Legislature(2015 - 2016)BUTROVICH 205
03/12/2015 03:30 PM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| HCR2 | |
| SCR1 | |
| SJR2 | |
| SB64 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HCR 2 | TELECONFERENCED | |
| += | SJR 2 | TELECONFERENCED | |
| += | SCR 1 | TELECONFERENCED | |
| *+ | SB 64 | TELECONFERENCED | |
SB 64-SCHOOL BOND DEBT REIMBURSEMENT
4:03:16 PM
CHAIR DUNLEAVY announced the consideration of SB 64. He said it
is the first hearing of the bill.
SENATOR ANNA MACKINNON, Alaska State Legislature, sponsor of SB
64, read the sponsor statement. Alaska is facing a $3.5 billion
revenue shortfall this year and projected into next year. One
thing we can do to take care of Alaska is to take care of our
fiscal house as quickly as possible. The current bill before you
proposes to sunset current state aid regarding reimbursement for
major maintenance and school construction. This is a measure
that is outside of our control in anticipating our future debt-
to-credit ratio needs. I understand that it is a valuable tool
for communities that can provide bond indebtedness. This doesn't
prevent schools from going forward and providing that
indebtedness.
She said she originally wanted an effective date of January 1,
2015. That date was rejected and is a policy consideration for
the committee. It takes into account that people go to bond
market in April and October and sell bonds. A municipality may
be getting ready to market to sell bonds. She opined that
January 1, 2015, is the correct date and the people of Alaska
will understand that the state is not in the position to go
forward with reimbursing at a higher level. The bill does not
eliminate the program, but sunsets it for five years.
4:06:04 PM
SENATOR GARDNER asked if January 1, 2015, is the correct date.
SENATOR MACKINNON said yes; it is retroactive. She related that
Legislative Legal expressed concern about retroactivity and the
possibility that Anchorage might have a bond proposition that
voters expect to be reimbursed for.
CHAIR DUNLEAVY requested a sectional analysis.
LAURIE PIERRE, Staff, Senator Anna MacKinnon, Alaska State
Legislature, presented a sectional analysis of SB 64. She
clarified that the year bonds are issued is listed in state
statute. The most recent one was issued from October 1, 2006, to
May 1, 2015. Legislative Legal suggested a May 1 sunset date so
as not to affect that bond.
4:08:17 PM
MS. PIERRE related that Section 1 sunsets the bond debt
reimbursement provisions for school construction and major
maintenance for five years, May 1, 2015 to July 1, 2020.
Section 2 begins on page 6, line 21, and restricts the
reimbursement of bonds authorized after May 1, 2015. Also, on
page 7, lines 1 through 11, it deletes language relating to
bonds authorized after May 1, 2015.
Section 3 page 12, line 17, through page 13, line 2, inserts
language relating to bonds authorized on or after July 1, 2020,
and reduces reimbursement from 70 percent for standard projects
to 50 percent, and from 60 percent for non-standard projects to
40 percent.
4:10:04 PM
Section 4 restricts the commissioner from approving an
application for bond debt reimbursement between May 1, 2015, and
July 1, 2020.
Section 5 restricts the commissioner from approving an
application for bond debt reimbursement between May 1, 2015, and
July 1, 2020.
Section 6 repeals sections 1, 4, and 5 of this Act on July 1,
2020.
Section 7 is the retroactivity clause and applies to Sections 1,
4, and 5.
Section 8 states that Section 3 takes effect on July 1, 2020.
Section 9 is the immediate effective date.
4:11:22 PM
SENATOR STEVENS requested clarification of a hypothetical
situation; if the voters of Anchorage approved a bond package on
April 7, 2015, it would be funded at a 70/30 ratio, but other
districts that vote at a later date would not have that
opportunity.
MS. PIERRE said that is correct.
4:12:28 PM
MIKE ABBOTT, Chief Operating Officer, Anchorage School District
(ASD), testified about concerns regarding SB 64. He said ASD
relies on general obligation debt for all capital projects, at
about 90 percent, with smaller contributions from legislative
grants, federal sources, and the operating budget. ASD has taken
advantage of multi-year bonding programs for capital projects
and voters appreciate that approach. ASD hopes to continue that
funding method.
He explained that ASD's six-year capital improvement program
anticipates going forward with debt reduction. New bonds have
been sold at lower rates and old debts have been refinanced at
lower rates. He said ASD is not involved in the state grant
process and would not score well compared to other area
projects. He concluded that ASD is uncertain if it could meet
its capital requirements going forward with this bill.
4:17:28 PM
SENATOR HUGGINS said Wasilla has had many new students and
construction demands. He asked what the trend is in Anchorage.
MR. ABBOTT replied that ASD anticipates a slight growth in
enrollment over the next six years; a slight decline is
anticipated next year.
SENATOR HUGGINS asked for retrospective data.
MR. ABBOTT said over the last five years the district has
declined in enrollment by about three percent.
4:19:18 PM
SENATOR STEVENS said the bill has unusual wording. He asked what
is on the Anchorage ballot for April 7, and how the 70/30 split
would work.
MR. ABBOTT replied that there is a single bond proposal,
Proposition 1, for a little over $59 million. About 2/3 of the
bond is to be reimbursed at 60 percent and 1/3 at 70 percent,
for a blended rate of about 64 percent. Of the $59 million, $56
million is for four elementary renewal projects. Individual
costs range between $12 million and $19 million. No new school
construction is planned within the six-year CIP.
4:22:12 PM
CHAIR DUNLEAVY noted SB 64 is an attempt to get a handle on
revenue and would provide breathing space for the state to
replenish its coffers. He stated he would hold the bill in
committee today. He thanked the sponsor and noted the bill goes
to Senate Finance next.
SENATOR MACKINNON said there are four major cost drivers in
Alaska's budget; K-12, Health and Human Service - Medicaid
growth, PERS/TRS, and school debt reimbursement, which has
totaled $3 billion since FY 1972. The legislature has had no
control except to step up and pay just under $120 million
annually. She stated support for what ASD is doing, but
maintained that it is time to reduce expenses. She stressed the
need to retroactively date the bill to prevent large bonds in
the fall. She concluded that SB 64 is totally about fiscal
restraint.
CHAIR DUNLEAVY asked Mr. Abbott about the 60 percent
reimbursement and if ASD followed DEED guidelines.
MR. ABBOTT explained that three of the elementary school
projects are eligible for 60 percent reimbursement under DEED
regulations because ASD is adding a small amount of square
footage to try and improve the security of the front entrances.
It is less expensive to add a few square feet rather than
remodel an old structure. It would be eligible for 70 percent if
that were not done, but would be more expensive.
4:28:02 PM
SENATOR HUGGINS assumed there would be a retroactive date
proposed. He asked what that would do to ASD's bond proposition.
CHAIR DUNLEAVY asked Mr. Abbott to consider a proposed amendment
to that effect.
MR. ABBOTT explained that the ballot language authorized by the
Anchorage Assembly describes school debt reimbursement as it is
currently defined in statute - it is not guaranteed and is
subject to appropriation. The voters are on the hook for the
entire amount of the indebtedness and the entire amount of
annual debt service.
CHAIR DUNLEAVY commented on the trend of a declining student
population in Alaska. He summarized that the bill is a result of
the financial situation in the state.
SENATOR MACKINNON noted SB 64 is a Senate Finance Committee
bill.
CHAIR DUNLEAVY held SB 64 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HCR 2 - Resolution.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| HCR 2 - Sponsor Statement.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| HCR 2 - Fiscal Note.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| SCR 1 Committee Substitute.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| SCR 1 Amendments in CS.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| CS for SCR 1 Testimony.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| CS for SCR 1 Fiscal Note.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| SJR 2 Diane Barrans Response to Question.pdf |
SEDC 3/12/2015 3:30:00 PM |
|
| SB 64 - Legislation.pdf |
SEDC 3/12/2015 3:30:00 PM |
SB 64 |
| SB 64 - Sponsor Statement.pdf |
SEDC 3/12/2015 3:30:00 PM |
SB 64 |
| SB 64 - Sectional Analysis.pdf |
SEDC 3/12/2015 3:30:00 PM |
SB 64 |
| SB 64 - Fiscal Note.pdf |
SEDC 3/12/2015 3:30:00 PM |
SB 64 |