Legislature(1993 - 1994)

03/23/1993 01:30 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  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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