Legislature(2013 - 2014)CAPITOL 106
03/11/2013 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB133 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 142 | TELECONFERENCED | |
| *+ | HB 133 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
March 11, 2013
8:03 a.m.
MEMBERS PRESENT
Representative Lynn Gattis, Chair
Representative Gabrielle LeDoux
Representative Dan Saddler
Representative Peggy Wilson
Representative Harriet Drummond
MEMBERS ABSENT
Representative Lora Reinbold, Vice Chair
Representative Paul Seaton
COMMITTEE CALENDAR
HOUSE BILL NO. 133
"An Act relating to grants for school construction."
- HEARD & HELD
HOUSE BILL NO. 142
"An Act increasing the monthly stipend available for students
attending a statewide boarding school operated by a school
district; and providing for an effective date."
- BILL HEARING RESCHEDULED TO 3/13/13
PREVIOUS COMMITTEE ACTION
BILL: HB 133
SHORT TITLE: SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES
SPONSOR(s): REPRESENTATIVE(s) EDGMON
02/20/13 (H) READ THE FIRST TIME - REFERRALS
02/20/13 (H) EDC, FIN
03/11/13 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
REPRESENTATIVE BRYCE EDGMON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 133 as the sponsor.
TIM CLARK, Staff
Representative Bryce Edgmon
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: On behalf of Representative Edgmon,
presented the fiscal note to HB 133 and answered questions.
ELIZABETH NUDELMAN, Director
School Finance and Facilities Section
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
133.
TOM BEGICH, Political Director
Citizens for the Educational Advancement of Alaska's Children
(CEAAC)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 133.
ACTION NARRATIVE
8:03:44 AM
CHAIR LYNN GATTIS called the House Education Standing Committee
meeting to order at 8:03 a.m. Present at the call to order were
Representatives LeDoux, P. Wilson, Drummond, and Gattis.
Representative Saddler arrived as the meeting was in progress.
HB 133-SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES
8:04:07 AM
CHAIR GATTIS announced that the first order of business would be
HOUSE BILL NO. 133, "An Act relating to grants for school
construction." She indicated that HB 142 was noticed but will
not be heard.
8:04:17 AM
REPRESENTATIVE BRYCE EDGMON, Alaska State Legislature, sponsor,
introduced HB 133. He said the bill adds small municipal school
districts to the regional educational attendance area (REAA)
school construction fund. This fund was created to comply with
the court decision of Kasayulie v. State of Alaska, 3AN-97-3782
CI, (1999). The bill addresses five schools that are located in
first class municipalities but do not have the financial
strength to bond for school construction, and are not included
in REAA organizations. In response to a request from the Bush
Caucus, HB 133 was drafted to include the districts of Saint
Mary's, Tanana, Kake, Klawock, and Hydaburg into the REAA school
construction fund so that each would have the ability to receive
funding in a timely manner. A small school is defined as having
an average daily membership (ADM) of 300 or less, and in which
the district's full value per ADM is not more than $500,000.
8:06:36 AM
TIM CLARK, Staff to Representative Bryce Edgmon, Alaska State
Legislature, sponsor, informed the committee the fiscal note to
HB 133 reflects a change to the annual capitalization amount of
the REAA fund based on the percentage that the five additional
districts add in the formula used to capitalize the fund. This
change totals about $618,000 in a fund that is normally
capitalized at $34 million to $35 million annually.
REPRESENTATIVE P. WILSON asked whether the affected school
districts are now on the Department of Education and Early
Development (EDD) capital improvement project (CIP) school
construction grant list (school construction list).
[The school construction list referred to was a document
included in the committee packet entitled, "State of Alaska
Department of Education and Early Development Capital
Improvement Projects (FY2014) School Construction Grant Fund
Final List, Issued 1/22/2013."]
MR. CLARK responded that the bill references the school
construction list compiled each year by EED.
REPRESENTATIVE P. WILSON recalled that state and community funds
are required for school construction.
MR. CLARK said there are several possible match funding amounts
that could be required depending on certain factors, such as
whether the school district is bonding for construction, or if a
school is in a REAA, which always requires some kind of match
funds.
REPRESENTATIVE P. WILSON asked for a step-by-step analysis: If
there is not the ability to bond, what other contributions could
a community make toward a school project.
MR. CLARK explained that under the present system REAAs, and the
proposed districts added by HB 133, would contribute in the form
of a match. In most cases, when a municipality bonds for a
school, the municipality will apply for the state's debt
reimbursement program which could be up to 60 percent or 70
percent of the bond. However, the grant amounts for projects on
the EED capital improvement project (CIP) school construction
grant list can differ significantly; for example, a non REAA
district seeking a grant would be eligible for 80 percent
funding with a 20 percent match, however, the grant match
amounts for REAAs can be as little as 2 percent, or less if
deemed necessary.
8:14:32 AM
REPRESENTATIVE P. WILSON referred to a list of school
construction projects "automatically" funded by the state. She
questioned how the bill will provide funds for school
construction faster.
MR. CLARK surmised Representative Wilson was referring to the
"Kasayulie schools," which are a related matter but apart from
the proposed legislation. The Kasayulie consent decree and
settlement agreement that followed the lawsuit had two major
components, one of which was that the establishment of the REAA
fund, which was set aside for rural school construction, would
address the inequities between rural and urban school
construction.
CHAIR GATTIS asked what HB 133 will accomplish beyond what is
already available.
REPRESENTATIVE EDGMON clarified that HB 133 creates fairness for
five small schools that do not have the ability to participate
in a bonding process, and that do not qualify for the REAA
school construction fund. In further response to Chair Gattis,
he said the schools do not qualify for the REAA fund because of
low property values.
REPRESENTATIVE P. WILSON asked why these schools may not appear
on either of the two EED priority lists.
REPRESENTATIVE EDGMON explained the schools do appear on EED's
"master list," but the subject is funding sources, not
categorization in terms of need, or construction timelines.
REPRESENTATIVE P. WILSON questioned the need for HB 133.
MR. CLARK explained that not all of the five named schools are
under construction and on a list. He said confusion may exist
because many schools that are listed appear under different
categories, such as those awaiting bonding or weighing bonding
versus grant opportunities.
REPRESENTATIVE LEDOUX understood there are three ways to have a
school constructed.
REPRESENTATIVE EDGMON deferred to EED for further clarity.
8:22:32 AM
ELIZABETH NUDELMAN, Director, School Finance and Facilities
Section, EED, said the proposed legislation adds five districts
to the school districts that can benefit from REAA funding, but
makes no further change to existing programs. The five small
school districts named in the bill are being added because they
do not have the financial ability to bond for construction
projects. She advised there are two means for school
construction: to bond, or through the grant program on the
school construction list. The REAAs and small municipalities
enter through the grant program on the school construction list,
and the projects are rated each year by the department. The
REAA funding provides a consistent source of funding thus as the
department rates projects there is a constant and predictable
stream of funding. When REAA and small municipalities meet the
criteria for construction, funding is available. As in the
past, projects on the school construction list advance and
schools that qualify to use REAA funding will do so when they
are in funding position.
REPRESENTATIVE P. WILSON asked to have each list explained.
MS. NUDELMAN restated the intent of the bill. She explained the
existing system is that if a district is capable of bonding for
a project, the state will reimburse 70 percent for qualifying
space and 60 percent for nonqualifying space. Otherwise,
projects can apply to EED's school construction list and await
funding. The REAA funding program simply sets aside a funding
source to shorten the wait. In response to Representative
Saddler, she said there are two school construction lists: one
for major maintenance and one for school construction.
8:27:17 AM
REPRESENTATIVE LEDOUX surmised the REAA law provides a funding
source so that a REAA school can receive funding even though
funding may not be available for schools in Anchorage or Juneau,
and the bill adds five small schools that do not meet the
criteria to the REAA group.
REPRESENTATIVE P. WILSON asked how the bill creates an advantage
for the five small districts.
MS. NUDELMAN stated the five small schools have no chance to
obtain bonds, thus they will be placed on the school
construction list, and when the project reaches funding
position, there will be a predictable stream of funding. She
pointed out the advantage is that REAA projects will keep moving
and projects will be funded without years of delay.
8:30:18 AM
REPRESENTATIVE LEDOUX queried how an urban school district is
treated when a project reaches the funding level on the CIT
list.
MS. NUDELMAN explained both municipalities and REAAs are
eligible to be on the grant list, and the department addresses
each in order. If the funding level project is a non-REAA
school, EED requests general fund (GF) money to fund the school.
If a project at funding level is a REAA school, the funding is
available from the REAA source.
8:31:34 AM
REPRESENTATIVE LEDOUX asked whether GF funding is usually
available when a school district in an urban area is at funding
level.
MS. NUDELMAN said the project at the top of the list is funded
when resources are available.
REPRESENTATIVE LEDOUX observed the REAA schools and the proposed
five districts are allowed to "jump to the top of the line."
MS. NUDELMAN expressed her belief that the schools will stay in
order on the list. At the time of the REAA legislation,
schools were waiting ten years for funding, so the intent of
REAAs was to provide a funding stream.
8:34:00 AM
REPRESENTATIVE DRUMMOND directed attention to the document in
the committee packed entitled, "State of Alaska Department of
Education and Early Development Capital Improvement Projects
(FY2014) School Construction Grant Fund Final List, Issued
1/22/2013." She asked how schools on the school construction
list are ranked, and whether projects for the five small
districts affected by the bill are already on the list.
MS. NUDELMAN said the projects are compared to the criteria set
out in statute and by regulation. Districts apply in September
and based on criteria on items such as un-housed students and
life, health, and safety issues, projects are awarded points.
Each year at the end of the process, the projects most in need
are placed at top of the list. The five small municipalities
in question may have projects on the school construction list,
but additional projects are submitted each year, after a local
planning process of six to ten years.
REPRESENTATIVE SADDLER restated the two ways to fund school
construction.
MS. NUDELMAN pointed out that EED differentiates between the
debt program and the grant program. The 70:30 debt program - in
which municipalities bond for projects - is not part of the
grant process which puts projects on the major maintenance or
school construction lists. The REAAs are a component on the
school construction list, and are not under a separate process.
In further response to Representative Saddler, she said each
year districts apply to the grant program for projects, the
projects are ranked, and through the governor's budget or the
legislature, funds are appropriated.
8:39:47 AM
REPRESENTATIVE LEDOUX observed that if the small schools aren't
prioritized to the top of the school construction list, the bill
would be ineffective even if there is a funding source.
MS. NUDELMAN reminded the committee that large school districts
bond for school construction and utilize the debt reimbursement
program afterward. The grant program may take longer to receive
funding, but it is the funding source that serves the REAAs and
small municipalities. It is important for this list to "keep
moving," so smaller schools are built, and HB 133 will provide
that movement. In further response to Representative LeDoux,
she said the school construction list is generally comprised of
REAA schools and smaller municipal schools.
MR. CLARK, in response to Representative LeDoux, said the
advantage is that the REAA fund creates a consistent, reliable,
funding stream for REAA eligible schools; all the other schools
on the grant list are awaiting legislative action and an
appropriation from the GF.
8:45:02 AM
REPRESENTATIVE P. WILSON asked if the funds referred to in 2010
and 2013 are the same fund.
MS. NUDELMAN answered there is one fund; the REAA legislation
was passed in 2010, but the first deposit from the fund was in
2013.
REPRESENTATIVE P. WILSON expressed her understanding that there
is $35 million in the fund, and the REAA schools on the list are
guaranteed to receive funding.
MR. CLARK explained that the REAA fund is capitalized on an
annual basis at about $35 million with a ceiling of $70 million.
The formula currently deposits about $35 million per year into
the fund. However, the majority of the schools high on the list
are REAA eligible, thus it is conceivable that the REAA fund
could be exploited.
MS. NUDELMAN advised EED's intention is to stay in list order,
and when a REAA project is ready for funding it will be funded
through this mechanism. If the next project is non-eligible for
REAA funding, the department will request GF, and continue down
the order of the list.
REPRESENTATIVE P. WILSON asked whether the $35 million is
currently available.
MS. NUDELMAN confirmed that the annual appropriation of $35
million is available for use. The funding process begins when
the department reviews projects on the school construction list
and when a district is eligible, REAA funding is used.
Returning attention to the school construction list, she
indicated that Galena is currently number nine, but Galena is
not eligible for REAA funding, so EED will request an
appropriation, fund the project with GF, and then address
project number ten, which is the Bering Strait School District.
In further response to Representative P. Wilson, she said the
first project on the school construction list would be funded;
in fact, the first four on the school construction list are REAA
schools, and the fifth, Saint Mary's, is one of the five
districts that would become eligible for REAA funding by the
passage of the bill. The reason Saint Mary's wants to be part
of REAA funding is because each year $35 million will be set
aside and eventually there will be funding for its project.
8:54:32 AM
REPRESENTATIVE P. WILSON, after being made aware that Saint
Mary's was on the school construction list, asked why the bill
is necessary.
MR. CLARK explained that although Saint Mary's is on the school
construction list, it is not currently eligible for REAA
funding.
CHAIR GATTIS said she had intended for Representative Edgmon to
explain the funding sources that are available to small towns
and the difficulties that prevent small municipalities from
bonding for school construction.
REPRESENTATIVE P. WILSON asked whether the five communities
identified by the bill are the only ones in the state that would
qualify in that way.
MR. CLARK said these five communities are identified because
they lack a tax base to bond for construction.
REPRESENTATIVE LEDOUX gave the example of if projects one
through four on the school construction list were funded through
REAA funding and Saint Mary's project was denied GF funding,
project six would be funded again by REAA funding.
MS. NUDELMAN explained EED would advocate for GF for Saint
Mary's and maintain the order of the school construction list.
In further response to Representative LeDoux, she said
historically the department has successfully funded the school
construction list in order.
REPRESENTATIVE LEDOUX suggested that the intent of HB 133 is
advantageous from the perspective of EED, but was unsure of how
the five communities benefit.
MS. NUDELMAN informed the committee that when the REAA
legislation was researched, it was found that the school
construction list moved very slowly and many schools were
waiting for legislative appropriations. She restated that REAA
funding and HB 133 provide an avenue of a known stream of
funding to ensure that projects submitted by REAAs and small
municipalities are funded.
REPRESENTATIVE LEDOUX failed to see how the bill improves the
timing of funding for small communities.
9:00:51 AM
MR. CLARK observed that in some years, without REAA funds, there
would be no school construction funded by the legislature with
GF. By establishing a REAA fund, it is evident that REAA-
eligible schools benefit and the uncertainty of GF funding is
removed. Furthermore, with the passage of HB 133, the
possibility of long delays for Saint Mary's project is
diminished.
REPRESENTATIVE SADDLER pointed out that a small municipal school
district is defined as "300 ADM." He asked why districts are
based on ADM instead of real property value "if the issue is how
much money they have to bond for locally."
MR. CLARK said it is difficult to draw a line to establish
eligibility for benefits. The 300 ADM figure was selected to
ensure that school districts that have a clear bonding authority
would not be eligible for the REAA fund. The five districts
identified by the bill are marginalized primarily by their
inability to bond. In further response to Representative
Saddler, he said the formula is full value divided by ADM, and
raising the property value would expand eligibility to larger
boroughs such as the City of Wrangell, which has the taxable
base to bond without great hardship to the community.
REPRESENTATIVE SADDLER asked why 300 ADM was chosen instead of
real property value.
MR. CLARK responded there is precedent in statute for
determining match requirements under the school construction
grant program that uses full value for ADM, thus ADM was used
for the first part of the formula. The second part uses ADM to
accurately identify schools that do not have bonding capability.
9:07:08 AM
MS. NUDELMAN expressed her understanding that the sponsor's
analysis was based on identifying small schools that did not
have the capacity to fund construction in the same manner as a
school that could obtain bonds. The assessed value and ADM were
the means used to categorize the small schools.
MR. CLARK offered that using 300 ADM was used to identify
schools that were most in need of consistent funding in order to
comply with the court decision.
REPRESENTATIVE SADDLER asked whether real property value and
pupil count are both factors.
MR. CLARK opined ultimately eligibility resides with the real
property value of a municipality or borough.
REPRESENTATIVE SADDLER suggested it is more appropriate to base
the eligibility for small municipal districts on real property
value.
MR. CLARK said ADM is necessary to help identify the smaller
school districts with the most need.
9:10:09 AM
TOM BEGICH, Political Director, Citizens for the Educational
Advancement of Alaska's Children (CEAAC), informed the committee
CEAAC represents 21 school districts in Alaska, including 12 of
the 19 REAAs. He advised that the bill is a top priority of
CEAAC as it is an extension of the Kasayulie v. State of Alaska,
3AN-97-3782 CI, (1999) consent decree. Mr. Begich recalled the
lawsuit was filed because, in general, funding for schools in
Alaska had been directed toward urban schools and rural schools
remained unfunded. In 1997, the courts ruled that the system of
funding education, and school construction in particular, was
arbitrary. This began a 13-year process to settle the lawsuit
in an equitable way and to create a funding stream. In 2010,
legislation was passed that set up the REAA mechanism. However,
although Saint Mary's was a party to the lawsuit, it was
excluded from the REAA mechanism for political reasons. The
REAA funding was scheduled to begin in 2013, and the lawsuit was
settled. As part of the settlement, a number of schools will be
funded in the future, and the REAA fund is to be regular and not
arbitrary. He stressed that it is important for EED to fund
projects in the order of the school construction list. In
addition, it is appropriate to add schools that were omitted as
a political solution, and because this is a guaranteed funding
stream. In fact, the fund has $35 million from last year and an
additional $35 million will be placed there this budget year.
That funding will allow an opportunity for the funding of the
Saint Mary's school in its position as fifth on the school
construction list. He returned attention to the funding
formula, saying this difficult decision was made in order to not
extend REAA eligibility to districts with the capacity to bond
and thereby shoulder the financial burden.
9:16:52 AM
[Testimony was indecipherable due to technical difficulties.]
The committee took an at-ease from 9:16 a.m. to 9:17 a.m.
[Testimony was suspended due to technical difficulties.]
9:20:40 AM
The committee took an at-ease from 9:20 a.m. to 9:24 a.m.
9:24:55 AM
CHAIR GATTIS announced that HB 133 would be held.
9:25:14 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 9:25 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01 HB 133 Bill Text.pdf |
HEDC 3/11/2013 8:00:00 AM HEDC 3/18/2013 8:00:00 AM HEDC 3/20/2013 8:00:00 AM |
HB 133 |
| 02 HB 133 Sponsor Statement.pdf |
HEDC 3/11/2013 8:00:00 AM HEDC 3/18/2013 8:00:00 AM HEDC 3/20/2013 8:00:00 AM |
HB 133 |
| 03 HB 133 Sectional Summary.pdf |
HEDC 3/11/2013 8:00:00 AM HEDC 3/18/2013 8:00:00 AM HEDC 3/20/2013 8:00:00 AM |
HB 133 |
| 04 HB 133 ADMs and Full Values.pdf |
HEDC 3/11/2013 8:00:00 AM HEDC 3/18/2013 8:00:00 AM HEDC 3/20/2013 8:00:00 AM |
HB 133 |
| 05 HB 133 Kasayulie v. Alaska Consent Decree and Settlement Agreement.pdf |
HEDC 3/11/2013 8:00:00 AM HEDC 3/18/2013 8:00:00 AM HEDC 3/20/2013 8:00:00 AM |
HB 133 |
| 06 HB 133 DEED FY14 School Construction Grant Fund List.pdf |
HEDC 3/11/2013 8:00:00 AM HEDC 3/18/2013 8:00:00 AM HEDC 3/20/2013 8:00:00 AM |
HB 133 |