Legislature(2023 - 2024)DAVIS 106
02/07/2024 08:00 AM House EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): the Nation's Charter Report Card | |
| HB236 | |
| HB230 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 236 | TELECONFERENCED | |
| *+ | HB 230 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 236-UA MAJOR MAINTEN. MODERNIZATION FUND
9:09:14 AM
CO-CHAIR RUFFRIDGE announced that the next order of business
would be HOUSE BILL NO. 236, "An Act relating to the duties of
the Board of Regents of the University of Alaska; establishing
the University of Alaska major maintenance and modernization
fund; repealing the University of Alaska building fund; and
providing for an effective date."
9:10:12 AM
REPRESENTATIVE WILL STAPP, Alaska State Legislature, as prime
sponsor, presented HB 236, and paraphrased the sponsor statement
[included in the committee packet], which read as follows
[original punctuation provided]:
As of this year, the University of Alaska (UA) system
has an estimated $1.4 billion in backlogged deferred
maintenance projects. 40% of state buildings belong to
the university, and university-affiliated members
across our state are hindered while working, studying,
and living in facilities and dormitories that have
fallen into disrepair. Without a clear fiscal vision
and framework, the $1.4 billion backlog will only
continue to grow, and our university system will
suffer.
HB 236 will solve this problem by establishing a major
maintenance and modernization fund. With this fund,
the Board of Regents will be able to leverage state
funding to create a clear, concise plan for reducing
the UA system's deferred maintenance backlog. This
bill intends to bring UA long-term financial stability
that will signify the State of Alaska's investment for
its students and higher education institutions.
Deferred maintenance is an ongoing cost, not a one-
time payment. The University of Alaska building fund
exists in the state's budget but has not been
consistently funded, which led to an unreliable
funding stream which the UA system could not utilize
to resolve its deferred maintenance backlog. To remedy
this, HB 236 will establish a funding source that will
be exclusively used for major maintenance and
modernization projects. The future generations and
workforces of our state must have the opportunity to
thrive in safe, modern buildings that lead Alaskans
north to the future.
9:13:13 AM
PAUL MENKE, Staff, Representative Will Stapp ,Alaska State
Legislature, on behalf of Representative Stapp, prime sponsor of
HB 236, began a PowerPoint [hardcopy included in the committee
packet], titled "HB 236: UA Major Maintenance and Modernization
Act." He proceeded to slide 2, titled "Problem," which read as
follows [original punctuation provided]:'
.notdef UA System has an extensive Deferred Maintenance (DM)
backlog
.notdef 40% of Alaska state buildings are university-
owned
.notdef 68% of Alaskas DM backlog is in the UA system
.notdef Currently no clear fiscal plan for catching up on
deferred maintenance projects
MR. MENKE added that projects within the university system are
capital projects which require individual appropriations, and it
is not conducive to creating a predictable source of funding for
the university to catch up on its deferred maintenance backlog.
9:14:02 AM
MR. MENKE moved to slide 3, titled "Map of UA System," showing a
visual representation of the state's main and satellite
campuses. The deferred maintenance backlog is spread across
almost all campuses throughout Alaska, and HB 236 has a solution
for reducing the expensive backlog and making the university
system more marketable, he said.
9:14:31 AM
MR. MENKE moved to slide 4, titled "HB 236's Solution:," which
read as follows [original punctuation provided]:
.notdef Create a reliable fund that the UA system can use to
catch up on deferred maintenance projects
.notdef Ensure the fiscally responsible expenditure of funds
being used for deferred maintenance projects
.notdef Maintain respect for legislative constitutional
appropriation authority
9:15:07 AM
MR. MENKE gave the section analysis for HB 236 shown on slides 5
through 7, which read as follows [original punctuation
provided]:
Section 1: - Adds the duty for the Board of Regents to
develop a comprehensive plan for applicable projects
to be funded from the UA Major Maintenance and
Modernization Fund
Section 2: - Adds the duty for the Board of Regents to
present a detailed, written report to the Alaska
Legislature within the first 30 days of each regular
session about current and proposed major maintenance
and modernization project.
Section 3: - Defines "major maintenance and
modernization project"
Section 4: - Creates the UA Major Maintenance and
Modernization Fund which will consist of: -
Appropriations from the legislature - Transfers from
the Board of Regents - Interest and investment income
- Donations - Establishes procedures in the event that
the legislature disapproves of a proposed project -
States the intent of the legislature to appropriate
$35,000,000 /year - Defines: - "Board of Regents" -
"Fund" - "Major Maintenance and Modernization Project"
Section 5: - Repeals the UA Building Fund (AS
37.05.555)
Section 6: - Outlines current projects that the Board
of Regents can leverage funds from the UA Major
Maintenance and Modernization Fund without further
appropriation
Section 7: - Provides for an immediate effective date
9:16:48 AM
MR. MENKE moved to slide 8, titled "Projects Approved in HB 236
(Section 6)." The slide showed the improvements needed to all
three major universities and a list of all the projects
contained in the bill. He reminded committee members they have
additional attachments in their committee packets.
9:18:50 AM
REPRESENTATIVE PRAX brought up the report to the legislature as
opposed to just letting regions "do their business." He said
the legislature does not know about deferred maintenance, and he
asked, "Why the legislature?"
REPRESENTATIVE STAPP replied that the legislature is the
accountability body and controls the appropriations. He added
that the legislature, being the approving body, seemed to be the
most effective way to have resources attributed.
REPRESENTATIVE PRAX asked whether the legislature needed to come
up with a definition to establish deferred maintenance.
REPRESENTATIVE STAPP responded there were people online who
would explain more in depth.
9:21:31 AM
CHAD HUTCHINSON, Director of State Relations, University of
Alaska (UA), explained the definition of deferred maintenance
and how it associated with the age of the building, the amount
of construction work needed, as well as being prioritized by
student use and both electrical and mechanical issues.
REPRESENTATIVE PRAX opined that there are necessary compliance
needs, and improvements are not maintenance.
MR. HUTCHINSON said that the Americans with Disabilities Act
(ADA) compliance is a component of UA's focus, but the
predominant focus is out-of-date mechanical equipment, leaking
fuel tanks, and insufficient electrical systems. He said UA's
hope is to become more self-sufficient and less dependent on
state dollars.
9:24:01 AM
CO-CHAIR ALLARD asked how much [money] is in deferred
maintenance.
MR. HUTCHINSON answered that it is approaching 1.48 billion. He
added that the top three projects are at the University of
Alaska Anchorage (UAA). He also spoke to the amount of wear and
tear, such as roofing issues, at the University of Alaska
Southeast (UAS) due to weather conditions. He noted that the
governor has had conversations with UA's president, Pat Pitney,
regarding creative solutions for sustained funding.
9:26:37 AM
CO-CHAIR ALLARD expressed her frustration at the university not
"maintaining its home," and now pleading with the legislature
for "all this money" now and each year thereafter. She gave an
example wherein she had dereliction of duty and not maintained
her home but expected insurance to cover the damages.
MR. HUTCHINSON referred to the 1.5 billion dollars and the "red
book" on page 56 that showed a chart, and the lack of capital
appropriations over the years.
CO-CHAIR ALLARD interjected Mr. Hutchinson and opined that what
he began stating is just an excuse and it was alarming that UA's
finances have not been figured out. She questioned what UA's
capital budget money went to.
REPRESENTATIVE STAPP suggested to think about who appropriated
the money in the first place, which was the state, having a
constitutional obligation to the university system. He further
explained that the university gets its money through various
entities and the budget is transparent as to where those funds
actually go.
9:30:12 AM
LUKE FULP, Chief Financial Officer, University of Alaska System,
explained that the deferred maintenance priority had been a top
capital priority for the Board of Regents for the last 20 years,
with most recently a $50-million request before the legislature
every year with a specific slate of projects. He added that UA
had adjusted its approach, and now comes with a request for $35
million, which he stated was "a modest request." He said UA is
a very large system with many facilities within. He stressed
that UA is not just looking to the legislature to "solve the
problem" for it but has designed a plan to use its own funds to
contribute starting in 2028. If HB 236 were enacted, UA would
pay $10 million per year and receive $35 million per year from
the legislature.
9:35:08 AM
REPRESENTATIVE STORY asked how the Board of Regents and the
president [of UA] have been involved, as well as the involvement
at the legislative level.
REPRESENTATIVE STAPP said there is a lot of technical thought to
unwind the problem. He said that outside of state
appropriation, the primary purpose is tuition. He gave an
example of a maintenance backlog and the possibility of then
raising tuition; however, if that type of policy were enacted to
solve the problem, it incentivizes Alaska children to pursue
education elsewhere for more reasonable tuition. He said
deferred maintenance is a problem that has gotten progressively
worse, and in turn gets progressively more expensive over time.
He said the concept behind HB 236 is to make the velocity of
money more efficient so it can go further.
9:39:25 AM
CO-CHAIR RUFFRIDGE referred to page 5 of the bill and that he
was seeing prescribed language referencing specific places and
things. He asked if someone could speak to the specific
language.
MR. MENKE replied the specific language built into the bill is
based off of the capital projects that UA had requested and is
designed that if the bill were passed, these projects in Section
6 would be the projects that the Board of Regents would be
allowed to use funds for.
CO-CHAIR RUFFRIDGE commented about a possible statutory process
to alter the bill and asked whether there would be a simpler way
or a potential change that may need to be made 20 years down the
road.
MR. MENKE replied that he did not see a simpler way. If there
were new projects that came up, a similar process would be
needed, and he opined that the proposed way is a more
streamlined way.
9:41:40 AM
REPRESENTATIVE HIMSCHOOT commented that the bill looked like a
creative solution to a very real problem, and she supported it.
She added that it was important to recognize the state's K-12
system lacks the same opportunities UA has to meet its own
needs.
9:42:37 AM
REPRESENTATIVE PRAX advised that the proposed legislation must
be evaluated carefully, and he noted that modernization is not
maintenance.
REPRESENTATIVE STAPP stated that he agreed; however, when
looking at building operations it is wise to look at replacement
costs and modernizing systems to reduce overall operation costs.
9:44:32 AM
CO-CHAIR RUFFRIDGE announced that HB 236 was held over.