02/23/2010 01:30 PM House FINANCE

HOUSE BILL NO. 180                                                                                                            
                                                                                                                                
     "An Act amending the percentages  required to be paid by                                                                   
     a   municipal  school   district   receiving  a   school                                                                   
     construction  or  major   maintenance  grant;  making  a                                                                   
     conforming  amendment  to   a  bond  debt  reimbursement                                                                   
     provision  referencing  the percentages;  and  providing                                                                   
     for an effective date."                                                                                                    
                                                                                                                                
CHRISTINE HESS, CHIEF OF STAFF,  REPRESENTATIVE REGGIE JOULE,                                                                   
stated  that  the  legislation   proposed  a  change  in  the                                                                   
participation  share of  local governments  in grant  funding                                                                   
for   school   districts.   Currently,    A.S.   14.11.008(b)                                                                   
established the required participating  chair for a municipal                                                                   
school  district  for  a construction  or  maintenance  grant                                                                   
project based on the district's  full value per average daily                                                                   
membership (ADM). In 2008, SCS  HB 373 passed the legislature                                                                   
on April  11th, near the  end of the  session. On  the senate                                                                   
side a  change was  made, which the  house concurred  with on                                                                   
the  same day.  The change  placed  the participating  shares                                                                   
into  four  categories;  5,  10, 30,  35  percent.  For  most                                                                   
participating  governments,  the  local  participating  share                                                                   
went  down,  but  for several  local  governments  the  share                                                                   
jumped from  10 percent to 30  percent. The bill  proposed to                                                                   
stair-step those  local governments with a 20  percent share.                                                                   
The fiscal note  attached was for $2.6 million.  The impacted                                                                   
communities  were;  Kake, Dillingham,  The  Northwest  Arctic                                                                   
Borough,  Klawock, Nome,  and  Kodiak. The  list of  proposed                                                                   
projects  was  located  on the  sponsor  statement  (copy  on                                                                   
file).                                                                                                                          
                                                                                                                                
1:59:53 PM                                                                                                                    
                                                                                                                                
SAM  KITO  III, SCHOOL  FACILITIES  ENGINEER,  DEPARTMENT  OF                                                                   
EDUCATION AND  EARLY CHILDHOOD  DEVELOPMENT, testified  as to                                                                   
how  the legislation  would affect  his  district. He  stated                                                                   
that  concerning  ADMs;  the  department  was  examining  the                                                                   
average  daily  membership,  which   was  the  count  of  the                                                                   
students on an  annual basis, but the full  assessed value of                                                                   
the property for the given district  divided by the number of                                                                   
student in the district.                                                                                                        
                                                                                                                                
Representative  Gara   asked  if  the  equation   applied  to                                                                   
regional  education attendance  area (REAAs).  He queried  if                                                                   
there was a  contribution requirement for REAA  villages. Mr.                                                                   
Keno replied  that REAAs  had a limited  amount of  2 percent                                                                   
participating  share,  the  participating  share  table  only                                                                   
applied to municipal governments.                                                                                               
                                                                                                                                
Representative Doogan  understood that the  legislation would                                                                   
reduce the participating share  for districts between 275,000                                                                   
and 500,000  by 10 percent. He  wondered what the  benefit of                                                                   
the change would be. Ms. Hess  replies that the increase from                                                                   
10 to  30 percent, instituted  in 2008, had been  too extreme                                                                   
for the affected communities.                                                                                                   
                                                                                                                                
Representative  Doogan  understood  that the  assumption  was                                                                   
that   larger   districts   had  more   resources,   so   the                                                                   
participating  share should  be higher.  Ms. Hess replied  in                                                                   
the affirmative.                                                                                                                
                                                                                                                                
                                                                                                                                
2:03:08 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  added that rural schools had  a limited tax                                                                   
base. He acknowledged the difficulty  of funding schools with                                                                   
a weak municipal economy.                                                                                                       
                                                                                                                                
Representative  Foster  asked   if  the  legislation  was  an                                                                   
attempt to create parity across  the board for all schools in                                                                   
the state. Ms.  Hess replied that ultimately it  was a policy                                                                   
call  where  the  participating  share would  fall  for  each                                                                   
district.  The smaller  communities  would  be receiving  the                                                                   
reduced share.                                                                                                                  
                                                                                                                                
Representative Foster expressed support for the bill.                                                                           
                                                                                                                                
Representative  Gara summarized that  if the ADM  per student                                                                   
was over 800,000,  the municipality paid 35  percent, and the                                                                   
schools  on major  maintenance  projects were  placed on  the                                                                   
major maintenance  project list.   Mr. Kito replied  that the                                                                   
municipality  was  responsible  for the  participating  share                                                                   
percentage.                                                                                                                     
                                                                                                                                
Representative  Gara wondered  why  a district  would want  a                                                                   
project on the major maintenance  list, when bonding would be                                                                   
less expensive.  Mr. Kito responded that when  a municipality                                                                   
bonded for  a project,  the bonds need  to pay interest.  The                                                                   
municipality would  need to weigh the principal  and interest                                                                   
cost against  what the participating  share cost would  be on                                                                   
the major maintenance or the grant list.                                                                                        
                                                                                                                                
2:07:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze  asked if the  community received  the money                                                                   
up front  if it was on the  major maintenance list.  Mr. Kito                                                                   
replied yes.                                                                                                                    
                                                                                                                                
Representative Salmon wondered who sponsored HB373 in 2008.                                                                     
                                                                                                                                
Representative   Fairclough   shared   that  the   bill   was                                                                   
introduced by the House Finance Committee in 2008.                                                                              
                                                                                                                                
Ms. Hess  added that  HB373 had  been changed  on the  senate                                                                   
side.                                                                                                                           
                                                                                                                                
DR. NORMAN  ECK, NORTHWEST  ARCTIC BOROUGH SUPERINTENDENT  OF                                                                   
SCHOOLS,  KOTZEBUE (via  teleconference), spoke  in favor  of                                                                   
the legislation.  He testified that the jump  from 10 percent                                                                   
to  30  percent  had  been  difficult  for  the  district  to                                                                   
reconcile.  He  informed  the committee  that  the  Northwest                                                                   
Arctic School District had done  a lot independently over the                                                                   
years to  provide for school  construction, rather  than wait                                                                   
in line  for grants. Schools  had been remodeled  and rebuilt                                                                   
with bonds.  The 30 percent  participating share  had stifled                                                                   
further school projects.  He stated the burden  that had been                                                                   
placed  on the region  had been  unfair, and  the 20  percent                                                                   
stair step would  make a positive difference in  the lives of                                                                   
the students.                                                                                                                   
                                                                                                                                
2:12:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze closed public testimony.                                                                                       
                                                                                                                                
Representative  Joule clarified that  the request was  not to                                                                   
return to the 10 percent, but  rather a mid-level percent. He                                                                   
hoped as  the session progressed  the bill would  continue to                                                                   
live.                                                                                                                           
                                                                                                                                
Representative Austerman  asked how much more  work needed to                                                                   
be done on the bill.                                                                                                            
                                                                                                                                
Co-Chair Stoltze wanted gather more debt reimbursement                                                                          
information for further discussions.                                                                                            
                                                                                                                                
2:14:09 PM                                                                                                                    
                                                                                                                                
HB 180 was HEARD and HELD in committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Hawker discussed housekeeping.