05/12/2025 09:00 AM Senate FINANCE

SENATE BILL NO. 184                                                                                                           
                                                                                                                                
     "An Act relating to school bond debt reimbursement;                                                                        
     and providing for an effective date."                                                                                      
                                                                                                                                
10:13:36 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman relayed that  the committee first heard the                                                                    
bill on  May 6 and  had taken public testimony  and reviewed                                                                    
fiscal  notes at  the  time. There  had  been one  amendment                                                                    
received.                                                                                                                       
                                                                                                                                
10:14:03 AM                                                                                                                   
                                                                                                                                
LIZ HARPOLD,  STAFF, SENATOR DONNY OLSON,  explained that SB
 proposed  to extend the  moratorium on school  bond debt                                                                    
reimbursement  for  an  additional two  years.  The  initial                                                                    
moratorium went into effect ten years previously.                                                                               
                                                                                                                                
10:14:38 AM                                                                                                                   
                                                                                                                                
Senator Kiehl MOVED to ADOPT Amendment 1.                                                                                       
                                                                                                                                
Co-Chair Hoffman OBJECTED for discussion.                                                                                       
                                                                                                                                
Senator  Kiehl spoke  to Amendment  1. He  relayed that  the                                                                    
amendment was  related to a  draft regulation that  DEED had                                                                    
circulated  to  school  business   officials.  The  way  the                                                                    
regulation was drawn up prevented  schools that were funding                                                                    
at  or  near the  cap  from  funding  things that  were  not                                                                    
subject  to  the  cap (non-instructional  expenditures).  He                                                                    
used the example  of The Unalaska City  School District, and                                                                    
the  subject  of  $400,000 in  school  nutrition  funds.  He                                                                    
listed $400,000 of lunch money  in Valdez and $13 million in                                                                    
Anchorage for  pupil transportation as further  concerns and                                                                    
indicated there  were many  more examples  in the  state. He                                                                    
cited that  in rough  terms, if  the regulation  passed, the                                                                    
first  $25  million  to  $30   million  provided  to  school                                                                    
districts  with  the  legislature  would  go  away  via  the                                                                    
department  over the  summer. The  amendment would  maintain                                                                    
the rules currently in place.                                                                                                   
                                                                                                                                
Senator Kiehl drew attention to  Section 7, which related to                                                                    
the school  districts' operating fund that  was currently in                                                                    
regulation  and put  it into  statute.  The amendment  would                                                                    
prevent  the department  from being  about  to re-write  how                                                                    
education  funding  was done  since  1998  when the  funding                                                                    
formula went  into effect.  He knew  there had  been concern                                                                    
voiced by the department that  there may be issues regarding                                                                    
the federal disparity test. He  explained that the education                                                                    
funding  provided by  the legislature  for the  current year                                                                    
allowed  for  headroom under  the  disparity  test that  the                                                                    
state had not had in the past.                                                                                                  
                                                                                                                                
Senator  Kiehl  remarked  that  the  federal  Department  of                                                                    
Education had  not indicated that  there was a  problem that                                                                    
needed  to be  solved by  a new  regulation. He  thought the                                                                    
regulation was  set to be  taken up  in the summer  when the                                                                    
legislature  was not  in session.  He thought  the amendment                                                                    
constituted "self-defensefrom   a  new regulation that would                                                                    
make giant  changes in school  funding and finance  and took                                                                    
money away from non-instructional expenses.                                                                                     
                                                                                                                                
10:17:39 AM                                                                                                                   
                                                                                                                                
Senator  Kiehl continued  that he  had conversations  with a                                                                    
couple  of members  that had  questions which  he needed  to                                                                    
answer. He understood that the  committee needed to move the                                                                    
bill,  and  he  had  wanted   to  introduce  the  issue  for                                                                    
discussion.                                                                                                                     
                                                                                                                                
Senator Kiehl moved to WITHDRAW  Amendment 1. There being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair Stedman thought the issue  of Amendment 1 should be                                                                    
addressed  and  suggested   querying  the  Senate  Education                                                                    
Committee  for consideration  of the  issue. He  thought the                                                                    
issue should  be pondered by  the committee. He  agreed with                                                                    
the  amendment  sponsor that  the  topic  was a  significant                                                                    
issue.  He understood  that the  regulation  would not  take                                                                    
effect  until 2027,  but thought  the  committee should  not                                                                    
lose sight of the issue.                                                                                                        
                                                                                                                                
Senator  Kaufman pointed  out that  the underlying  bill was                                                                    
about  maintenance and  capital projects  rather than  about                                                                    
program  funding. He  thought the  committee  should keep  a                                                                    
clean bill.  He thought  the issue  raised by  Senator Kiehl                                                                    
deserved thorough vetting in a policy committee.                                                                                
                                                                                                                                
Co-Chair Stedman  MOVED to  report SB  184 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
SB  184 was  REPORTED out  of committee  with six  "do pass"                                                                    
recommendations  and with  one  "amend" recommendation,  and                                                                    
with  one new  fiscal  impact note  from  the Department  of                                                                    
Education and Early Development for Debt Service.                                                                               
                                                                                                                                
10:19:53 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:22:57 AM                                                                                                                   
RECONVENED