03/10/2014 08:00 AM Senate EDUCATION

              SB 208-SCHOOL CONSTRUCTION BOND DEBT                                                                          
                                                                                                                                
8:58:14 AM                                                                                                                    
CHAIR STEVENS announced that the  next order of business would be                                                               
SB 208, version A.                                                                                                              
                                                                                                                                
DAVID   SCOTT,  Staff,   Senator   Donny   Olson,  Alaska   State                                                               
Legislature, Juneau,  Alaska, presented SB  208 on behalf  of the                                                               
sponsor. He explained  that the intent of SB 208  is to encourage                                                               
small  and rural  schools to  address their  facility improvement                                                               
needs by  issuing debt,  rather than by  obtaining a  state grant                                                               
program.  It  would  increase  the  state's  share  of  the  debt                                                               
reimbursement from 70  percent to 80 percent for  a select number                                                               
of  schools. Those  schools are  those  who meet  the 20  percent                                                               
threshold  of  the   participating  share  that  is   set  in  AS                                                               
14.11.008.  He  counted  seven   schools  that  are  eligible  to                                                               
participate.                                                                                                                    
                                                                                                                                
9:00:03 AM                                                                                                                    
MR. SCOTT  referred to  a drafting  error in  Section 1,  page 7,                                                               
lines 1 and 2. It states that  the schools would have to "meet or                                                               
exceed"  the 20  percent participating  share requirement.  It is                                                               
the intent of  the sponsor that it should say  the schools should                                                               
"meet" the 20 percent participating  share. The words "or exceed"                                                               
is confusing language and needs to be removed.                                                                                  
                                                                                                                                
He continued  to explain that  Section 2 is a  retroactive clause                                                               
that  would allow  schools that  have  taken debt  at 30  percent                                                               
after January 1,  2013, and who meet the  20 percent requirement,                                                               
could take  on the 20  percent share retroactively. Section  3 is                                                               
the immediate effective date.                                                                                                   
                                                                                                                                
9:01:51 AM                                                                                                                    
SENATOR  GARDNER  asked  for  clarification  of  Section  2.  She                                                               
inquired if it  applied to anyone who has outstanding  debt or if                                                               
there is a start date for that debt.                                                                                            
                                                                                                                                
MR.  SCOTT said  the  project Port  Alsworth  would benefit  from                                                               
Section 2 in the amount of $128,000.                                                                                            
                                                                                                                                
SENATOR GARDNER  said that  explains why  Port Alsworth  has sent                                                               
testimony on the bill.                                                                                                          
                                                                                                                                
CHAIR STEVENS agreed.                                                                                                           
                                                                                                                                
9:03:15 AM                                                                                                                    
ELIZABETH  NUDELMAN,  Director,  School  Finance  and  Facilities                                                               
Section, Department  of Education  and Early  Development (DEED),                                                               
Juneau, Alaska, answered questions related to SB 208.                                                                           
                                                                                                                                
CHAIR STEVENS requested the department's reaction to the bill.                                                                  
                                                                                                                                
MS. NUDELMAN agreed that clarification of  an area of the bill is                                                               
needed, as pointed  out by Mr. Scott. She said  without it, it is                                                               
difficult to complete a fiscal note.                                                                                            
                                                                                                                                
CHAIR STEVENS said that is problematic.                                                                                         
                                                                                                                                
MS.  NUDELMAN related  that  the  language on  page  7, lines  2,                                                               
"exceeds the  20 percent  participating share"  is a  problem. If                                                               
the intent  of the bill  is for districts  who have a  20 percent                                                               
participating  share in  the grant  program,  the language  needs                                                               
more clarity.                                                                                                                   
                                                                                                                                
CHAIR STEVENS requested  an explanation of a document  by DEED on                                                               
the FY 2015 Participating Share Requirement.                                                                                    
                                                                                                                                
MS.  NUDELMAN   explained  that  the  document   comes  from  the                                                               
Construction   Grant   Program,   a  competitive   program.   The                                                               
department does  not use  participating share  in this  manner in                                                               
the  debt  program.  The  department does  review  and  rank  the                                                               
applicants for  the Construction  Grant Program. The  statute for                                                               
the  grant  program  says  if  the full  assessed  value  of  the                                                               
property  in the  district is  over  $500,000 per  ADM, then  the                                                               
participating  share is  30 percent.  There is  a ladder  of five                                                               
categories.  The participating  share for  a school  district and                                                               
their  municipality is  5  percent, 10  percent,  20 percent,  30                                                               
percent, or 35  percent for the grant program.  The handout shows                                                               
where  each school  district falls.  For  example, the  Aleutians                                                               
East is at 35 percent.                                                                                                          
                                                                                                                                
She  pointed out  that  the  regional education  areas  are at  2                                                               
percent. They do not have legal capacity to bond.                                                                               
                                                                                                                                
CHAIR STEVENS  said Aleutians East  must pay 35 percent  as their                                                               
local share.                                                                                                                    
                                                                                                                                
MS. NUDELMAN said, "For our grant program; correct."                                                                            
                                                                                                                                
9:07:50 AM                                                                                                                    
TY  MASE, Superintendent,  Lake  and  Peninsula School  District,                                                               
King Salmon, Alaska,  testified in support of SB  208. He thanked                                                               
the sponsor and said how important  the 20 percent rate is to his                                                               
district.  He related  that  the district  has  been pursuing  an                                                               
80/20  school  construction  grant  for  Port  Alsworth's  school                                                               
expansion for  the better  part of  a decade.  He said  they have                                                               
been  as  high as  number  five  on the  list.  He  said with  an                                                               
anticipated enrollment of 70-plus  students in Port Alsworth, the                                                               
district  could not  wait any  longer to  begin construction.  In                                                               
April  they obtained  voter approval  to issue  debt and  get the                                                               
project underway.  The participating share  was set at  70/30. He                                                               
concluded that debt reimbursement is  a means for the district to                                                               
address  overcrowding  and  much-needed  upgrades.  He  requested                                                               
passage of the bill.                                                                                                            
                                                                                                                                
9:09:56 AM                                                                                                                    
NATHAN HILL,  Manager, Lake and  Peninsula Borough,  King Salmon,                                                               
Alaska, testified in support of  SB 208. He thanked Senator Olson                                                               
for sponsoring the bill and  the committee for considering it. He                                                               
believed  the bill  was a  reasonable  request and  would have  a                                                               
positive impact  on education and  teacher development  for rural                                                               
schools like Lake and Peninsula Borough.                                                                                        
                                                                                                                                
CHAIR STEVENS  commented that the  school was built under  the 30                                                               
percent program, but  the 20 percent retroactively  would be very                                                               
beneficial.                                                                                                                     
                                                                                                                                
MR. HILL said yes. He added  that there was overcrowding and they                                                               
could not wait any longer to expand the school.                                                                                 
                                                                                                                                
CHAIR STEVENS said he has been  in the old school and understands                                                               
the problems they were facing.                                                                                                  
                                                                                                                                
9:12:05 AM                                                                                                                    
TOM   BEGICH,   Government   Affairs   Director,   Citizens   for                                                               
Educational Advancement of  Alaska's Children, Anchorage, Alaska,                                                               
testified in support  of SB 208. He said the  bill is good public                                                               
policy and would  allow districts to upgrade  and improve schools                                                               
in  rural  Alaska  statewide.   Rural  schools  were  chronically                                                               
underfunded  for years.  The bill  would fill  the gap  in school                                                               
grant construction.                                                                                                             
                                                                                                                                
CHAIR STEVENS thanked Mr. Begich.                                                                                               
                                                                                                                                
MR. SCOTT  pointed out that  the participating  share requirement                                                               
has some precedent. On page 6,  line 6, those schools who met the                                                               
10  percent  participating share  were  eligible  for 90  percent                                                               
reimbursement from the state.                                                                                                   
                                                                                                                                
He reiterated  that the language  in Section  1, page 7,  lines 1                                                               
and 2, "or  exceed" needs to be removed. Also,  the sponsor would                                                               
like  to add  language  to allow  for 5  percent  and 10  percent                                                               
shares,  but for  all practical  purposed, those  districts would                                                               
not be able to bond.                                                                                                            
                                                                                                                                
9:15:12 AM                                                                                                                    
CHAIR  STEVENS  asked  Mr.  Scott  to comment  on  the  need  for                                                               
clarity, as mentioned by Ms. Nudelman.                                                                                          
                                                                                                                                
MR. SCOTT  agreed. The intent  of sponsor  is for 20  percent and                                                               
lower.                                                                                                                          
                                                                                                                                
CHAIR STEVENS held SB 208 in committee.