04/07/1997 09:12 AM Senate FIN

                                                                               
       CS FOR SENATE BILL NO. 11(HES)                                          
                                                                               
       "An Act relating  to state aid for  school construction                 
  debt;     and providing for an effective date."                              
                                                                               
  Senator Sharp convened the session and outlined the schedule                 
  for the  morning.   He first  called SB  11.   He noted  the                 
  session was  to  be  on teleconference  but  there  were  no                 
  available operators this  morning.   However, the bill  will                 
  not  be  moved out  of  committee  today and  there  will be                 
  further opportunity for teleconference.                                      
                                                                               
  Brett Huber,  staff to Senator  Halford was invited  to join                 
  the committee.  This  bill was introduced to  re-establish a                 
  program  for  the  state to  share  in  the  cost of  school                 
  construction in the municipal school district.  AS 14.11.100                 
                                                                               
                                                                               
  provides  the  mechanism  for  local  government to  be  re-                 
  imbursed  for  a portion  of the  debt  service they  pay on                 
  school construction  projects, providing they  have received                 
  Department of Education approval and have been approved by a                 
  local vote.   In  unorganized areas  it is  usually done  by                 
  capital  appropriation.     Municipal  districts  and  their                 
  taxpayers have been left with  virtually no state assistance                 
  for school construction.  Passage of this bill would re-open                 
  the debt re-imbursement  program  to new projects  and allow                 
  municipal  school  districts  and their  taxpayers  help  in                 
  meeting  the  demands  of growing  student  population.   He                 
  further described the operative sections of CSSB 11(HES) for                 
  the  benefit  of the  committee  at the  request  of Senator                 
  Parnell.                                                                     
                                                                               
  Senator Phillips referred to section 9, page 4 and noted the                 
  original bill did  not have  anything.  Mr.  Huber said  the                 
  original bill was  at a  prospective re-imbursement of  50%.                 
  He said there was  an amendment offered by the  sponsor that                 
  both opened the retroactive  window of the bill and  set the                 
  prospective re-imbursement level at 70%.   The HES committee                 
  further  amended and  adjusted the amount  to 75%.   Senator                 
  Phillips said  he would wait to pose further questions until                 
  the department could be present  and would propose amendment                 
  at that time.                                                                
                                                                               
  Senator Adams said  that he supported  the bill but that  it                 
  had inequities.    He noted that the fiscal note had errors.                 
  Mr.  Huber  said  he  also  had  a  question  regarding  the                 
  operating  expenditure  in  FY  '99.   This  was  attributed                 
  because of the  local bond  package that was  passed in  the                 
  Mat-Su for the  schools in October 1995.  The bonds have not                 
  been  sold,  the  funds  would not  be  encumbered  and  the                 
  district  would  not have  the  opportunity to  make  a debt                 
  service  in time to meet the  qualifications for FY '99.  In                 
  speaking with the  school district he said they  advised the                 
  first year the  bill would have a determinable fiscal impact                 
  would  be FY 2000.  Senator Adams  further noted there was a                 
  retroactive  clause.    This  would  go  back  and  pick  up                 
  something the voters  had already voted  for.  A new  fiscal                 
  note would show  the debt service.   Mr. Huber  noted a  new                 
  fiscal  note  of 24  March 1997.    While he  understood the                 
  problem with certain  areas of the  State that did not  have                 
  local  bonding  capacity  that  was  something the  sponsor,                 
  Senator Halford, chose to address.  This related only to the                 
  municipal school districts.                                                  
                                                                               
  Co-chair Sharp  noted the  24 March  1997 fiscal  note.   He                 
  voiced concern over who the  retroactive clause would affect                 
  by municipality, by  school and  by the amount  of the  bond                 
  issue.  He assumed the allocation to those municipalities on                 
  the previous legislation several  years ago was all  used up                 
  and  then additional bonding was passed  where it was agreed                 
  to pay 100%.   Information would be  needed to see  what the                 
                                                                               
                                                                               
  impact was on the  retroactive part of it and also  what did                 
  this legislation  propose to  do.   He wanted  to make  sure                 
  there would  be no  recreation facilities  or administrative                 
  facilities allowed under  this legislation.  Mr.  Huber said                 
  the  only  bond  package  passed  with prior  Department  of                 
  Education approval and with 70/30 reimbursement language was                 
  the Mat-Su package passed in October  1995.  The fiscal note                 
  did reflect  what  the  cost  of that  bonding  package  and                 
  reimbursement would be.  He further noted the Mat-Su package                 
  was a 70% state share.   He  said there was some concern for                 
  the Anchorage packages that would  not qualify because of no                 
  prior Department of Education approval and no specific state                 
  share  language on the ballot.   That would be a policy call                 
  for the  committee to address.    Anchorage  school district                 
  was discussing the matter with the Department of Education.                  
                                                                               
  Senator Adams asked about Sitka and the North  Slope Borough                 
  schools.    Mr. Huber  said  only  the  Mat-Su school  would                 
  qualify  retroactively.    Senator Phillips  noted  for  the                 
  record that the Department of Education was not present.  He                 
  felt  major efforts had  been made throughout  the State and                 
  there should  be adequate discussion of the  bill.  Co-chair                 
  Sharp  indicated that  he  would not  move  the bill  today.                 
  Senator Phillips referred to page 4, subsection 9 and wanted                 
  to know if this  would be reduced in the future.   Mr. Huber                 
  noted that it was the reimbursement rate.  They will balance                 
  what  rate will make sense.  Again Senator Phillips requests                 
  the bill be held in committee  or at least until the arrival                 
  of Senator   Halford, sponsor  of the bill.   Senator  Adams                 
  also felt there  were questions that  needed to be posed  to                 
  the  Department of  Education.    However,  he did  say  the                 
  questions could be  answered in  writing by the  department.                 
  Co-chair  Sharp requests  that the  department be  notified.                 
  Senator Adams went  on further  to voice  his concern  about                 
  rural Alaska being  left out and  that this was a  statewide                 
  problem.  He thought the bill  should be merged with Senator                 
  Duncan's package.                                                            
                                                                               
  Larry Wiget, Anchorage  School District was invited  to join                 
  the  committee.  He said  he  would rather  wait  to testify                 
  regarding  the  bill  but  would  be  happy  to  answer  any                 
  questions he could.   He explained their  position regarding                 
  retroactive status.  Anchorage was able to obtain a matching                 
  state  grant.     Senator Parnell  commented on  more school                 
  facilities in Anchorage.                                                     
                                                                               
  Senator Phillips interrupted asking  the co-chair about tort                 
  reform.  Co-chair Sharp said  that HB 58 would not  be heard                 
  and  the  afternoon  meeting  scheduled  for 6:00  p.m.  was                 
  cancelled.  He advised those waiting to testify were free to                 
  leave.  Further, Co-chair Sharp held SB 11 in committee.                     
                                                                               
  Co-chair Sharp called SB 55.