Legislature(1993 - 1994)
03/23/1993 01:30 PM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 32: SCHOOL CONSTRUCTION DEBT REIMBURSEMENT Number 570 CHAIRMAN OLBERG asked at the onset, "Does this change anything that we're doing now? Does this do anything now?" REPRESENTATIVE PAT CARNEY, PRIME SPONSOR OF HB 32, testified addressing Chairman Olberg's questions: "Over the years, quite a number of years in the past, 15 years perhaps or more, the state agreed to pay a percentage of the debt service for communities to bond themselves for building schools. That percentage has varied from time to time based on the sentiment of the particular people involved in passing legislation. From 50 percent to 90 percent... In 1989, the bill passed, HB 37, which was supposed to level the playing field of school construction statewide, supposedly taking the politics out of school construction, of prioritizing school construction to be built by the state at the state's cost without bonding." REPRESENTATIVE CARNEY continued, "Unfortunately, because of the great need for schools in the Bush from a health safety point...most of the schools that are being funded directly by the state are being funded in the rural areas. So I believe, in order to give some relief to the urban areas that need schools constructed now, we can't wait until they come up high on the priority list..." Number 593 CHAIRMAN OLBERG asked, "Does this affect bonding that currently exists...previously incurred debt?" GARY BADER, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF EDUCATION (DOE), replied in the negative and said, "This is an approach for school constructions and municipalities that would be in addition to the current HB 37 process... In HB 37 it's a straight grant by the legislature. It's a legislative appropriation to fund school construction. I believe what's intended under this bill (HB 32) is that in addition to that, municipalities would have the opportunity to bond themselves and to construct schools and get reimbursed from the state for a portion of the bonding cost." REPRESENTATIVE BUNDE pointed out, "There is a provision that the Department of Education evaluate these requests. I don't think it's a blank check." Number 626 REPRESENTATIVE CARNEY said, "In fact the requirements for these schools are identical to the requirements involved in the priority one schools, that DOE has to go through the same evaluation process and come up with a determination of the need for the school." REPRESENTATIVE BUNDE said, "I can easily conceive there will be more requests than money available. How are we going to prioritize?" REPRESENTATIVE CARNEY said, "In the first place these payments begin two years after the bond has been incurred. So there's a two year lag before you have to begin funding. If it turns out that the funding isn't available, the legislature simply short-funds. Instead of getting 70 percent, they get 50 or 40 or whatever we fund." REPRESENTATIVE BUNDE asked, "If ten people requested and we had enough money to fund eight at 50 percent, you're saying then they would spread the money out over all ten at a lower rate." Number 640 REPRESENTATIVE CARNEY replied, "I hope that wouldn't happen but that's what traditionally happens if we run up short of money. We prorate based on the requests. CHAIRMAN OLBERG asked, "Aren't we already doing that?" Number 642 REPRESENTATIVE CARNEY said, "On previous bonds that were sold some years back, we're doing that, I believe." REPRESENTATIVE DAVIES said, "Those were funded at various percentages, typically around 80 percent of the 80 percent." REPRESENTATIVE CARNEY said, "So you see, we've been short- funding 20 percent on our previous commitments." CHAIRMAN OLBERG referred to the fiscal note. (A copy of this fiscal note may be found in the House Community and Regional Affairs Committee Room, Capitol 110, and after the adjournment of the second session of the 18th Alaska State Legislature, in the Legislative Reference Library.) He then asked Mr. Bader if HB 32, aside from administrative fees, would cost more than what is spent now "because the funds still have to be appropriated by the legislature and allocated by the department." Number 652 MR. BADER pointed out HB 32 requires a DOE approval, but he did not know if the approval was prior to the municipalities' bond or after. REPRESENTATIVE DAVIES said, "I can't imagine a municipality doing that. There are a lot of questions asked when you try to put an issue out to bond. The voters have to approve it. And if the point was raised that you didn't have approval for this, I'm sure the bond issue would go down in flames." Number 681 MR. BADER referred to Chairman Olberg's earlier question on the DOE's fiscal note. He said, "We have no idea how many municipalities might decide to go out and bond for this so these costs reflected here are simply administrative costs." REPRESENTATIVE BUNDE suggested current DOE employees "pick up the program rather than have to hire new employees." REPRESENTATIVE CARNEY concurred that HB 32 requires the same tasks that are already being done currently at the DOE. Number 699 MR. BADER said, "The legislature funded school construction last year at a level of about 20 to 25 million dollars. That's a handful of grants... This program, presumably, there will be many times that amount of grants to approve." TAPE 93-17, SIDE B Number 000 MR. BADER continued, "I think it's a valid statement to say we are looking at the grant requests as they come in, but primarily what we're doing with them is we're taking them and putting them on a list and ranking them." REPRESENTATIVE WILLIAMS agreed most of the work is being done already and asked how many positions are requested to work on the school funding bill, HB 83. Representative Ed Willis arrived at 2:35 p.m. MR. BADER indicated two positions, at approximately $130,000, are included for the school funding bill, HB 83. REPRESENTATIVE DAVIES clarified, "Most of the schools we're talking about in terms of the approval part of the process, have already requested approval. They're on the list in some priority ranking right now, so there would be relatively little, in most cases, additional work required in that aspect of the project. If the program were to blossom into some big program, there may be more ongoing work in terms of oversight of the projects." He then suggested the House Finance Committee address the fiscal note. Number 063 REPRESENTATIVE BUNDE pointed out school funding is currently being discussed in the House Education and Social Services Committee. He said, "You're asking for a blanket 30 percent match which would exclude many of the smaller communities. But it also would excuse some of these larger communities that the governor would ask for a 50 percent match. Have you given any thought to that kind of graduated scale, three levels of funding or something like that?" REPRESENTATIVE CARNEY replied, "We have to assume that some of these schools will be built under the Governor's program of prioritizing schools. I don't know how many... It could be a decision by the community about whether or not they want to take the 70 - 30 percent in bonding and build schools they need now, or if they wanted to wait... I just think this is an option..." Number 133 REPRESENTATIVE DAVIES made a MOTION to pass HB 32 out of committee with individual recommendations. There were no objections, and the MOTION CARRIED.
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