04/20/1993 08:50 AM Senate FIN

                                                                               
  SENATE BILL NO. 7:                                                           
                                                                               
       An Act relating to reimbursement of school construction                 
       debt; and providing for an effective date.                              
                                                                               
  Co-chair Pearce announced that SB 7 was before the committee                 
  and   that  Judith  M.  Brady,  Executive  Director,  Alaska                 
  Municipal Bond Bank  Authority, was joining the  meeting via                 
  teleconference from Anchorage.  She also invited Robert Poe,                 
  staff for  Senator  Pearce, to  join  the committee  at  the                 
  table.                                                                       
                                                                               
  Co-chair Frank  MOVED for adoption  of SB 7(FIN)  work draft                 
  "E".  Hearing no objections, IT WAS SO ORDERED.                              
                                                                               
  ROBERT POE reviewed  the sectional  analysis (copy on  file)                 
  that outlined SB 7 including grants for school construction,                 
  the review of  the grant  applications by school  districts,                 
  reimbursement of school  debt, and the authorization  of the                 
  Alaska Municipal  Bond Bank to facilitate  the reimbursement                 
  of that school debt.                                                         
                                                                               
  Co-chair  Pearce  pointed  out  that  Senator  Kerttula  had                 
  introduced SB 7 as a school construction reimbursement plan,                 
  and  although there  were some  changes  to CSSB  7(FIN) she                 
  asked him to speak to it.  Senator Kerttula  said that years                 
  had been spent  on the  issue of school  reimbursement.   He                 
  said  that  this legislation  would  provide local  decision                 
  making  with  the  state  supporting  the decision  with  70                 
  percent  funding.   He felt  this bill was  conservative but                 
  would help service the rural areas.                                          
                                                                               
  Senator Kelly  spoke in support  of SB 7  but had a  concern                 
  with  the state supporting 70 percent of all swimming pools.                 
                                                                               
                                                                               
  He also  had concern  with new  programs and  said he  would                 
  prefer  that  traditional  programs  be  funded.   His  last                 
  concern  was  a  $50,000  amount   which  he  considered  an                 
  operational expenditure and not suitable for this bill.  Co-                 
  chair  Frank voiced  his support  regarding Senator  Kelly's                 
  remarks  and  said  he  would  consider amendments  to  that                 
  affect.                                                                      
                                                                               
  GARY BADER, Director, Administrative Services, Department of                 
  Education, said that there were statutes that limit the size                 
  of a swimming pool  or excluded them from programs  that can                 
  be funded.  He agreed to get back to the committee with more                 
  information.                                                                 
                                                                               
  JUDITH BRADY,  via teleconference,  said that  in the  short                 
  time she had  to review  SB 7,  she felt that  it would  not                 
  cause any problems for the bond  bank.  The main concern was                 
  that the  bank would not lose its rating.   She asked if the                 
  municipalities and the  bond bank  would be doing  financing                 
  before a  constitutional amendment  took effect.   When  the                 
  committee  answered  affirmatively, she  asked how  the bond                 
  would be paid  back.  Co-chair Frank asked her  and the bond                 
  council to look at the bill more extensively.  He hoped that                 
  the constitutional amendment  would be passed next  year but                 
  in the meantime,  several school districts would  issue debt                 
  and wanted to know if that would cause problems for the bond                 
  bank.  Ms. Brady said that the bond bank's financial advisor                 
  would forward his ideas about this issue to the committee.                   
                                                                               
  End SFC-93 #64, Side 2                                                       
  Begin SFC-93 #66, Side 1                                                     
                                                                               
  Senator Kerttula said that  the state had a 25  year history                 
  of repayment of  school construction funds  that technically                 
  were not obligations of  the state.  Senator Sharp  asked if                 
  convertible  bonds could  be used  to  lock in  a percentage                 
  difference once those  funds were assured to be dedicated by                 
  the  voters.    Ms.  Brady  said  that was  possible.    She                 
  concurred that the state had a good rating and had never had                 
  a default.  Discussion was had  by Senators Kelly, Frank and                 
  Ms. Brady regarding who was responsible for scrutinizing the                 
  municipality regarding their ability to pay.  The Department                 
  of  Education  would be  involved  in the  grant  and design                 
  criteria.  Mr. Brady suggested that an amendment be added to                 
  the bill making the community's ability to pay as a criteria                 
  for  project  approval.   Mr. Poe  and  Ms. Brady  agreed to                 
  prepare an amendment to CSSB 7(FIN).                                         
                                                                               
  Discussion was had  by Senator Rieger, Co-chairs  Pearce and                 
  Frank regarding an  amendment to  determine a threshold  for                 
  project  costs.    Discussion  was also  had  on  the  words                 
  "alternative education project" on page 3,  lines 13 and 14.                 
  Co-chair Pearce asked  the committee to bring  amendments to                 
  CSSB 7(FIN) as soon as possible.   She announced the end  of                 
                                                                               
                                                                               
  the teleconference part  of the meeting and that CSSB 7(FIN)                 
  would be HELD in committee until April 21, 1993.                             
                                                                               
                         Recess 10:45am                                        
                        Reconvene 10:50am