the
department's two bills, HB 82 and HB 83, would also create
building codes and standards to prevent districts from over-
or under-building their structures.
Number 315
(Rep. B. Davis arrived at 3:20 p.m.)
CHAIR BUNDE encouraged those people listening to the meeting
from teleconference sites to submit questions.
REP. BRICE asked why priority one and two schools were
combined, instead of priorities one, three, and four, and
breaking priority two schools out separately.
Number 320
COMMISSIONER COVEY answered that the department was
attempting to get away from the old system in which funding
did not last long enough to fund priority two projects. He
said the department wanted first to make sure each district
got some money from the program so as to ensure support for
the plan, and second, to direct some money at smaller
problems before they became major problems.
REP. BRICE said he has heard the HB 37 process has not
worked well, especially in funding priority two projects.
He supported the idea of breaking out maintenance grants
separately.
Number 366
COMMISSIONER COVEY said that even the old process addressed
priority one projects. He said the plan as presented would
take all of priority ones, 20 percent of priority twos, all
of priority threes and half of priority fours. And, in the
next year, funding would be provided to take care of the
remaining 80 percent of priority two projects, dealing with
overcrowded schools. He added that the department wanted to
present a rational, reasonable and defensible plan to
address the needs of schools. He said the department
remained open to committee suggestions.
Number 390
REP. AL VEZEY asked if the department's proposal to
establish a property value per student ratio for setting
required local contribution required an annual survey of
property values to determine full and true value.
Number 400
GARY BADER, DIRECTOR OF THE DIVISION OF ADMINISTRATIVE
SERVICES IN THE DOE, answered that the property assessments
would be based on the Department of Community and Regional
Affairs' surveys, on their regular schedule.
REP. VEZEY said it would be easier for a taxpayer to
understand that ratio as taxable value per average daily
student membership, or the tax base per student.
MR. BADER said the DOE was attempting to exclude any
exemptions that might be allowed in a community's property
tax code.
REP. VEZEY asked clarifying questions about HB 82, which Mr.
Bader answered. Rep. Vezey said that requiring a 5 percent
contribution from smaller school districts, with less than
$100,000 per average daily membership, was not enough to
encourage such districts to be responsible for their
construction plans.
Number 450
COMMISSIONER COVEY responded, acknowledging urban concerns
that REAAs do not have to pay anything for construction of
their schools. He said the DOE plan in HB 82 and HB 83 is
significant in that it marks the start of requiring REAAs to
pay any money at all for their schools, and leaves the
possibility open to raise local contributions even more
later. He said many of the Alaska 2000 proposals are
designed to provide gradual transition to a new way of doing
business. He noted that some REAAs have not had to pay for
any of their own construction during their 20 years of
existence.
Number 490
REP. VEZEY asked if the department had considered balancing
the per-capita distribution of money, which he considered a
fair method, and a (unintelligible) basis.
Number 500
DUANE GUILEY, DIRECTOR OF THE DIVISION OF EDUCATION FINANCE
AND SUPPORT SERVICES FOR THE DOE, said the Alaska 2000
committee had considered a per-capita funding for
construction, but found that any such proposal would not
allow them to clear the existing backlog of life-health-
safety projects and unhoused student projects on the current
priorities list. The committee felt they should first fund
the projects on the current list or on some other needs-
based list, then possibly later move to a per-capita based
list that might even be merged with the foundation formula,
as is done in some other states.
Number 513
CHAIR BUNDE asked if there had been public response to the
proposal to fund school construction through the
undistributed earnings of the Permanent Fund. He encouraged
committee members to tell their constituents about that
element of the bill, and to solicit public comment.
Number 520
COMMISSIONER COVEY answered that he had not heard much
feedback, though the department was planning a public
information campaign on the proposal that would probably
generate public comment. The campaign will describe the
undistributed earnings from the Permanent Fund as
extraordinary earnings available even after contributions to
the Permanent Fund, inflation-proofing, and dividends.
Number 544
CHAIR BUNDE noted that the Kenai Peninsula Borough School
District had sent documents by facsimile machine indicating
support for the proposals, with some provisos.
REP. BRICE asked Commissioner Covey to walk through the flow
chart on page 12 of the DOE information packet on HB 82.
REP. CYNTHIA TOOHEY said the DOE educational campaign needs
to make very clear that the bill would be funded by the
Permanent Fund's undistributed earnings and that the impact
would not be felt for 20 years. She further asked how the
state could avoid getting into a similar situation in which
school construction and maintenance was underfunded, in
which school districts built not uniform schools but
individual custom schools, which in some cases leaked water
within a year of construction. She said dipping into the
Permanent Fund earnings should be a one-time occurrence.
Number 572
COMMISSIONER COVEY said there is a way out of the current
situation. The DOE is proposing that a one-time use of the
Permanent Fund earnings over the next four years would clear
up the backlog of construction projects and cut in half the
bonded indebtedness that doubles the cost of construction.
Decreasing bonded debt would free up an additional $60
million per year for school construction. But according to
the committee's estimates, growing school populations will
require about $100 million per year in new construction, he
said. The current facilities are inadequate to revitalize
the state's educational system, he said. He added that many
districts have simple plans ready should they need another
elementary school, plans which are not site-specific.
Number 600
MR. BADER proceeded to discuss the flow chart included on
page 12 of the departmental handout on HB 82, which outlines
the current HB 37 process of funding school construction
projects. He said districts submit a six-year capital plan
to the DOE by September 1. The DOE categorizes the grants,
then prioritizes them in each category and publishes the
list by November 5. Districts may appeal the rankings
through a three-step process. The first step is a public
hearing by December 1, which results in a new ranking list,
which is subject to a second appeal. The department must
appoint a neutral hearing officer within 15 days who issues
a report to the state school board, which may accept or
reject his opinion. As a third level of appeal, districts
may still appeal to the Superior Court.
Number 653
REP. BRICE asked if the current appeal system would remain
under HB 82.
COMMISSIONER COVEY responded that it would.
REP. BRICE asked who would serve as the hearing officer and
who served on the team that evaluated districts' grant
request.
Number 650
COMMISSIONER COVEY answered that hearing officers are
usually people outside the DOE, and the hearing officer this
year was a private attorney in Anchorage. He said the
evaluation team is comprised of civil servants who are long-
time department employees with experience in facilities.
Number 666
REP. TOOHEY expressed the opinion that the long appeals
process was why government has a bad name. She asked how
many schools engaged in appeals last year.
COMMISSIONER COVEY answered that 14 appeals went to first
public hearing last year, and three of them led to hearings
last week in Anchorage.
REP. TOOHEY expressed the opinion that the appeals process
was very expensive, complicated and ineffective.
COMMISSIONER COVEY said the appeal process was similar to
the state procurement code. He noted that 14 appeals out of
168 projects was not an excessive number.
Number 685
TAPE 93-12A, SIDE B
Number 000
REP. BETTYE DAVIS apologized for being late to the meeting.
She expressed satisfaction that education was receiving
attention and early discussion. She complimented the
governor and DOE for identifying the problems and presenting
a proposal to remedy them. But she expressed the opinion
that the HB 37 process was not working because it was not
funded sufficiently to meet even all the priority one grant
requests. She said the proposal in HB 82 was a step in the
right direction to address the state's problem with
crumbling and overcrowded schools, and the legislature would
eventually decide on a funding source. She said she was
unhappy Anchorage would not get as much as she would like at
first, but accepted that for the greater good. She said it
has been difficult for districts to submit grant requests
when they knew there was no money to fund their requests.
HB 83: APPROP:SCHOOL CONSTRUCTION GRANT FUND
Number 064
CHAIR BUNDE brought to the table HB 83, and repeated that
the committee was taking no action on the two bills, but
only gathering information on them.
COMMISSIONER COVEY said HB 83 was an appropriations bill
that goes along with HB 82. It directs $107,688,000 to a
school construction grant fund for life-health-safety issues
and for unhoused students. The bill's second section
directs $42,312,000 to fund major maintenance and repairs.
REP. BRICE asked about the process for making appeals of
state construction grant decisions. He referred to page two
of the bill, line 18, an $8.8 million allocation for an
elementary school addition in the North Star Borough School
District, which he believed was not as important as others,
but to which he believed the local school district would
probably accede rather than enter the long, difficult
appeals process. He invited Commissioner Covey's comment.
Number 130
COMMISSIONER COVEY said regulations limit how the DOE may
classify priorities. He admitted that in some cases, local
districts may see their highest priorities given lower
priority in the state's evaluation and categorization
process. He said some school administrators have expressed
an interest in revisiting the priority criteria to prevent
such problems.
Number 152
CHAIR BUNDE expressed disagreement with Rep. Toohey
concerning the appeals process, saying he believed that,
though complex, it provided ample opportunity for districts
to shape how they would be affected by departmental
appropriations.
REP. GARY DAVIS asked whether there was any mechanism in
HB 83 to require local districts to be responsible for
maintenance.
COMMISSIONER COVEY said that the state would require
districts to prove they had adequately maintained existing
facilities on their own as a condition of future funding.
REP. G. DAVIS mentioned new school construction, which in
some cases had suffered leaking roofs, and said he believed
strongly that each district should ensure quality of
construction on its own by requiring performance bonds.
Number 198
COMMISSIONER COVEY said the DOE shared those concerns.
REP. VEZEY asked for help from departmental staff in
formulating more questions about the bill.
COMMISSIONER COVEY said he and his staff stood ready to
answer questions.
CHAIR BUNDE repeated his belief that the committee and DOE
should consider their work an ongoing process to develop the
bills.
Number 230
REP. BRICE asked whether the DOE's list of projects
represented firm commitments, or whether there was room for
negotiation.
COMMISSIONER COVEY indicated that, while the DOE had
provided a rational plan, it was up to the legislature to
set the final list.
Number 248
REP. TOOHEY asked Commissioner Covey to provide new copies
of the grants list, including information on the date each
school was built, its capacity at construction and its
present capacity.
CHAIR BUNDE asked the addition of the school's enrollment as
well, as distinct from capacity.
REP. IRENE NICHOLIA said she had visited some of the schools
on the list and was glad that the DOE was doing something
about them. She said it was a shame that building codes
could prevent the use of an existing vocational education
facility. She thanked the department and the governor for
submitting the bill.
REP. G. DAVIS asked about an item on page three of the bill,
line nine. He asked whether the $298,400 for the Kenai
Peninsula Borough schools addressed problems with the
Tustanema School, the district's top priority.
GARY BADER said that was one project that had been moved up
in response to public hearings. The determination that the
relocatable classrooms had exceeded the core capacity of the
facility earned the school a spot on the list, he said.
Number 300
REP. G. DAVIS referred to page two, line 24, and asked the
location of the Kashunamiut School district.
COMMISSIONER COVEY answered that the district was near
Bethel in Southwest Alaska.
Number 314
There being no further questions, and no further business
before the committee, CHAIR BUNDE ADJOURNED the meeting at
4:04 p.m.
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