Legislature(2013 - 2014)SENATE FINANCE 532
04/04/2013 02:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB88 | |
| SB74 | |
| HB22 | |
| HB26 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 22 | TELECONFERENCED | |
| + | HB 26 | TELECONFERENCED | |
| += | SB 88 | TELECONFERENCED | |
| += | SB 18 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 74
"An Act creating the University of Alaska building
fund for the payment by the University of Alaska of
the costs of use, management, operation, maintenance,
and depreciation of space in buildings; and
authorizing the Board of Regents of the University of
Alaska to designate buildings for which the fund is to
be used."
3:26:40 PM
HEATHER SHATTUCK, STAFF, SENATOR PETE KELLY, related that
the bill would create a University Building Fund (UBF) as a
special account in the General Fund. She shared that there
was currently $1 billion in backlog maintenance for the
university's 7 million square feet of facilities. She
stated that the university was shifting to long-term
strategic planning to adequately address the ongoing
maintenance issue. She stressed that the fund would be a
tool that the university could use to do their share in
assuring that facilities were taken care of properly, while
bringing deferred maintenance costs down to a responsible
and sustainable level. She relayed that the university
could begin charging departments for rent, which would
encourage improved space utilization and operational
efficiency. She explained that before the Public Building
Fund, which the UBF was based on, state departments had
more space than was needed. The fund, along with charging
rent, had forced department's reconsider how much space
they actually needed. She said that the intent of the
legislation was to help the university take advantage of
the same process to ensure that it was implemented in the
most effective way possible. She explained that initially
the university would put buildings that were new, or under
15 years-old, into the fund; as buildings were
rehabilitated they would be added to the fund in order to
prevent them from falling into disrepair.
3:28:58 PM
Co-Chair Kelly thought the bill would alleviate the
university's deferred maintenance problem. He believed that
the legislation would highlight that space costs money,
which would prompt managers to give up space that was not
completely necessary. He felt that significant savings
would result from an aggressive space reconfiguration
program.
3:30:24 PM
PATRICK GAMBLE, PRESIDENT, UNIVERSITY OF ALASKA, testified
in support of SB 74. He understood that the university had
some catching up to do after the previous decade of funding
predominately for the purpose of growth. He shared that
growth began to level off in 2011, and he understood that
the university needed to take responsibility for the
maintenance of its infrastructure. He offered that more
funding alone would not benefit the university at this
time. He described the legislation as a tool that would
give the university the ability to take steps toward
further autonomy. He believed that the UBF would address a
large account in the university budget, which was where
efficiencies and savings would be found. He noted that the
university was the largest real estate manager in the
state. He said that the facilities managed by the
university were being examined on a building-by-building
basis to determine whether they would remain or be
demolished, which would reveal information concerning the
entire building array that had previously been unknown. He
reiterated that the legislation would provide a tool for
the university that had already proved to be successful
when used by universities in the Lower 48. He believed that
the legislation would inspire discipline in the area of
space management.
KIT DUKE, ASSOCIATE VICE PRESIDENT FOR FACILITIES,
UNIVERSITY OF ALASKA, believed that the legislation would
instill discipline in the university that would ensure the
future care of all of its facilities. She expressed the
desire to provide tools that could be used in times of
lesser revenue to maintain buildings. She noted that new
construction was sometimes necessary, but maintenance of
older buildings was equally important. She thought that the
bill would generate a cultural change in the way that
academic administrations valued physical space and the
costs associated with maintaining the space beyond first
costs.
3:40:00 PM
Co-Chair Kelly wondered how the legislation was useful when
no funds would be distributed for 2013. He asked whether
the SBF was capitalized at when it was created.
Ms. Duke replied that she did not remember the
capitalization amount.
Co-Chair Kelly asked if the money that the university was
currently spending on building maintenance and operation
would shift into the UBF.
Ms. Duke relied that that was the intent.
3:42:53 PM
Co-Chair Kelly understood that in the future the money
could be capitalized upon through donations or general fund
dollars.
Ms. Duke related that the funding could come from many
sources and that the legislation allowed for almost any
type of deposit to be made into the fund. She related that
the money would still need to be appropriated by the
legislature from the UBF, which was why she believed the
fund would prove to be a tool for the legislature as well
as the university in the long term. She stressed that it
would take some time to implement the plan, which made
immediate funding less of a concern.
3:44:47 PM
Co-Chair Kelly wondered why the university could not
currently set up a rent charging system for the different
departments.
Ms. Duke replied that the issue was not that rent charging
could not be set up, rather, whether a system could be set
up that would survive long enough to do any real good in
the long term.
3:45:16 PM
Senator Bishop hoped that the funds authorized by the
legislature would remain in-state.
President Gamble felt that there was nothing in the intent
language of the bill that would prevent the funds from
remaining in-state.
3:48:10 PM
Co-Chair Kelly asked if the university had been in
discussion with the Office of Management and Budget (OMB)
concerning the shift of funds planned for 2014.
President Gamble replied no.
Co-Chair Kelly thought that the discussion should happen
soon and that the changes should be made at the
administrative level as the budget was submitted, rather
than have the legislature make the changes after the fact.
3:48:36 PM
President Gamble commented that extensive internal
discussions had occurred at the university with the
understanding that whatever the legislature budgeted for
2013 would inform the expected numbers for 2014.
3:49:09 PM
Ms. Duke reiterated that the plan laid out in the bill
would provide information concerning space utilization and
program cost, which would cause the university to take a
more business approach to investment decisions.
3:50:07 PM
Co-Chair Meyer wondered if federal grant monies could be
used in the UBF.
Ms. Duke thought that Co-Chair Meyer could be referring to
grants allotted for deferred maintenance projects. She
imagined that there was a possibility that the grants could
be put into the UBF.
3:51:01 PM
President Gamble offered that there were many kinds of
grants, some of which had very specific restrictions. He
added that the university generally liked to use grant
dollars for their intended purpose.
3:51:40 PM
Vice-Chair Fairclough asked why language indicating that a
dedicated fund was not being created was not in the bill.
3:52:28 PM
President Gamble referred the question the DOL.
3:52:35 PM
Vice-Chair Fairclough turned to Page 3, line 13, which
contained language specifying that any money in the fund
would stay in the fund unless it was allocated out by the
legislature.
3:53:27 PM
Vice-Chair Fairclough queried how much bonding authority
the university currently had.
President Gamble replied about 2 percent. He said that the
goal was to stay below 5 percent encumbered with debt
service. He asserted that the university was comfortable
with its ability to bond further.
3:54:16 PM
Vice-Chair Fairclough wondered whether the university could
qualify for the Alaska Housing Finance Corporation
Revolving Loan Fund to offset the deferred maintenance
costs of the university's engineering buildings. She
understood that $250 million had been capitalized through
the fund for improvements in weatherization, and at low
interest rates. She stressed the need to address the
deferred maintenance issue as soon as possible.
Ms. Duke replied that the university was taking advantage
of some of the energy monies available through AHFC. She
said that the university was looking into accessing more of
those funds for deferred maintenance work.
3:56:24 PM
Vice-Chair Fairclough reiterated her question concerning
the university's bonding authority limit.
President Gamble replied that he was not aware of the
bonding authority limit.
3:57:23 PM
Kit Duke interjected that additional information could be
provided to the committee at a later date.
3:57:30 PM
Vice-Chair Fairclough believed that the bond limit was set
in stature.
Co-Chair Meyer CLOSED public testimony.
SB 74 was HEARD and HELD in committee for further
consideration.
3:58:59 PM
AT EASE
4:21:19 PM
RECONVENED
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