Legislature(2021 - 2022)ADAMS 519
03/25/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB283 | |
| Presentation: State-aid for School Capital Projects: Grant and Debt by the Department of Education and Early Development | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 281 | TELECONFERENCED | |
| += | HB 282 | TELECONFERENCED | |
| += | HB 283 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 25, 2022
1:33 p.m.
1:33:25 PM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative Andy Josephson
Representative Bart LeBon
Representative Adam Wool
MEMBERS ABSENT
Representative Steve Thompson
Representative Sara Rasmussen
Representative DeLena Johnson
ALSO PRESENT
Heidi Teshner, Director, Finance and Support Services,
Department of Education and Early Development; Tim Mearig,
Facilities Manager, Department of Education and Early
Development; Sarah Sledge, Executive Director, Coalition
for Education Equity; Nils Andreasson, Director, Alaska
Municipal League; Representative Mike Cronk.
PRESENT VIA TELECONFERENCE
Tom Roth, Chief Operating Officer, Anchorage School
District; Jim Anderson, Chief Financial Officer, Anchorage
School District; Ed Pekar, Lower Kuskokwim School District;
Kevin Lyon, Planning Director, Kenai Peninsula Borough
School District.
SUMMARY
HB 283 APPROP: CAP; REAPPROP; SUPP
PRESENTATION: STATE-AID FOR SCHOOL CAPITAL PROJECTS:
GRANT AND DEBT BY THE DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT
Co-Chair Merrick reviewed the agenda for the meeting.
HOUSE BILL NO. 283
"An Act making appropriations, including capital
appropriations, reappropriations, and other
appropriations; making supplemental appropriations;
and providing for an effective date."
1:34:04 PM
^PRESENTATION: STATE-AID FOR SCHOOL CAPITAL PROJECTS: GRANT
AND DEBT BY THE DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT
1:34:08 PM
HEIDI TESHNER, DIRECTOR, FINANCE AND SUPPORT SERVICES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, introduced
the PowerPoint presentation: "State-Aid for School Capital
Projects: Grant and Debt - Department of Education and
Early Development" (copy on file). She began with slide 2:
"Our Mission, Vision, and Purpose." She explained that the
vision of the Department of Education and Early Development
(DEED) was taken directly from Alaska Statute (AS)
14.03.015. She indicated that DEED existed to provide
information, resources, and leadership to support an
excellent education for every student every day.
1:34:57 PM
Ms. Teshner continued to slide 3 and explained that there
had been significant school capital funding in the history
of Alaska. There were three sources of funding including
federal, state, and funds from the Local Education Agency
(LEA). The funding from the state came from various grants
and bonds, which started in approximately 1970. The school
debt reimbursement program also contributed significantly
to funding sourced from the state and began in the year
1971. The program has been administered by DEED since 1983.
There were also debts that were reimbursed annually, which
was funded through the operating budget. Local education
agencies and municipalities had also been a strong
component and had used capital reserves, municipal funding,
and other revenue that could be utilized from the general
fund in order to help maintain and upkeep local school
facilities.
1:37:02 PM
Representative Edgmon thanked his mother, Edie, and his
brother, Gary, who were listening in. He asked if Ms.
Teshner would contextualize the Kasayulie lawsuit and the
Moore case. He hoped she would focus in on the Kasayulie
case. He thought it could provide a guidepost on the type
of school funding that had taken place.
Ms. Teshner would follow up with the committee.
Representative Edgmon wanted her to provide context in the
current meeting.
Ms. Teshner relayed that the most recent Kasayulie case
involved the Kivalina replacement school that was funded in
2016.
1:39:07 PM
TIM MEARIG, FACILITIES MANAGER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT, added that there was a helpful briefing
in HB 237 that gave more information. He indicated that the
report would be highlighted later in the meeting. It had a
large impact on funding starting on 2010.
Ms. Teshner explained that Handout 1 (copy on file) was the
document that would provide the additional information.
Mr. Mearig continued to slide 4: "Recent Funding (SB 237
Report)." The report was required by statute and
highlighted the funding since 2010 when the Regional
Educational Attendance Area (REAA) and small municipal
grant fund was established. In the current year, the
funding was $1.445 million. He explained that if a grant
was awarded to a municipality that had a 35 percent
matching share, only the state share would be shown in the
funding amount. He indicated that Handout 1 was available
for review. He pointed to Appendix A and B, which showed a
compendium of all the funding that had been provided to
date.
1:41:29 PM
Mr. Mearig advanced to slide 5: "Current Finding Options."
The funding currently available in statute was the School
Construction Grant Fund, Major Maintenance Grant Fund, and
the REAA and Small Municipal School District School Fund.
The REAA fund was an indexed fund and was tied to the
amount of debt reimbursement funding that was allocated
through the operating budget annually. The amount was
determined by a formula found in AS 14.11.025. Prior to
2010, there was no forecasting of funding for maintenance,
but through this mechanism, there was now a forecast for
available funding for REAAs and indexed debt reimbursement
funding.
1:43:21 PM
Representative Edgmon referred to the federal
Infrastructure Investment and Jobs Act (IIJA) and asked
whether there was funding for schools.
Mr. Mearig responded that there was $500 million for energy
projects for schools.
Representative Edgmon commented that the issue was a
"sleeper issue" that should be watched. He noted the price
increase amount was changing rapidly.
Mr. Mearig continued to slide 6: "Current Project
Categories (AS 14.11.013)." He explained that necessary
projects identified by school districts were determined
through the 7 provisions outlined on the slide. School
construction projects would be defined under items A, B,
and C and would be put on the school construction grant
fund list for possible funding. He added that projects that
addressed items C, D, and E were major maintenance
projects. The split of project types had served the state
well. The categories had grown out of the effort to
identify the major maintenance grant fund and put it into
statute.
Mr. Mearig advanced to the matrix on slide 7: "Fund
Category Entity Relationships." The slide indicated the
type of districts that might be able to take advantage of
the funding. He reminded members that there were 19 REAA
school districts in the small municipal district category.
He highlighted that there were some restrictions, such as
REAA schools not being eligible for debt reimbursement.
1:47:55 PM
Mr. Mearig turned to slide 8: "Capital Improvement Project
(CIP) Eligibility." He explained that when the department
looked at eligibility criteria, there were several
components that had to be considered in order to be
eligible to be on the major maintenance or grant fund list.
These components were listed on the slide as follows:
1. Six-year capital improvement plan
2. Functioning fixed asset inventory system (FAIS)
3. Proof of required property insurance
4. Certified Preventative Maintenance and Facility
Management Program
5. Capital project and not maintenance
6. Participating Share
Co-Chair Merrick asked for a list of school districts that
had not qualified.
Mr. Mearig responded by providing the following list: the
Aleutian Region, Hydaburg, Klawock, Lake and Peninsula
Borough, Skagway, and Yukon Flats.
1:50:40 PM
Mr. Mearig continued to slide 9: "Grant Participation and
Eligibility." He explained that there was an annual period
for applying for school capital funds across the state.
Eligible districts would provide a Capital Improvement
Project (CIP) grant application no later than September 1,
which was then received by the review committee. An
application would include a category of work and would fall
into the respective list on slide 6. The department
evaluated and ranked each project through a robust review
process which included the use of measured and evaluative
metrics in order to prioritize the projects. The ranking
was determined through statute and additional regulation
determined how the projects would be scored. The process
had functioned smoothly since its rollout in 1996 and only
minor adjustments in the evaluative process had been made
since its inception. The department worked to understand
the needs of school districts to ensure that it was tuned
into an appropriate measuring mechanism to determine the
need. He noted that a CIP priority list was generated and
released on November 5 of each year. There was a
reconsideration period if a district thought that the
department made an error. The list the department generated
took special care in identifying costs to ensure that the
department was accurately representing the costs to the
legislature and the public.
1:54:11 PM
Mr. Mearig continued to the graph on slide 10: "Grant
Participation and Eligibility FY 13 FY 23." He noted that
the trend downwards in fiscal year (FY) 20 was alarming
because many districts were not participating in the
program. He pointed out that in FY 19 there were several
major maintenance projects. The department was glad to see
the participation number rebound since FY 20. He explained
that one element of the department's process was outreach
and training to encourage districts to participate in the
program. If a district did not participate, the department
would not be informed of a district's needs. Information
had to be turned in for the department to know how to
proceed.
Co-Chair Merrick noted Representative Mike Cronk in the
audience.
1:55:58 PM
Mr. Mearig turned to slide 11: "Grant Awards FY 13 FY 22"
which showed a chart delineating the dollar amount of funds
awarded under each fund category by fiscal year. He
indicated that the funding that had been provided lately
had been relatively moderate in the major maintenance grant
fund category. He noted there had been four years without
funding for school construction grant fund projects,
however school construction projects had still been funded
through the REAA and small municipal project fund. The
majority of school projects had been eligible for REAA
funding.
1:57:31 PM
Co-Chair Merrick asked if any of the areas on the chart
indicating zero dollars had to do with vetoes.
Mr. Mearig responded that there had been some efforts to
award funds under the school construction grant fund
category that had been vetoed. In the REAA and small
municipal district fund, the normal funding would be in the
high $30,000 to the low $40,000 range according to the
calculations. He explained that the numbers represented the
actual projects that were funded, not the amount that was
placed into the fund.
Ms. Teshner added that in FY 21, the school bond debt
reimbursement was vetoed, which meant no funding went to
the REAA fund.
Co-Chair Merrick asked Ms. Teshner to speak to the
additional costs that could result from pushing back
projects because of increasing construction costs.
Mr. Mearig agreed that construction costs had been
increasing. He thought that cost increases combined with
the deteriorating conditions of some facilities made it
clear that there was a need for funding.
Representative Edgmon wanted to discuss the Bristol Bay
School District. He understood that the school building had
been built when Governor Jay Hammond was on the borough
assembly. There was an expensive remodeling project that
was made more expensive when asbestos was discovered in the
roof. He suggested there was nothing in the budget to
address potential cost overruns.
Mr. Mearig replied that he was aware of the Bristol Bay
project which was funded in FY 19. He indicated that the
project was basically completed. However, he agreed there
had been unanticipated issues including delays because of
the discovery of asbestos. There were also additional costs
and delays related to COVID-19 mitigation. Additional funds
had been needed in order to complete the project. There had
been occasions in which funds had to be allocated to other
projects that were behind schedule.
Representative Edgmon noted that the circumstances were
anomalies. The borough had additional costs of about $3
million which came out of the Bristol Bay Borough reserves
in order to keep the project on track.
2:03:43 PM
Mr. Mearig explained slide 12: "Total Eligible Grant
Projects and Actual Grant Funding by Fiscal Year." The
slide reflected the number of projects that had been placed
on the list. He noted that the school construction list had
diminished significantly, which he thought was the direct
result of heavy funding in that area. Much of the capacity
issues related to overcrowding that had been problematic in
the past had been resolved, and old facilities had been
replaced. The remaining items would be expensive, but the
number of projects had been reduced.
Mr. Mearig turned to slide 13: "Appropriations into the
REAA and Small Municipal School District Fund." The slide
showed how the fund had faired since the first
appropriations were made in FY 13.
Mr. Mearig continued to slide 14: "Allocations from the
REAA and Small Municipal School District Fund." The list
reflected projects that had received funding through the
REAA and small municipal school district funds. In FY 21,
there was a bill passed that had made funding available for
major maintenance projects. He noted that some high-ranking
major maintenance projects had used these funds.
2:07:17 PM
Mr. Mearig advanced to slide 15: "Debt Reimbursement and
Eligibility." The program was established through AS
14.11.100 and gave the state the opportunity to review
applications made by school districts and municipalities
for projects that could be eligible for state aid. The
projects were typically not ranked, but on occasion there
had been some need to evaluate and prioritize applications
when certain allocations were identified in statute. The
department used the same metrics and eligibility
requirements that were used for all projects.
Co-Chair Merrick asked Co-Chair Foster to comment on the
school bond debt reimbursement allocation in the current
operating budget that was moved out of committee.
Co-Chair Foster explained that the school bond debt
reimbursement was funded at the 100 percent level in the FY
23 operating budget. He noted that only half was paid last
year, so it was determined that the state would pay the
other half this year in a supplemental appropriation. He
thought that the amount came to around $60 million. He
wasn't sure of the exact monetary number associated with
the difference.
Co-Chair Merrick thought that the information was important
for people to know.
2:09:44 PM
Mr. Mearig advanced to slide 16: "Debt Reimbursement
Trends: Percentage of Reimbursement Trends." The slide
identified the percentage of school debt covered by the
state that had changed over time. Currently, all projects
that had received debt reimbursement were either being
reimbursed at 70 percent or 60 percent. Proposed statutory
language was suggesting this be changed to 50 and 40
percent. The difference between the two eligibility
percentages was tied to whether or not the project was
eligible under the department's regulations for school
space.
Mr. Mearig moved to the chart on slide 17: "Debt
Reimbursement Trends: Project Values by Percent
Reimbursement." He offered clarification that when he
discussed debt reimbursement, he was talking about project
values, not the overall cost over time. He highlighted that
the majority of projects had been reimbursed at the 70
percent rate. There was also a substantial number of
projects reimbursed at 60 percent.
Ms. Teshner addressed slide 18: "Debt Reimbursement Trends:
State Share of Outstanding Debt." She answered Co-Chair
Foster's question and reported that the difference between
FY 22 debt reimbursement appropriations and the
supplemental appropriation was about $49 million. She
discussed the state's share of outstanding debt on the
slide. She explained that current projections showed that
the state liability would be fully paid off in FY 40,
assuming that the moratorium would end and that no new
bonds would be sold. She noted that Handout 2 (copy on
file) provided information on the numbers behind the chart.
2:13:26 PM
Ms. Teshner advanced to slide 19: "Debt Reimbursement
Trends: Reimbursement Shortfalls." The slide showed
reimbursement shortfalls. She noted that Handout 3 (copy on
file) showed the same information on the slide but in an
easier to read format.
Ms. Teshner continued to slide 20: "Debt Proceed and
Refundings." She explained that after the initial bonds
were sold, the department identified how much of the
approved projects were funded by the new bond. There might
be other elements within an approved bond that were not
school related, so the department would break the elements
out in order to only include what was eligible in statute.
After eligibility was confirmed, the reimbursement rates
were determined. If districts and municipalities were
allowed to provide refundings, the refundings would have to
show an overall savings to the state.
2:15:23 PM
Ms. Teshner indicated that slide 21: "Funding Comparison"
was a summary of the presentation and showed the three
funding options that had been discussed. All REAAs had a 2
percent participating share and small municipalities had a
share of between 10 and 20 percent. The participating share
for school construction and major municipality grants was
between 2 and 35 percent. The local share under the debt
reimbursement program was 40 percent if not eligible for
space and 30 percent for all others. When the moratorium
lifted in FY 26, the percentage would change to 50 percent
and 40 percent, respectively.
Ms. Teshner turned to slide 22: "Additional Handouts and
Resources." The slide showed some additional reference
information and several online resources.
2:18:22 PM
AT EASE
2:18:25 PM
RECONVENED
Co-Chair Merrick thanked the presenters. She was glad the
presenters highlighted that the costs would increase in the
future and that the state had not been keeping up with
school major maintenance. She suggested that although many
of the projects were not glamorous, the projects were
necessary.
2:19:11 PM
Representative Carpenter asked if deferred maintenance was
considered to be the same as major maintenance.
Ms. Teshner confirmed that deferred maintenance was a title
that was used at the state level and major maintenance was
used at the district level. She agreed that both titles had
been used interchangeably for school districts.
Representative Carpenter asked about the difference between
the preventative maintenance program and a grant
application for major maintenance.
Mr. Mearig responded that the preventative maintenance
program included five different areas of maintenance
management and school facility management. All of the five
areas should be funded by school districts through their
operating budgets. The responsibility of school maintenance
was that of the operating fund. All of the major
maintenance projects listed were projects that were already
in need.
Representative Carpenter clarified that all of the projects
that were on the major maintenance list would not be found
on the preventative maintenance list that the department
would certify for each school district. He asked whether
there would be any projects with major maintenance needs
that would fall under the preventative maintenance program.
Mr. Mearig responded in the affirmative. He explained that
that the state did not manage a district's preventative
maintenance program, though it would ensure that a district
had one in place and would help a district develop a
program if necessary. In regulation, the department
categorized major maintenance projects as projects at
$50,000 or more. Any projects below that dollar amount
needed to be worked as a district project.
Representative Carpenter shared his understanding that the
needs for major maintenance projects had been less
substantial in the last few years. There was also a
decision that was made at the local level for preventative
maintenance. He asked about the linkage between the current
major maintenance projects and the decisions that had been
made to forgo the preventative maintenance projects in the
districts. He asked if it was known whether districts were
putting off preventative maintenance, and therefore would
incur a major maintenance cost down the road that would be
the responsibility of the state.
Mr. Mearig explained that in 1999, the legislature
instituted a taskforce for deferred maintenance to look
into the matter. When the program was implemented to
measure the preventative maintenance participation of each
district, there was a position added to evaluate the
districts. If districts could not provide proof of
compliance, they would remain ineligible.
Representative Carpenter thought that part of the criteria
for getting onto the major maintenance list would be an
assessment at the state level to investigate each project.
Mr. Mearig replied in the affirmative. He indicated that if
the state saw that there was a maintenance issue that was
reflected as part of a project, it would be taken out of
the request.
Co-Chair Foster noted that school bond debt and REAA were
tied together by formula and sometimes the two numbers were
lumped together. He wanted to clarify his earlier comment
stating that the number came to $60 million. School bond
debt was $49 million, but the total between school bond
debt and REAA was $67 million. He explained that last year,
$49 was tied to the Constitutional Budget Reserve (CBR)
vote. The vote failed to pass and the other $17 million for
REAAs was also vetoed. He reiterated that both were funded
at 50 percent. The legislature put in $67 million in the
supplemental capital budget for both school bond debt and
REAA.
2:27:07 PM
Vice-Chair Ortiz noted the major maintenance list had grown
over the years and the state had access to more financial
resources in the current year than it had in recent years.
He wondered whether there would be any bandwidth problems
within the department to efficiently use resources if there
was an attempt to eliminate the current list of projects
that totaled about $200 million. He asked if there was a
preference and whether it would be better if the funds were
more dispersed.
Co-Chair Merrick thought the cost for the projects was $260
million to $280 million.
Ms. Teshner responded that the state's share was $196
million. She also noted that the full funding was
appropriated, the department would do its due diligence to
distribute the agreements to school districts as quickly as
possible. Some monies would be spent faster than others. In
the following year there would be a new list, as there was
continued need.
Co-Chair Merrick indicated that the committee would hear
from stakeholders.
2:29:39 PM
TOM ROTH, CHIEF OPERATING OFFICER, ANCHORAGE SCHOOL
DISTRICT (via teleconference), thought Mr. Jim Anderson,
also from the Anchorage School District (ASD), was
available online to comment. He relayed that ASD made sure
it was eligible to participate in the grants over the last
several years. The district had received state funding for
two projects since 2015. The amount received by the state
had not been substantial. The district was currently
sitting on more than $820 million in deferred major
maintenance funds. He relayed the district had a dedicated
maintenance and operations department to ensure that
preventative maintenance was taking place. Additionally,
the district did a significant amount of unscheduled
maintenance that came up from time to time. As time
continued without doing maintenance, the unscheduled
repairs would increase. Deferring major maintenance led to
greater costs with the passage of time.
2:33:15 PM
JIM ANDERSON, CHIEF FINANCIAL OFFICER, ANCHORAGE SCHOOL
DISTRICT (via teleconference), reported that ASD had
received about $21 million over the last 10 years, which
was about 3 percent of the total in the state. He did not
think the district had received a significant amount, but
when it did receive funds, the funds were for projects that
needed the funding. There was certainly more need for
funding to be available due to many projects being vetoed.
2:34:09 PM
Representative Carpenter asked whether there was a
statutory requirement mandating that the state fund major
maintenance projects for schools. He wondered if a decision
at the local level could be made to push projects to
deferred maintenance. He offered that operational spending
and capital spending dedicated to improving buildings could
compete for available dollars. He asked whether the state
was required to pay for the major components of a project.
Mr. Roth responded that there was no statutory requirement.
He shared that ASD had not sought funding since the bond
debt program was suspended. The cost had been borne by the
municipality since 2015.
Representative Carpenter commented that he was not
necessarily looking for a response from ASD on the
statutory requirements. He stated that he would look into
it on his own.
2:36:46 PM
Mr. Mearig replied that there was some responsibility
involved in an REAA for the state to enter into a capital
renewal of necessary facilities. Outside of that situation,
the responsibility would fall to boroughs and
municipalities.
Representative Carpenter thought Mr. Mearig was drawing a
distinction between major maintenance projects in REAA
schools that were not in a local municipality and major
maintenance projects that were in municipalities. He
suggested that the latter was the responsibility of the
legislature.
Mr. Mearig replied in the affirmative.
2:38:33 PM
Representative LeBon thought ASD was set up similarly to
the Fairbanks North Star Borough (FNSB) school district. He
wondered if the district owned and operated the school
buildings.
Mr. Roth responded that all real property was owned by the
municipality. The district exercised management of the
properties and maintained the grounds.
Representative LeBon asked how extensive ASD's role was in
the maintenance of properties. In particular, he wondered
about the maintenance of roofs within the district.
Mr. Roth responded that the district was wholly responsible
for maintaining roofs through both preventative and
unscheduled maintenance repairs as well as replacing the
roofs when needed. It was the responsibility of the
district to request funding through bond debt
reimbursement.
Representative LeBon referred to one of the elementary
school improvement lists on file that mentioned roof
maintenance. The schools in his district appeared on the
list on three occasions all for roof replacement. He
wondered how much of the chronic roof replacement needs
could have been avoided.
Co-Chair Merrick noticed that roof replacements were
frequent on the list. She asked about the roof repairs for
Eagle River Elementary School (ERES) and whether the need
resulted from earthquake damage.
Mr. Roth replied that the need did not result from
earthquake damage. The schools had received public
assistance to cover the earthquake damages. Prior to the
earthquake in November of 2018, ERES was next in the queue
for what would have been a roof replacement and a scheduled
periodic improvement to the school building.
Co-Chair Merrick noted that ERES was one of the most
damaged schools in the aftermath of the earthquake. She
thanked the testifiers.
2:43:30 PM
ED PEKAR, LOWER KUSKOKWIM SCHOOL DISTRICT (via
teleconference), relayed that the Lower Kuskokwim School
District's (LKSD) most pressing needs were a new school in
Napakiak and a new school in Mertarvik. There had been
significant river erosion in Newtok that had impacted the
village, and the village was in the midst of a relocation
project from Newtok to Mertarvik. The timeline of the
relocation had been impacted due to COVID-19. There were
several other maintenance projects in the district that
needed funding. Another school on the CIP list, Anna
Tobeluk Memorial School, had been moved down the list due
to the priority of addressing the river erosion in Newtok.
The district received funding to begin the project in
Napakiak. He had revamped the district's list of
preventative maintenance projects and there was a new
management system. The district had secured a lease for the
new school site in Napakiak and continued to work towards
completing the project. The district continued to reach out
to state and local entities in Newtok and Napakiak for help
developing water wells, sewer systems, and electricity.
2:47:16 PM
KEVIN LYON, PLANNING DIRECTOR, KENAI PENINSULA BOROUGH
SCHOOL DISTRICT (via teleconference), wanted to express his
support for the school major maintenance projects efforts.
He shared that the Kenai Peninsula Borough School District
(KPBSD) spanned about 25,600 square miles and required
bussing students to and from school a distance of about
6,670 miles per day. The average age of facilities in the
district was 46 years old, with the oldest facility at 87
years old. He relayed that 30 percent of schools in the
district had facilities that exceeded 50 years. The
district had done a good job of maintaining facilities and
extending the life of facilities. The district was unique
in that it included urban, rural, and remote areas. There
were 42 schools and 70 communities in the district and the
replacement amount totaled around $713 million. There were
some computer systems in the district that were 36 years
old and were based on Windows 2.0. The newer systems were
more reliable, easier to maintain, and saved significant
energy.
Mr. Lyon noted that the reduction in state participation in
the reimbursement program over the last three years had
shifted about $5.5 million to property owners, which
covered the state portion of the bond payments. The local
funds could have been utilized by adjusting facility needs.
He indicated that the reduction in state participation
combined with the reimbursement moratorium of 2015 had
detrimentally impacted the district. If these issues were
addressed in a timely manner, the education infrastructure
could be preserved.
Representative LeBon suggested that there were nearly 100
projects listed by priority on the CIP list. He indicated
that Kenai appeared as number 61 on the list of projects,
and the need was for a partial roof replacement. He was
impressed that the district only had one project on the
list.
2:51:28 PM
SARAH SLEDGE, EXECUTIVE DIRECTOR, COALITION FOR EDUCATION
EQUITY, began her PowerPoint Presentation: "Coalition for
Education Equity." She began on slide 2 and read a prepared
statement:
Good afternoon. My name is Sarah Sledge. I am the
executive director of the Coalition for Education
Equity, a statewide organization representing Alaska
school districts, organizations, and individuals
concerned about the quality and breadth of educational
opportunities available to Alaska's children. Thank
you for the opportunity to speak with you today.
Formerly known as Citizens for the Educational
Advancement of Alaska's Children, or CEAAC, our
organization advocated for education reform at the
legislative level while fighting the Kasayulie and
Moore lawsuits, which were settled in 2011 and 2012
respectively. The Kasayulie vs State of Alaska lawsuit
was filed in 1997 regarding the method of funding
capital projects for education. At the time the
lawsuit was filed, many of the physical facilities
within plaintiff (REAA) school districts were in dire
need of replacement and/or major maintenance,
exhibiting widespread deterioration, physical dangers,
structural deficiencies, inability to satisfy relevant
code requirements, and a lack of sufficient
instructional space.
We are concerned that we again find ourselves in the
situation of seeing deterioration of school facilities
creating unsafe or uncomfortable environments,
environments that interfere with or impede the ability
of students to learn, or, at the very least, increased
costs for maintenance. We are also concerned that
continued deferment of major maintenance will
necessitate a larger number of school construction
projects in the future, at great cost to our state.
2:53:31 PM
Ms. Sledge turned to slide 3 and continued to read from a
prepared statement:
Slide 3 shows the number of projects and dollar
amounts of the Major Maintenance priority lists over
the past five years, including the current year list.
We can see that in this time frame the number of
projects and the cost of these projects has steadily
increased. Many of the projects on this list have
remained on the list for many years, and in many cases
the maintenance issues at those schools become worse
over time as conditions deteriorate. Other major
maintenance projects we know have either fallen off
the list, for a variety of reasons, or are not on the
list because school districts did not complete CIP
applications. So, we know that the need across the
state is larger than what is on this list.
This need does not correspond with the funding that
has been provided for school major maintenance over
the past several years.
2:54:56 PM
Ms. Sledge remained on slide 3 and continued to read from a
prepared statement:
In 2017, the legislature passed $3.5 million for
school Major Maintenance in the FY 2018 Capital Budget
In 2018, we worked with the Legislature to pass HB
212, which allows the REAA Fund to be used for school
major maintenance projects as well as school
construction.
The REAA Fund has been used twice since passage of HB
212 to fund REAA major maintenance projects:
FY 2019 St. Mary's Campus Upgrades ($3,449,928)
FY 2021 St. Paul K-12 School Roof Replacement &
Structural Repairs ($1,896,395)
That year the Legislature passed $24,203,372 for
school Major Maintenance in the FY 2019 Capital
Budget, which covered the top five maintenance
projects on the priority list that year.
In 2019, $2,484,000 was appropriated for specific
school construction and major maintenance projects
(NWABSD and ASD Sand Lake Elementary safety lighting
project). No funding was appropriated for the major
maintenance grant program.
In 2020, no funding was appropriated for the major
maintenance grant program.
In 2021, the legislature passed $21,642,300 for school
major maintenance, as well as funding for a couple of
individual school projects. The $21,642,300 was
vetoed.
Ms. Sledge advanced to slide 4 and continued to read from a
prepared statement:
CIP (Capital Improvement Project) Application Process
The CIP application process is thorough and is set up
to ensure that school capital projects are needed,
well planned and designed, and a good use of state
funding. School districts submitting grant
applications must have a six-year CIP plan on file
with DEED, which outlines all current and future
capital priorities. Applications themselves will
require some form of facility or component condition
survey, depending on the scope of the project. A
facility condition survey would be needed for a major
rehabilitation project. Additional assessments or
documentation that will be needed for larger scale
projects include planning, schematic design, and
design development work. This work needs to be
completed by an engineer or architect. Smaller
projects can be assessed by a licensed contractor.
This process, again depending on the scope of the
project, can cost between $2-3000 up to $75,000-
$100,000 to prepare for and submit the CIP
application. Getting design teams to rural village
schools for these assessments and to prepare cost
estimates can be especially expensive. I spoke
recently with a superintendent who had an engineering
team visit two of the district's schools to prepare
these surveys and plan and the cost was just under
$62,000. For another district, they were unable to get
any contractor to travel to their schools at all to do
this work and give them a bid. They were unable to
submit a CIP application. Many school districts use
outside assistance to help them put their grant
application packets together, which can range from
$2500-10,000, depending on the number of projects.
In addition to this initial cost, there is an ongoing
cost to reapply when projects are not funded. The
application must be updated and the cost to resubmit
can run around $8,000 every two years.
For many of these school districts, these projects
once completed will result in significant cost savings
due to improved energy efficiency and reduced need for
ongoing maintenance and repair. We continually ask our
school districts to spend efficiently funding these
projects will help them do so.
I just want to stop here and acknowledge the wonderful
staff at the Department of Education and Early
Development. They provide extensive ongoing support to
school districts throughout this process and I always
hear about how helpful they are.
Impact of Projects Not Getting Funded
So, given what I've just shared about the costs of
preparing for and submitting CIP applications, you can
see that if a project doesn't get funded, there are
ongoing costs for resubmitting year after year. This
can add up to a significant amount of money for school
districts over the years.
But there are also the costs involved with making do
in the meantime working with district maintenance
staff or hired contractors to make fixes or repairs
that are temporary and insufficient. The costs
involved in taking these actions don't solve the
problem and are sunk costs for school districts.
2:59:54 PM
Ms. Sledge remained on slide 4 and continued to read from a
prepared statement:
You can see the burgeoning need by looking at the
major maintenance priority list. What is this like in
reality for our school districts? I'd like to share
with you just a few scenarios:
Our DDC Control system is off-line and has been for
four years. The cost to the district is increased fuel
usage, an inordinate amount of maintenance personnel
time manually adjusting valves for rooms which are too
hot/too cold, and poor ventilation since we discovered
some of the air handlers went offline. This is also a
health issue with poor air circulation in the
buildings, especially in the time of COVID. We plan to
use some of our second round of CARES Act funding to
try to bring at least one school back online with a
new system.
Our high school generator is too small and
inefficient, and it is also located INSIDE our
maintenance shop with inadequate exterior ventilation.
Every time the power goes off our maintenance staff
must evacuate the shop until the generator can be shut
off as it pours fumes into the building.
Roof Repair requested 6 years ago. The need for this
is that the roof is a hot roof and a light pitched
roof, this allows the snow to build up and as it
accumulates it melts at the roofing level then runs
down to where the roof is the coldest and refreezes
and build an ice dam that backs up further melt water.
When this happens the water's depth allows it to find
its way under the roofing and into the inside of the
building causing water damage to the insulation,
sheetrock and wood framing and also allows for the
formation of mold.
The H-Vac and ducting system have not been functioning
properly for over 12 years and needs to be fixed by a
professional. Because the duct work has gaps and has
fallen in places it allows dirty air and dust from the
crawl space to be introduced into the school. This
also appears to be where mice are gaining access to
the school building. All of this makes for unhealthy
air quality, as well as heating inefficiency.
3:02:21 PM
Ms. Sledge turned to the photos on slides 5, 6, and 7 and
continued to read from a prepared statement:
This school built in 1979 and has never been
renovated. The roof is so damaged from snow and ice
during the winter that it continually leaks when the
temperatures rise above freezing. Rain during the
warmer seasons further aggravates the problem. The
roof has 3-inch ribs, spaced 8 inches apart, and has
over 12 "valleys" which trap precipitation. We have
done everything in our capabilities to repair and stop
the leaks. The design of the roof does not allow the
water to flow down naturally. The snow must be
shoveled off every winter by the maintenance crew, who
have spent untold hours doing so. During the summer we
spend many hours working on large portions of
repairing those winter damages, summer after summer.
The repairs only seem to last one season. Insulation
has been added in the attic space; we thought we were
losing heat through the roof causing the ice dams, but
the added insulation made no change. The heavy amount
of snow insulates it, then melts causing the leaks.
The school's foundation is deteriorating very quickly.
There is so much moisture in the soil underneath the
school building and surrounding the school property,
that the weight of the building is causing the entire
school to sink several inches a year. That same
moisture is causing dry rot and warping the building's
supporting structure. Hours have been spent re-
leveling and replacing the rotting foundation sections
every year. It is a losing battle, as more and more
moisture damage occurs each year. The leaking roof
adds to the problem as the water flows down the wall
and onto the foundation. With improper substrate being
used (with the foundation) when the building was
built, and the added water being placed on the
foundation due to the leaking roof, the problem grows
rapidly.
The school building is located about 500 yards away
from the Kuskokwim River. Due to the moisture
associated with the river, we have large sections of
the school's exterior walls bowing and causing the
outside trim to pop off. The continued bowing has
increased to the point of warping the window frame,
causing window breakage.
Also at this school, due to bowing of the building
walls and pressure buildup from the sinking ground,
the main power box often rips off the side of the
school building when the winds blow.
The need for major maintenance for our school
districts is real and it is significant. For many
schools the need is urgent. For all school districts,
the financial impact is substantial, and for REAA
school districts, there are no real alternatives for
obtaining funding for these needed projects. For small
rural village schools, there are no options for moving
to another location there are no extra buildings
available in those villages for educating our
children. It is unimaginable to me that we are sending
our educators and children into these conditions and
expecting them to have a high quality education
experience.
I am deeply grateful to you all for your time today
and for the time you give every day in service to our
State. Thank you for giving your attention to this
critical matter.
3:04:21 PM
Representative LeBon asked if the focus of the coalition
was on rural schools.
Ms. Sledge responded that it was not necessarily the focus.
The coalition was originally founded to help rural schools,
but it had urban members as well. Major maintenance was
needed in both rural and urban areas.
Representative LeBon agreed. He asked what involvement the
coalition had in the big five districts: Juneau, Kenai,
Anchorage, Matanuska-Susitna, and Fairbanks.
Ms. Sledge responded that ASD was one of the members of the
coalition and the other four were not. She shared that the
work done around REAA funding was significant. She knew
that the need for major maintenance was great.
Representative LeBon asked about the nature of ASD's
membership in the coalition.
Ms. Sledge responded that there were school district
memberships, and the majority were REAA or small school
districts.
Representative LeBon was curious as to why ASD was a member
of the coalition and FNSB was not. He wondered what the
reason for this was and asked about the role ASD played in
the coalition.
Ms. Sledge responded that she did not know why FNSB had
historically not been part of the coalition. She understood
that ASD saw the value in membership because it helped
support rural school districts. There was significant
transition of students from rural school districts to
larger urban school districts.
Representative LeBon wondered what benefits ASD experienced
through its membership in the organization.
Ms. Sledge thought the benefit was to better support all of
Alaska's school children.
3:07:12 PM
NILS ANDREASSON, DIRECTOR, ALASKA MUNICIPAL LEAGUE, thanked
the committee for its work with the operating budget. He
relayed that school construction and major maintenance
funding was one of Alaska Municipal League's (AML)
priorities. He noted that a number of resolutions had
passed that spoke to the need to fully fund school bond
debt reimbursement and greater funding for school
construction and major maintenance. He relayed that AML had
looked at the amount of annual school construction and
major maintenance that had been funded over the past 11
years and saw that it had only been funded at about 11
percent. Some years there was no funding at all. The cost
involved in submitting applications and complying with
requirements was significant, as well as the time it took
to complete the applications. There had been trends that
suggested lower interest in submitting applications to the
state because it was perceived that there was little
benefit in doing so. He added that there were over 1,000
school facilities in Alaska and 429 of them were 40 years
or older. He relayed that age 40 was the age at which
school needed major maintenance.
Mr. Andreassen thought it was worth thinking about the
replacement costs of schools. He recalled a calculation
from a few years ago that put the cost at $6.3 billion. The
reason for AML to have a role in the conversation was
because of the 1,000 schools in the state, 757 were
municipal owned or maintained. He remembered the earlier
conversation during the meeting about the state's
responsibility and argued that the state's constitutional
obligation did not differ between REAA districts and
municipal school districts. The state had a responsibility
to provide an education to students and to provide a
facility. He acknowledged that cities still played a role
in contributing to maintenance. It had been suggested that
for a project to be considered a major maintenance project,
costs needed to exceed $50,000, but he stated that just a
few years ago that number was $25,000.
3:12:06 PM
Mr. Andreassen added that the six-year fiscal plan to pay
for major maintenance projects had typically been reported
at about $1.3 billion in the past few years. However, the
average cost of projects on the major maintenance priority
list since 2011 suggested that the six-year plan would
amount to a number closer to $2.8 billion. There were also
16 districts that were not included on the list. Many of
the 16 excluded districts did not provide a request to the
state due to there being little benefit due to the costs
associated with the application process. A local school
district could not perform the needed maintenance on its
own.
Mr. Andreassen indicated that the school bond debt
reimbursement program had pushed more districts to apply to
the grant program. The increase in participation had also
increased competition for what has traditionally been
limited funding. He recognized that the legislature had
supported funding for the programs in the budgets during
the last few years. Ultimately, the question that needed to
be addressed was whether the state was contributing
adequately to meet the needs of the public. He argued that
funding has been insufficient, and that data supported that
assertion. He recalled that the previous couple of years
skewed the understanding the contribution capacity of
various entities. The influx of federal relief dollars had
not resulted in a windfall of funding for local governments
or schools. Most of the funding had been used to replace
lost revenue and maintain local services to ensure that
communities could continue to function. At the local level,
he thought the federal relief programs were used
appropriately. He noted that the federal Bipartisan
Infrastructure Law (BIL) did not include funds for major
maintenance projects in schools. For example, the funds
would not replace roofs. He expressed that it was great to
see that there was some potential to save money with
improvements in energy efficiency, but that it would not
address the list of needed school improvements. He
concluded that parallel state investment into schools would
be the best way to leverage efforts from the BIL to improve
things like water, sewer, energy, and power systems.
3:18:29 PM
Representative LeBon thanked Mr. Andreassen for joining the
committee. He wondered what Mr. Andreassen's opinion was on
the appropriate level of responsibility that school
districts and boroughs should have in ongoing major
maintenance projects. He noted that the borough of
Fairbanks owns the FNSB buildings and the school districts
were responsible for day-to-day maintenance of the
buildings. He asked how active FNSB should be in the effort
to keep its school off of the CIP list. He reminded the
committee of the roof replacement issue in Fairbanks.
Mr. Andreassen responded that it was primarily the state's
obligation, and local boroughs and municipalities should
work in partnership with the state. He indicated that just
as state resources were constrained, so were local
governments. Issues such as roof replacements would be
weighed against other issues like homelessness, opioids,
and public safety. Public education was already 30 percent
of most municipalities' budgets. However, without a state
partnership, it would be difficult to meet the needs of
students. The reason for the major maintenance program was
to facilitate cost sharing between state and local
governments.
Representative LeBon thought Mr. Andreasson's response was
fair. He thought it was possible that some of the
maintenance items could have been avoided with preventative
maintenance.
HB 283 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick thanked the presenters for their time. She
reviewed the agenda for the following meeting.
ADJOURNMENT
3:22:58 PM
The meeting was adjourned at 3:23 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| DEED Handout #1 - AS 14.11.035 Final 2022 Report.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #2 - FY2023 State Share Totals by District 1.15.2022.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #3 - Debt Actual % 1976-2022.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #4 - FY2023 Anticipated School Debt Reimbursement.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #5 - FY23ConstructionFinalList.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #6 - FY23ProjectDescriptionsConstruction.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #7 - FY23MaintenanceFinalList.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| DEED Handout #8 - FY23ProjectDescriptionsMaintenance.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| HB 283 3.25.2022 (H)FIN DEED School Capital Funding.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| HB 283 2022_03_25 CEE presentation to House Finance.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 283 |
| HB 281 CS FIN Final v. F.pdf |
HFIN 3/25/2022 1:30:00 PM |
HB 281 |