Legislature(2021 - 2022)ADAMS 519
04/27/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB413 | |
| HB350 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 283 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 413 | TELECONFERENCED | |
| += | HB 350 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 27, 2022
1:40 p.m.
1:40:14 PM
CALL TO ORDER
Co-Chair Merrick called the House Finance Committee meeting
to order at 1:40 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 DeLena Johnson
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Representative Harriet Drummond, Co-Chair, House Education
Committee; Andrew Leavitt, Director of Budget and Finance,
Lower Yukon School District.
PRESENT VIA TELECONFERENCE
Gene Stone, Chief School Administrator, Lower Yukon School
District; Elwin Blackwell, School Finance Manager,
Department of Education and Early Development; Dr. Lisa
Parady, Executive Director, Alaska Council of School
Administrators; Nils Andreassen, Executive Director, Alaska
Municipal League; Peter Hoepfner, President, Association of
Alaska School Boards; Jim Anderson, Chief Finance Officer,
Anchorage School District.
SUMMARY
HB 350 SCHOOL BOND DEBT REIMBURSEMENT
HB 350 was HEARD and HELD in committee for
further consideration.
HB 413 FACILITIES CONSTITUTING A SCHOOL
HB 413 was HEARD and HELD in committee for
further consideration.
Co-Chair Merrick reviewed the agenda for the day.
HOUSE BILL NO. 413
"An Act relating to facilities constituting a school;
and providing for an effective date."
1:40:43 PM
REPRESENTATIVE HARRIET DRUMMOND, CO-CHAIR, HOUSE EDUCATION
COMMITTEE, indicated the House Education Committee
introduced HB 413. She read a portion of the sponsor
statement (copy on file):
House Bill 413 seeks to remedy a technical problem in
the education funding formula which is occurring in
Hooper Bay and affects the entire Lower Yukon School
District. The problem occurs when a district with a
single school with more than 425 students opens a
charter school, which Hooper Bay recently did.
Under current law, the existence of the charter school
implies that there is no longer "only one facility
administered as a school." Consequently, the district
must calculate the adjusted ADM in the public school
with a lower school size factor. As a result, opening
a charter school in such a district comes with a
financial penalty of about $1 million per year.
HB 413 adds three words to existing law: "excluding
charter schools." These three words allow the district
to restore its full funding and remove the
disincentive a school board faces when considering a
charter school application.
While one might see the fiscal note as a $1 million
per year funding increase, this is really not the
case, because this bill would simply restore the
previous level of funding to the district.
The House Education Committee supports charter
schools, and Hooper Bay, and the Lower Yukon School
District and requests your support in removing this
barrier to ensure they are available to students
across the state.
Representative Drummond indicated there were a number of
invited testifiers.
1:43:30 PM
GENE STONE, CHIEF SCHOOL ADMINISTRATOR, LOWER YUKON SCHOOL
DISTRICT (via teleconference), read a prepared statement:
On behalf of the Lower Yukon School District (LYSD),
allow me to express our appreciation for scheduling HB
413.
The Lower Yukon School District is in full support of
HB 413. HB 413 will remedy a funding issue that
unfairly penalizes the Lower Yukon School District for
opening a charter school in Hooper Bay.
The penalty within the statute for adding a charter
school in Hooper Bay resulted in an annual reduction
in funding of $1,033,000 for FY 2021, and $1,021,000
for FY 2022. Until this funding penalty is remedied,
LYSD will lose approximately $1 million each year.
The district operates two separate educational
programs in the Hooper Bay School; the conventional K-
12 school a 4th - 8th grade charter school that
features a culturally relevant, place-based learning
curriculum for its students. Additionally, the school
has a K-3 Yupik Immersion program but is not part of
the charter school and functions as part of the
conventional school as a special program.
Some may argue that HB 413 has a fiscal note to the
State of Alaska of $1 million annually.
LYSD sees the opposite; to date our loss of foundation
funding has resulted in fiscal surplus to the state of
$2 million dollars for FY 21 and FY 22.
As a result of the Hooper Bay Charter School, our
district has same number of students - the exact same
students- inside of the same school building- and yet
we realize a funding penalty of over $1 million per
year.
By adding the three words "excluding charter schools"
to AS 14.17.905, the annual funding penalty is
remedied and it becomes feasible to fund Hooper Bay's
Charter School. As it stands now, the statute is
punitive and this unintended $1 million annual funding
penalty impacts our entire school district and
effectively jeopardizes rural Alaskans' access to
school choice.
HB 413 would remedy this funding problem and support
charter school equity for rural Alaska school
districts.
Thank you for sponsoring and scheduling this
legislation, thank you for your time and consideration
and I'm open for any questions.
1:46:37 PM
Co-Chair Merrick reported that Representative Thompson had
joined the meeting.
ANDREW LEAVITT, DIRECTOR OF BUDGET AND FINANCE, LOWER YUKON
SCHOOL DISTRICT, did not have any extra testimony but was
available for questions.
Vice-Chair Ortiz asked what in the base student allocation
(BSA) funding formula caused the unique situation. He
wondered if any other schools would be impacted if the bill
were to pass.
Mr. Leavitt responded that when a school's average daily
membership (ADM) was below 425 students, the school would
receive two adjustments. If ADM was 426, the school would
receive one adjustment. One of the adjustments was a
penalty of about one million dollars. When the charter
school opened in Hooper Bay two years prior, the ADM
exceeded 425 which meant that the original school received
only one adjustment. He explained that Hooper Bay was the
only community with an applicable population level and
other communities were not affected.
Vice-Chair Ortiz asked if the term "school" referred to a
building or a name.
Mr. Leavitt replied that the term referred to the
administration of the school. The term did not refer to the
actual school building. Even if two schools were housed
within the same building, the two schools were considered
separate for funding purposes.
1:50:35 PM
Representative Wool was trying to understand how a charter
school that was within another school building could be
considered a separate school. He wondered if there was
another funding mechanism that would maintain the
functionality without losing funding.
Mr. Leavitt had attempted to find other options to solve
the issue. However, the only viable options were too
complicated. If the charter school was closed it would
solve the problem, but the charter school would lose its
independence.
Representative Wool asked if the charter school had a
separate principal and educational methodology. He
suggested that it was a distinctively different school.
Mr. Leavitt agreed that the charter school was separate.
The charter school was for fourth to eighth grade students
and the educational methodology was more place-based and
experiential. A fourth-grade student could decide if they
would like to go to the traditional school or the charter
school.
Representative LeBon asked if the charter school paid rent
when it was embedded within a traditional school building.
Mr. Leavitt responded that it was not charged with a rent
or facility charge. According to state law, charter schools
were allowed to obtain space within existing school
facilities. However, the charter school was responsible for
its own janitorial services.
Representative LeBon suggested the charter school's
operating costs would not subtract from the district's
financial overhead.
Mr. Leavitt responded that he was correct.
1:54:31 PM
Representative Carpenter asked what the charter school was
offering that the Hooper Bay School was not.
Mr. Leavitt deferred to Mr. Stone.
1:55:34 PM
Mr. Stone responded that he would not describe it as a
division of schools, but as a school choice. Community
members and families wanted to preserve cultural
experiences and language and incorporate the elements into
a school setting for children. Some people in rural Alaska
wanted their children to have traditional educational
experiences, some preferred the experiential charter school
option, and others wanted to send their children to
boarding schools or enroll them in correspondence
education. He thought the choice was driven by cultural
preservation and values.
Representative Carpenter asked when the charter school in
Hooper Bay opened.
Mr. Stone replied that there was an attempt to open a
charter school in 2014 but it took some time to organize
it. The school was approved by the Board of Education in
2020.
Representative Carpenter explained that he thought it was a
division because the total number of students in Hooper Bay
was a combination of the ADM of both schools. He thought
the administration could have acted to incorporate more
cultural experiences into the traditional school instead of
opening a charter school. He thought there was an
administrative solution and if the need for cultural
enrichment and language had been addressed, there would not
be the need for a charter school.
Mr. Stone wondered if Representative Carpenter would
perceive all charter schools in the same manner. The
administration already provided bilingual programs
throughout the district. There was a segment of families
that wanted a choice for their children and an emphasis on
place-based education.
2:01:24 PM
Representative Carpenter responded that his question was
meant to be technical in nature. He wondered if there were
administrative options to address cultural and language
deficiencies. There were many parents in the state who
found public schools to be lacking and decided to place
their children in alternative education. He thought the
problem was systemic in nature.
Mr. Stone replied that the Hooper Bay school had enhanced
its cultural offerings. He explained that it was simple to
infuse charter schools with grant opportunities. Some
people simply wanted a locally controlled school in the
form of a charter school. An additional benefit of charter
schools was offering some relief in terms of overcrowded
public schools. The ability to offer choice in schooling
was provided through statute.
Representative Carpenter assumed the charter school
students received a comparable education to the public-
school students. He wondered if it had been considered to
convert the entire Hooper Bay school into a charter school.
Mr. Stone relayed that a charter school handled fourth
through eighth grade and the modeling to expand had not
happened. He noted there was an option to explore trade
school education for some high school students. He thought
needs were being addressed but that it was not a "one size
fits all" model.
Representative Carpenter thought there was a solution, and
the bill was a band-aid.
Vice-Chair Ortiz commented that he had been a charter
school principal in the past and had some experience in the
matter. The charter school at which he worked occupied one
building in conjunction with another charter school. He was
aware of the enrollment requirements to qualify for
funding. He asked why Hooper Bay was not allowed to exist
within the current BSA formula at the ideal funding level.
Mr. Leavitt responded that the situation was unique because
the school was a single site that offered kindergarten
through twelfth grade. There typically would be an
adjustment based on the population of the school. When
there were two schools under the same roof, the charter
school would receive funding, but the regular school would
not. The problem only occurred when there was one community
with one school that spanned all grade levels over the ADM
cap of 425.
Representative Edgmon asked for clarification on the ADM
composition.
Mr. Leavitt reiterated that the ADM was 425.
Representative Edmon asked how many students were in Hooper
Bay.
Mr. Leavitt responded that Hooper Bay had around 480
students in total.
Representative Edgmon indicated Dillingham had 420 students
within the community of about 2,400 people. He wondered
what the impact of the bill might be in Dillingham.
2:12:35 PM
Mr. Stone responded that depending on the grade levels,
elementary classrooms were averaging around 23 students per
classroom, middle school was averaging around 24, and high
school was averaging around 20. The charter school averaged
around 15 students per classroom. The classroom size was
not necessarily the issue.
Representative Edgmon spoke in support of the bill. He
suggested doing a full forensic analysis of other charter
schools in the state.
Representative Wool understood that a strange idiosyncrasy
with the BSA was the reason for the bill. He thought that
the average numbers of students per classroom mentioned by
Mr. Stone were better than his children had experienced in
Fairbanks. He asked if the BSA for the charter school
supported the school. He wondered if the charter school was
treated as financially separate from the public school.
Co-Chair Merrick called on Mr. Elwin Blackwell to respond.
2:16:51 PM
ELWIN BLACKWELL, SCHOOL FINANCE MANAGER, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT (via teleconference),
responded that all funding generated by a charter school
had to be given to the charter school for its
administration and funding. There could be some monies that
could be retained by the school district through the
agreement between the school district and the charter
school. Any retained money would have to be allowed as part
of the charter school agreement with the district. Although
the charter school generated funding through the foundation
funding formula, all funding had to go to the charter
school to fund the program.
Representative Wool thought half of his question had been
answered. He wondered if there was relief available if the
charter school was short on funds, or if the
insufficiencies were solely the responsibility of the
charter school.
Mr. Blackwell did not know the answer. He assumed it would
be up to the charter school and the school district to make
a determination.
2:19:29 PM
Representative Josephson asked if the charter school had
been short a million dollars in FY 21 and FY 22.
Mr. Leavitt responded in the affirmative.
Representative Josephson asked for the total grant funding
amount.
Mr. Leavitt thought the total state funding was $55
million.
Representative Josephson suggested that the district lost
two to three percent of its funding.
Mr. Leavitt responded that he was correct. There were many
teacher cuts and reserves were starting to be depleted.
Representative Josephson thought that new staff and new
supplies were needed but not received.
Co-Chair Foster thought it was imperative to pass the bill
and he would be supporting it. He thanked the bill sponsor
for bringing the legislation forward. He reiterated the
substantial cut to the school district. He asked how many
schools were in the district that experienced a $55 million
cut in funding.
Mr. Leavitt replied there were ten schools in addition to
the charter school and the career academy.
Representative Carpenter wanted to support the bill. He
thought charter schools were an important part of the
school system.
2:23:38 PM
Co-Chair Foster OPENED public testimony.
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster asked Mr. Blackwell to review the two
fiscal notes.
Mr. Blackwell discussed the zero fiscal note from the
Department of Education and Early Development with control
code rDdlo. He explained that it was provided for
explanatory purposes only and would incur no costs to the
state. He moved to discuss the second fiscal note from
Department of Education and Early Development with a
control code of KaqET. He explained the note represented
the capitalization of the public education fund. The fiscal
note was based on FY 23 projected numbers and would incur a
cost of $1.87 million to fund the bill. He was happy to
answer questions on the fiscal notes.
2:26:12 PM
Representative Rasmussen wanted to verify that the funding
described by the second fiscal note would not be affected
by the reverse sweep.
Mr. Blackwell understood that the general fund deposit into
the education fund was not sweep-able. If money was
deposited into the education fund, it would remain there.
2:27:06 PM
Representative Carpenter had a question for Legislative
Legal Services.
Co-Chair Foster responded that Legislative Legal Services
was not online.
Representative Carpenter asked if an alternative school was
synonymous with a charter school as according to statute.
Co-Chair Foster noted the question for Legislative Legal
Services.
Co-Chair Foster set the bill aside. Amendments were due
Monday, May 2, 2022, by noon.
HB 413 was HEARD and HELD in committee for further
consideration.
#hb350
HOUSE BILL NO. 350
"An Act relating to school bond debt reimbursement;
and providing for an effective date."
2:28:59 PM
REPRESENTATIVE HARRIET DRUMMOND, CO-CHAIR, HOUSE EDUCATION
COMMITTEE, read the sponsor statement (copy on file):
As a result of the passage of Senate Bill 64 in April
2015, the state of Alaska stopped reimbursing new
school bond debt that could have been put before the
voters of at least 21 school districts, because the
state was suffering serious revenue shortfalls. The
state has, however, continued to pay down the debt
from school bonds passed prior to 2015. SB 64 passed
just a few days before Anchorage's spring election day
with a retroactive date of January 1, 2015. So,
starting in the spring of 2015, Anchorage taxpayers
have been paying more for new school bonds presented
to the voters than they would have had the moratorium
not been set by the legislature. And in 2020, since
the state was still having serious revenue issues, HB
106 extended the moratorium to 2025.
School bonds are critically important to school
districts, to build new schools and keep older
facilities running. Bonds pay for a variety of
construction and maintenance projects, such as new
boilers, roof replacements, security improvements, and
more. School districts spend a substantial amount on
regular maintenance out of their operating budgets to
keep their buildings in good repair and their students
and staff in safe and healthy schools. But as schools
age, and thousands of kids and staff troop in and out
of them every day, things wear out and day to day
maintenance just can't cover the needs adequately, and
so districts have to bring forward carefully
considered bond issues, developed in consultation with
their school communities as well as with their local
governments.
Currently the school bond debt moratorium is set to
end July 1, 2025. HB 350 would change that to end on
July 1, 2022, and school districts could again count
on help from the state to help pay for school bond
debt and save their taxpayers money.
The 2015 legislation also decreased the rate that the
state reimbursed communities to 40 percent or 50
percent, depending on whether the bonds covered new
construction or major maintenance. HB 350 seeks to
increase the reimbursable school bond debt back to the
original 60 percent or 70 percent from the state.
Alaska taxpayers and school districts can no longer
afford to pay the full price for essential maintenance
and construction of public schools in our state. There
are over 500 school facilities among the 54 school
districts in our state, and they all suffer from
similar maintenance issues, and some need to be
replaced with new schools as some older schools are
simply uneconomic to keep repairing.
The Institute of Social and Economic Research at UA
studied this issue in 2021. They found that Alaska is
underfunding school maintenance and school districts
are falling behind big time in addressing maintenance
problems. ISER noted that since the moratorium started
in 2015, only Anchorage and the North Slope Borough
have approved new school bonds.
The Legislature is mandated to spend a certain amount
of funding on rural schools in communities that don't
have taxing authority, so those schools are guaranteed
a certain minimum amount of funding. But
municipalities don't have that kind of guarantee and
so are falling behind.
I urge your support of this legislation and ask that
you please reach out to my office with any questions
or concerns.
2:38:11 PM
Representative Josephson asked if the outlay was larger
than $60 million to $80 million annually prior to the 2014
recession.
Representative Drummond did not bring the history with her
but would bring it to the next bill hearing. The demand
existed and communities needed help.
Representative Josephson thought many issues like school
funding went back to the structure of the state and making
choices like implementing boroughs instead of counties.
Representative Drummond replied that, historically, when
bond issues had passed in Anchorage, the tax cap increased
to accommodate the changes approved by the voters. She
relayed that it was important to know how much bond debt
was retired in the prior year.
2:41:39 PM
Co-Chair Merrick indicated there were five invited
testifiers online. She invited Mr. Elwin Blackwell to
begin.
ELWIN BLACKWELL, SCHOOL FINANCE MANAGER, DEPARTMENT OF
EDUCATION AND EARLY DEVELOPMENT (via teleconference), was
available for questions. He could respond to Representative
Josephson's earlier question about the history of the debt
reimbursement program. Currently, the state owed $75
million for debt bond reimbursement through the existing
program. However, when the program reached its sunset date,
the annual reimbursement was in excess of $100 million. If
the bill passed, it was reasonable to expect the annual
reimbursement amount to grow over time.
2:43:46 PM
JIM ANDERSON, CHIEF FINANCE OFFICER, ANCHORAGE SCHOOL
DISTRICT (via teleconference), spoke in support of HB 350.
He relayed that the governor had vetoed over $83 million of
state bond debt reimbursement from FY 17 through FY 22. The
Anchorage School District (ASD) had 91 facilities worth
over $2 billion and the average facility age was 36 years
old. He relayed that 12 facilities were over 60 years old.
The district had $100 million in deferred maintenance about
12 years ago, but currently had over $800 million in
differed maintenance and it was growing by three to four
percent per year. The moratorium on school bond debt and
the shift in cost funding had a significant impact on the
district's ability to sustain its facilities through
bonding. The district had always tried to pay off more
debts than it bonded, but that did not account for the
value of the bond changing over time. It meant that the
district received less and less funding each year through
bonds. He thought HB 350 would be a welcome relief to
Anchorage taxpayers.
2:47:12 PM
Representative Rasmussen asked for the difference between
ASD's fiscal footprint in 2022 compared to 2002.
Mr. Anderson could supply the committee with the
information she requested at a later date.
Representative Rasmussen asked if Mr. Anderson could also
offer a list of average student attendance numbers in ASD.
Mr. Anderson would supply the information to the committee.
2:48:31 PM
DR. LISA PARADY, EXECUTIVE DIRECTOR, ALASKA COUNCIL OF
SCHOOL ADMINISTRATORS (via teleconference), spoke in
support of HB 350. She explained that each year, members of
the Alaska Council of School Administrators (ACSA) worked
together to develop joint position statements. The
statements discussed the highest priorities for higher
education policy positions. School safety was one of the
highest priorities in the current year's joint position
statement. She emphasized that ASCA supported student
safety and therefore supported capital funding projects
that provided a safe and healthy learning environment to
students.
Dr. Parady indicated that in 2019, 44 percent of schools in
the state were over 40 years old. There was a study
conducted by ACSA that found that, of the 38 districts that
participated in the study, 10 percent of schools reported
major maintenance needs ranking from $1 million to $10
million. She relayed that 61 percent of schools districts
responded "there's no point" when asked why the district
did not request funding from the state. The application
process was expensive and there was little return-on-
investment. She provided some examples of major maintenance
needs in schools, such as new heating and air conditioning
systems. Since the moratorium was implemented in 2015, many
schools had been deferring major maintenance needs. In
2019, 21 boroughs had bond debt totaling $1 billion.
Sunsetting the moratorium to July of 2022 and changing the
major maintenance amount by 20 percent as proposed by the
bill would help alleviate major maintenance needs and help
ensure safety for students.
2:53:32 PM
NILS ANDREASSEN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE (via teleconference), spoke in support of HB 350.
Alaska Municipal League (AML) members were interested in
the bill. He agreed schools had experienced a significant
lack of return-on-investment when asking for funds from the
state. It was worth knowing that when looking back on the
schools that had submitted projects to the state in the
previous 30 years, there was only an eight percent chance
that the project was funded. The removal of the moratorium
of the school bond debt reimbursement program would reduce
pressure on the maintenance and construction grant program
and increase partnership between local government and the
state. He thought a good starting place would be the six-
year plan that every district was required to create to
identify its needs. The value of the current FY 23 plan was
about $1.42 billion. He wanted to know how the state
planned to meet that need over the next six years. He noted
that the total plan value should be closer to $2.5 billion
as many schools did not report major maintenance projects
to the state due to lack of confidence. He reported some
sensitivity regarding the program, as it had faced an
uncertain funding mechanism. The failure to reimburse had
meant a depletion of trust that the state would fulfill
future obligations. Support was welcome, but entities would
continue to proceed with caution. He was available for
questions.
2:58:12 PM
PETER HOEPFNER, PRESIDENT, ASSOCIATION OF ALASKA SCHOOL
BOARDS (via teleconference), supported HB 350 and thanked
Representative Drummond for bringing the bill forward. The
Alaska Association of School Boards (AASB) also had a
resolution supporting the legislation. He did not think
implementing bans ever worked and banning school
construction was no different. The moratorium had only
caused costs to skyrocket. He suggested that if a school
needed construction seven years ago, it still needed it
today, but the project was now likely to be more
substantial and more expensive. He indicated maintenance
departments were holding buildings together with duct tape
and bubble gum and wasting time trying to maintain failing
systems. He appreciated returning to the 60 to 70 percent
reimbursement rates that were in place prior to the
moratorium. The high school in Cordova was built in 1965
and Cordova was handed a $1.5 million bill for construction
projects. He relayed that local contribution to education
was reduced due to the expense. He did not want Alaskans to
lose faith and trust in Alaska. He appreciated
consideration of HB 350.
3:01:33 PM
Representative LeBon asked if the construction of the
school in Cordova was built with a voter-approved school
bond in 1965.
Mr. Hoepfner could not accurately answer the question as
the construction had occurred before his time. However, he
offered that the elementary school in Cordova built in 1958
had just been redone with approval by the voters. The
unintended consequences of the state failing to meet its
obligations was disappointing.
Representative LeBon asked if the community would expect to
receive funding from the state if the school needed capital
maintenance or repair. Alternatively, he wondered whether a
bond would be posed to voters.
Mr. Hoepfner responded that it would be a bond issue. He
suggested there were too many other entities in need of
funding that would remain higher on the capital improvement
project list of priorities ahead of Cordova. He thought
Cordova was fortunate to be able to utilize bonds. However,
the failed obligation created uncertainty amongst
constituents, and he did not know if voters would continue
to approve bonds.
Representative LeBon considered a scenario where the
community thought the school needed repair and approved the
bonds. He asked if the community believed HB 350 was the
catalyst for supporting the project or whether it would
simply address the need and move forward. He asked Mr.
Hoepfner for his insight on what Cordova would do if the
bill did not pass but acknowledged that it might be
impossible to know.
Mr. Hoepfner responded that construction costs would
increase the longer the project was put off. The community
of Cordova supported and valued its students and hoped that
the funding rate of 60 to 70 percent would be achieved.
Co-Chair Merrick invited Mr. Blackwell to review the fiscal
note by the Department of Education and Early Development
with a control code of cYLqt.
Mr. Blackwell reviewed the indeterminate fiscal note. It
was indeterminate because the department could not
anticipate how many municipalities would seek voter
approval for new school capital debt under the program. The
department anticipated that at least some of the
municipalities would issue debt. Since the fiscal note was
written, he found out that three municipalities were
looking to go to voter approval for bonds. He noted that
the bill returned the reimbursement percentages back to
where they had been before at 60 percent and 70 percent.
The earliest any new school debt would be apparent in the
budget would be FY 24.
3:10:12 PM
Representative Wool noticed there were two reimbursement
rates: 60 percent and 70 percent. He wondered which applied
to new construction.
Mr. Blackwell explained that major maintenance projects
would receive 70 percent reimbursement. However, it was
possible for new construction to be reimbursed at 70
percent if the project qualified for the requested new
space based on the department's space guidelines. If it did
not qualify, a school could still get reimbursed at 60
percent.
Representative Wool wondered if increasing the
reimbursement rates to 60 and 70 percent would create a
"bond garage sale." He wondered about the implications of
changing the rates.
Mr. Blackwell did not have a specific projection. It would
depend on the voters and the municipalities and there were
several contingencies to consider. He relayed that voters
recently turned down a bond proposition in Anchorage and he
could not forecast how many municipalities would jump into
the debt reimbursement program. He suggested the program
would only grow slightly in the short-term, but it could
grow significantly in the future.
Representative Wool commented that a reimbursement rate of
zero percent was presented to the voters in Anchorage in
the bond proposition mentioned by Mr. Blackwell. He thought
the 60 to 70 percent rate would tip the scales in favor of
voters approving the bonds.
3:14:42 PM
Representative Carpenter asked if there would there be a
guarantee to the municipalities, boroughs, and voters that
the 70 percent reimbursement rate would be honored in
following years if the bill passed and the moratorium was
lifted.
Mr. Blackwell responded there would not be a statement of
guaranteed payment because the annual payments would still
be subject to appropriation by the legislature.
Representative Carpenter noted that one of the testifiers
suggested that the state was obligated to pay bonds. He
asked if there had ever been a guarantee of reimbursement
under the program prior to the establishment of the
moratorium.
Mr. Blackwell responded that there had never been a
communication to municipalities that they were guaranteed
the amount at the reimbursement rate. It had always been
communicated that the amount would be subject to
legislative appropriation.
Representative Carpenter asked if there was an aggregate
limit in terms of the number of municipalities who could
take advantage of the increased reimbursement rates.
Mr. Blackwell responded that there was no cap on the number
of projects that could be approved under the bill. He
relayed that it was a matter of how many municipalities
would be able to get voters to approve bond issues.
Representative Carpenter thought that it sounded like if
the bill were to pass, the state would be issuing a blank
check to municipalities before the legislature's fiscal
accounts were in order. He was not convinced enough to
support the bill.
HB 350 was HEARD and HELD in committee for further
consideration.
Co-Chair Merrick reviewed the agenda for the following
meeting.
ADJOURNMENT
3:18:48 PM
The meeting was adjourned at 3:18 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 4.13.2022 (H)EDC Hearing DEED Follow-Up.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 413 |
| HB 413 and SB 236 Analysis by David Means, Legislative Data Analyst, ALASBO.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 413 SB 236 |
| HB 413 DEED funding chart.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 413 |
| HB 413 SB 236 LYSD Letter.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 413 SB 236 |
| HB 413 Sponsor Statement.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 413 |
| Supporting Testimony for HB 413 LYSD.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 413 |
| HB 350 ASD Bond Debt vs Facility Backlog for HB 350 070121.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 350 |
| HB 350 Sponsor Statement Ver. 2.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 350 |
| HB 350 Public Testimony Rec'd by 042722.pdf |
HFIN 4/27/2022 1:30:00 PM |
HB 350 |