04/24/2006 10:00 AM House RULES
| Audio | Topic |
|---|---|
| Start | |
| HB13 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| HB 362 | |||
| = | HB 13 | ||
ALASKA STATE LEGISLATURE
HOUSE RULES STANDING COMMITTEE
April 24, 2006
10:12 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative John Coghill
Representative John Harris
Representative Vic Kohring
Representative Lesil McGuire
Representative Ethan Berkowitz
Representative David Guttenberg
MEMBERS ABSENT
All members present
OTHER LEGISLATORS PRESENT
Representative Max Gruenberg
COMMITTEE CALENDAR
HOUSE BILL NO. 13
"An Act relating to reimbursement of municipal bonds for school
construction; and providing for an effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 13
SHORT TITLE: SCHOOL FUNDING & SCHOOL BOND REIMBURSEMNT
SPONSOR(s): REPRESENTATIVE(s) GATTO, GRUENBERG
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) EDU, HES, FIN
01/25/05 (H) EDU AT 11:00 AM CAPITOL 106
01/25/05 (H) -- Meeting Canceled --
02/01/05 (H) EDU AT 11:00 AM CAPITOL 106
02/01/05 (H) Heard & Held
02/01/05 (H) MINUTE(EDU)
02/22/05 (H) EDU AT 11:00 AM CAPITOL 106
02/22/05 (H) -- Meeting Canceled --
03/03/05 (H) EDU AT 11:00 AM CAPITOL 106
03/03/05 (H) Moved Out of Committee
03/03/05 (H) MINUTE(EDU)
03/04/05 (H) EDU RPT 5DP
03/04/05 (H) DP: GARA, GATTO, WILSON, THOMAS, NEUMAN
03/15/05 (H) HES AT 3:00 PM CAPITOL 106
03/15/05 (H) Scheduled But Not Heard
03/22/05 (H) HES AT 3:00 PM CAPITOL 106
03/22/05 (H) <subcommittee meeting>
03/29/05 (H) HES AT 3:00 PM CAPITOL 106
03/29/05 (H) Heard & Held
03/29/05 (H) MINUTE(HES)
04/05/05 (H) HES AT 3:00 PM CAPITOL 106
04/05/05 (H) Heard & Held
04/05/05 (H) MINUTE(HES)
04/07/05 (H) HES AT 3:30 PM CAPITOL 106
04/07/05 (H) <Bill Hearing Postponed>
04/14/05 (H) HES AT 3:00 PM CAPITOL 106
04/14/05 (H) Moved CSHB 13(HES) Out of Committee
04/14/05 (H) MINUTE(HES)
04/15/05 (H) HES RPT CS(HES) NT 4DP 1NR
04/15/05 (H) DP: CISSNA, GARDNER, KOHRING, WILSON;
04/15/05 (H) NR: SEATON
04/20/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/20/05 (H) -- Meeting Canceled --
04/21/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/21/05 (H) Heard & Held
04/21/05 (H) MINUTE(FIN)
04/23/05 (H) FIN AT 10:00 AM HOUSE FINANCE 519
04/23/05 (H) Scheduled But Not Heard
04/26/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/26/05 (H) Heard & Held
04/26/05 (H) MINUTE(FIN)
04/27/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/27/05 (H) Moved CSHB 13(FIN) Out of Committee
04/27/05 (H) MINUTE(FIN)
05/02/05 (H) FIN RPT CS(FIN) NT 6DP 4NR
05/02/05 (H) DP: JOULE, WEYHRAUCH, CROFT, MOSES,
FOSTER, CHENAULT;
05/02/05 (H) NR: HAWKER, HOLM, KELLY, MEYER
04/13/06 (H) RLS AT 1:30 PM CAPITOL 106
04/13/06 (H) -- Meeting Canceled --
04/20/06 (H) RLS AT 9:00 AM CAPITOL 17
04/20/06 (H) Moved CSHB 13(RLS) Out of Committee
04/20/06 (H) MINUTE(RLS)
04/24/06 (H) RLS AT 10:00 AM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE CARL GATTO
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the co-prime sponsor of HB 13.
EDDY JEANS, Director
School Finance
Department of Education and Early Development
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 13, answered
questions.
CAROL COMEAU, Superintendent
Anchorage School District
Anchorage, Alaska
POSITION STATEMENT: Testified on HB 13.
ACTION NARRATIVE
CHAIR NORMAN ROKEBERG called the House Rules Standing Committee
meeting to order at 10:12:31 AM. Representatives Kohring,
McGuire, Berkowitz, Guttenberg, Harris, Coghill, and Rokeberg
were present at the call to order.
HB 13 - SCHOOL CONSTRUCTION BOND REIMBURSEMENT
10:13:07 AM
CHAIR ROKEBERG announced that the first order of business would
be HOUSE BILL NO. 13, "An Act relating to reimbursement of
municipal bonds for school construction; and providing for an
effective date."
REPRESENTATIVE COGHILL moved to rescind the committee's action
in reporting committee substitute (CS) for HB 13, Version 24-
LS0062\R, Mischel, 4/11/06, as amended, from committee. There
being no objection, it was so ordered.
10:13:46 AM
REPRESENTATIVE HARRIS moved to adopt the proposed committee
substitute (CS) for HB 13, Version 24-LS0062\N, Mischel,
4/20/06, as the work draft. There being no objection, Version N
was before the committee.
10:14:05 AM
REPRESENTATIVE CARL GATTO, Alaska State Legislature, as co-prime
sponsor of HB 13, said the proposed legislation began as an
extension of school debt reimbursement, which was originally set
at 70 percent [for one school] and 60 percent [for a second
school]. He noted, for the record, that the Matanuska-Susitna
[school district] will hold an election on May 2, 2006, that
includes the existing 70/60 rate. If that election fails, he
said, the district would be eligible to hold another election
for school bonds. Representative Gatto said the bill has been
modified to a rate of 60/40 percent. He initially indicated
that he could find no language regarding a cap; however, he
amended that and directed attention to page 8, [line 14], which
read:
(1) may not exceed $179,256,000 [$177,256,000];
REPRESENTATIVE GATTO highlighted that Version N would also
change the base student allocation from $4,919 to $5,380. He
offered his understanding that that would be the equivalent of
$96 million.
10:16:09 AM
REPRESENTATIVE GATTO said Representative Joule's school district
was left out and is now included, which he surmised "is probably
what the $2 million addition is about."
10:17:10 AM
EDDY JEANS, Director, School Finance, Department of Education
and Early Development, in response to a question from
Representative Harris, said last year the House Rules Standing
Committee amended SB 73, to include the North Slope Borough, at
a cost of $2 million. He reviewed the new language on page 6,
[paragraphs (16) and (17)], which read as follows:
(16) subject to (h), (i), and (j)(2)-(5) of
this section, and after projects funded by the tax
exempt bonds, notes, or other indebtedness have been
approved by the commissioner, 60 percent of payments
made by a municipality during the fiscal year for the
retirement of principal and interest on outstanding
tax exempt bonds, notes, or other indebtedness
authorized by the qualified voters of the municipality
on or after November 1, 2006, but before November 30,
2008, to pay costs of school construction, additions
to schools, and major rehabilitation projects and
education-related facilities that exceed $200,000, are
approved under AS 14.07.020(a)(11), and are not
reimbursed under (o) of this section;
(17) subject to (h), (i), and (j)(2), (3),
and (5) of this section, 40 percent of payments made
by a municipality during the fiscal year for the
retirement of principal and interest on outstanding
tax exempt bonds, notes, or other indebtedness
authorized by the qualified voters of the municipality
on or after November 1, 2006, but before November 30,
2008, to pay costs of school construction, additions
to schools, and major rehabilitation projects and
education-related facilities that exceed $200,000, are
reviewed under AS 14.07.020(a)(11), and are not
reimbursed under (o) of this section.
MR. JEANS said this is similar to legislation passed under House
Bill 2003 approximately four years ago; although the percentages
are different, the concept is the same. He stated that there
are no caps for those projects authorized between November 2006
and November 2008.
REPRESENTATIVE HARRIS said, "So, anybody that goes out to bond
under the 60 percent in this bill, there's an unlimited amount
at that point?"
MR. JEANS answered that's correct.
10:19:21 AM
REPRESENTATIVE MCGUIRE asked Mr. Jeans if he was part of the
process that formulated the 60/40 split and, if so, why. She
said her district is one of the districts that is growing
exponentially and "we're the folks that are going to be taking
advantage of it." Changing to 60/40 may make things more
difficult [for school districts], she predicted.
MR. JEANS said he did not contribute to the decision for the
60/40; it was a result of a bill recently introduced by
Representative Meyer that would open up the debt program. He
said the 60/40 came from the recommendation that the department
made when it did its report to the legislature regarding the
effectiveness of House Bill 2003. He continued:
And what we found under that bill was during that two-
year window, voters and the department approved almost
$700 million in debt reimbursement, and it was almost
right down the middle; half of them qualified based on
our space guidelines, [and] half of those projects
exceeded our space guidelines. And so, that 10
percent variance in the reimbursement really didn't
deter people from going beyond the department's space
guidelines. So, I would have to say this expanded
variance between the two did come from that report,
but the recommendation to go to 60 percent
reimbursement came from Representative Meyer's bill
that was introduced a couple of weeks ago.
10:21:50 AM
REPRESENTATIVE BERKOWITZ asked if moving to 60 or 70 percent is
just a policy call by the legislature.
MR. JEANS said yes.
REPRESENTATIVE HARRIS said Representative McGuire has a good
point; many areas in the state are having difficulty getting
bonds passed. He inquired as to why one would not make the
level at 70 [percent].
MR. JEANS said he has not raised that issue; the level of
reimbursement through the debt reimbursement program is strictly
a policy call for the legislature to determine. He said he
recommended that the variance between those approved and those
outside of the space guidelines be expanded.
10:22:43 AM
REPRESENTATIVE BERKOWITZ inquired as to the arguments against
going back up to 70 percent.
MR. JEANS said he would not argue one way or the other.
10:23:00 AM
CHAIR ROKEBERG said he is "curious about the 40 percent." He
asked if it is "for the non-qualifying or non-DEED [Department
of Education and Early Development] approved."
MR. JEANS said:
Under house bill 2003, the legislature approved two
reimbursement rates: one at 70 percent if you meet the
department's space guidelines-if you work within those
space guidelines. If you wanted to go beyond the
space guidelines, the legislature said [they] will
participate in 60 percent reimbursement. I'm simply
recommending that that 10 percent variance wasn't
enough to deter people from going beyond the
department's space guidelines. And so I recommended
that the legislature look at that and widen that gap a
little bit.
MR. JEANS said he has found that schools were being authorized
beyond those guidelines, and he suggested looking at that
policy.
REPRESENTATIVE HARRIS asked if too many schools are being built
and classroom sizes are too small.
MR. JEANS clarified that he is not saying too many are being
built, but that they are being built beyond space guidelines.
"With our grant program, you can't get a project that's beyond
the department's space guidelines on that grant list." He said
if a district submits a project over that, the department
reduces the scope of that project.
10:24:51 AM
REPRESENTATIVE GUTTENBERG asked if those guidelines are meant to
constrain the size of hallways, gyms, and other space in order
to ensure that a palace isn't built. He asked if there is a
provision for an architect to design a building 10 percent over
the space guidelines, or if there is a strict limit.
MR. JEANS said the guidelines allocate total square footage, "we
don't even tell the architect that you have to build a gym."
The space allocated is based on the number of students served.
It is up to the designer and school to work together to meet the
needs of that community.
REPRESENTATIVE GUTTENBERG asked if the space limit has no
leeway.
MR. JEANS said that that is correct.
10:26:09 AM
CHAIR ROKEBERG spoke of $96 million and asked why $6 million was
added in the House Finance Committee.
MR. JEANS said the co-chair of the House Finance Committee had
been working on district cost factor adjustments, and money was
added to the base student allocation in order to increase total
revenue while those negotiations continue.
CHAIR ROKEBERG said a chart dated April 4, 2006, shows a loss to
some districts if the Institute of Social and Economic Research
(ISER) proposal on geographical differential is adopted. He
asked if the [additional] money will make up for that.
MR. JEANS said if any adjustment to cost differentials is
adopted by the legislature based on the ISER study, there will
be no loss to any school district. The chart Chair Rokeberg is
looking at is a redistribution of the total amount, and the
negatives are based on the percentage of the total and are not
based on the total state aid districts are receiving.
10:28:53 AM
REPRESENTATIVE HARRIS asked, "Isn't it true that you would have
to bring your number one, or your base, up, to begin with,
before you implemented the study? In other words, if you divide
the amount of money that we have now...and if you divide that
amount by the ISER study, in other words, you took and you
implemented a quarter of it, the big number one school district
would lose."
MR. JEANS said that without new money for redistribution the
larger communities, such as Anchorage and Fairbanks, will pay
for that redistribution; however, if the money is appropriated
with the adjustment, nobody loses.
REPRESENTATIVE HARRIS said the current bill takes the current
base, plus the $96 million that is proposed for the increase,
and divides it under the present formula.
MR. JEANS said that is correct.
REPRESENTATIVE HARRIS said the proposal would divide another $24
million - if it is a quarter of the ISER proposal - in
accordance with that proposal.
MR. JEANS said yes, and there would be an increase to all
districts except Anchorage because Anchorage was the base.
REPRESENTATIVE HARRIS surmised that the $96 million "is sort of
a lead-in to what possibility might be in the future of an
amendment to say, 'to make Anchorage whole you have to add
another $2 million to the pot,' and if you do that, then you can
[indisc.] you end up with a million six, or $6 million total,
two of it to the Anchorage School District and the rest of it
split up. And then you could do the $24 million on ISER;
everybody would be held whole."
MR. JEANS said that is his understanding.
10:31:29 AM
REPRESENTATIVE MCGUIRE said her frustration is "to get this
right," and she wants a fair formula. "And so we elicit these
studies; they come back and we seem to find flaws in them," she
noted. She said the committee has been thinking about doing
another study with firms with better expertise. She said the
area cost differential is a problem, but also Anchorage,
Matanuska-Susitna, and Fairbanks are growing "by leaps and
bounds." The current formula takes into account the number of
students, but "some of us believe that for every student that
you add, it may not go up quite enough to cover the costs." She
said the people in Wrangell and Petersburg are suffering, "so
here we are at the end of session trying to put a Band-Aid on a
gaping wound once again." She said there needs to be a solution
and asked for Mr. Jeans' leadership in trying to find a formula.
10:33:16 AM
REPRESENTATIVE BERKOWITZ said many on the committee weren't
present when Senate Bill 36 was enacted, but he remembers the
debate. He noted that it passed because it was the first time
in many years that the legislature added money to the foundation
formula. He said that purchased a lot of support among
legislators who were skeptical about its allocation component.
He said there were extensive commitments to fix [the formula].
He said every time there is a study to suggest how to repair the
flaws, those studies get ignored. "And every year there's some
brute force solving of some of the problems that are built in to
Senate Bill 36. It is not a well formula. It is a formula that
should be fixed." He said a future legislature will have to do
it. He said there is an eroding floor for rural areas.
CHAIR ROKEBERG said he agreed. He was around for Senate Bill
36, and there was a mandate to require studies, and there have
been at least three formal studies of which none have been
accepted by the legislature for a variety of reasons. He agreed
that "brute force" is used to get a budget bill by the end of
the year. He said there was a clear recognition that Senate
Bill 36 was not a finished product because of the cost
differential.
10:36:08 AM
REPRESENTATIVE GATTO noted that Anchorage gets a third of the
money the legislature distributes. Adding $90 million means
Anchorage will get $30 million, but it needed $32 million, so $6
million was added. Now Anchorage is fine, but dealing with the
ISER study with no new money means that Anchorage's funding
drops. "So, in order to bring Anchorage back to a one, you have
to add a certain amount of money to ISER. My understanding is,
at a quarter ISER, we're going to need about $24 million. So we
will probably see that amendment for $24 million." He said that
would be a permanent fix, so next year for every dollar added,
Anchorage won't get the $0.33 it got under Senate Bill 36; it
will get $0.31. "If we don't add the extra money, Anchorage
losses. If we do add the extra money and make it permanent, the
next year Anchorage will get a smaller portion," as will
Fairbanks and the Matanuska-Susitna area, he stated.
10:39:09 AM
CAROL COMEAU, Superintendent, Anchorage School District, said it
is very important for the Anchorage base to increase "if the
ISER-something is added." She noted her support for an increase
for the other districts, "but we also can't accept that
Anchorage would not be made whole." She expressed concern that
getting the $2 million back would make the district whole, but
it allows for no enhancements. Although such action would
restore some of the cuts, it wouldn't restore all of them
because some have been redirected. She spoke of a career center
that is critical and needs to be continued. She said there are
many initiatives that the board is interested in, but those can
not be funded even with the $96 million. She added that the 60
percent is not just space guideline, but there are a number of
alternative programs, which needed remodeling, as well as the
Eagle River High School. She said she could not get voter
approval for 70 percent of the new high school because:
you look at the whole district population and high
schools, and we could qualify as a district, but we
clearly knew that the Eagle River High School needed
to be in Eagle River and not bussing a whole range of
students from North Anchorage to fill it up. That is
one of the arguments we made that sometimes some of
our alternative programs that have a defined
population need to be upgraded, and so we pushed hard
for the 60 percent back when that passed and it's been
very helpful to our community, so that our schools
that meet the E.D.'s qualifications ... are eligible
for 70 percent. The other are 60 percent. So that's
been very important to us. With our failure of our
bonds on April 4, we're very concerned that 60/40 is
going to be a very negative message to the taxpayers
who already voted down the bonds at 70/60 percent.
And with the cap, that we were only eligible to submit
$62 million worth of projects when we had
substantially more project need, that also raised the
cost to the taxpayers, and that they weren't willing
to accept.
MS. COMEAU said she would take the 60/40 because she is not sure
she could get the support from the community for a special
election.
10:42:31 AM
CHAIR ROKEBERG asked Ms. Comeau to comment on putting a quarter
of the ISER plan into the formula.
MS. COMEAU expressed that unless the base was raised, merely
adding the quarter in for ISER is going to be a detriment to
Anchorage. She opined that the aforementioned is a negative
factor because of the number and complexity of students
Anchorage is receiving, including bilingual and special
education students. She said the federal funding is not "coming
along to support some of those populations."
CHAIR ROKEBERG suggested there would be an eroding floor for
Anchorage and other large school districts without sufficient
appropriations.
MS. COMEAU said yes. In response to Representative Berkowitz,
Ms. Comeau said that the retirement system cost was $13 million
and utilities increased an average of 14 percent.
10:45:06 AM
REPRESENTATIVE MCGUIRE asked about an amendment to change the 60
percent to 70 percent, "would you need a corresponding increase
in the total cap?"
MS. COMEAU said she would like the 70 percent back with no cap
because her community will not support unlimited projects.
REPRESENTATIVE HARRIS said that the voters will determine the
cap.
MS. COMEAU said, "We feel that part of the reason some of our
bonds went down is because we couldn't submit all of our
projects for debt reimbursement because of the cap. And then,
as you know, once we submitted the request to have the debt
reimbursement approval, our other project went off the list.
So, we're not able to access the state list either, except for a
few of our projects that we did not submit for approval."
The committee took a brief at-ease at 10:47 a.m.
[HB 13 was held over.]
ADJOURNMENT
10:48:24 AM
The House Rules Standing Committee was recessed at 10:48 a.m. to
a call of the chair. [The meeting was never reconvened.]
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