Legislature(2005 - 2006)CAPITOL 106
02/01/2005 11:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB20 | |
| HB13 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 13 | TELECONFERENCED | |
| *+ | HB 20 | TELECONFERENCED | |
HB 13-SCHOOL CONSTRUCTION BOND REIMBURSEMENT CHAIR NEUMAN announced that the next order of business would be HOUSE BILL NO. 13 "An Act relating to reimbursement of municipal bonds for school construction; and providing for an effective date." REPRESENTATIVE GATTO, sponsor to HB 13, stated that [HB 13] deals with school debt reimbursement. He related that in his own district, 13 years ago, two schools were built when school debt reimbursement was "90/10" with the state funding 90 percent and the local district funding 10 percent. Since then, he explained, the state has reduced the amount of money it supplies for reimbursement; the state now funds 70 percent. He described the Mat-Su borough and its growth rate of 500 students each year, requiring the construction of new schools. He related the importance of all districts to find a source of revenue to fund new schools. This bill, he said, takes the previous statutes which "sunsetted" on January 1, 2005, and extends the "sunset" date. He clarified that this gives the borough time to introduce bonding legislation. 11:56:20 AM REPRESENTATIVE GRUENBURG invited the [committee] to add things that would benefit educational capital construction. He explained that this needs to be accomplished this year in Anchorage, in the Mat-Su, and in other parts of the state. He emphasized that [educational capital construction] is one of the most important issues facing the municipalities. REPRESENTATIVE SALMON asked how this bill affects rural school districts. REPRESENTATIVE GRUENBURG responded that this is legislation that is needed in certain parts of the state. He said: the last time this was done, there was a contingent effective date clause put on the bill ... the provision that was at issue here, the amendment, had ... a contingent effective date that said this language, extending the 60 to 70 percent school debt reimbursement, would become effective, if and only if, the voters approved the bond issue that contained bonding for rural schools ... this would not become effective unless two things happened ... the legislature passed the other provision ... that other provision authorized bonds to be put to the voters at the next general election and it would only become effective if the voters approved those bonds. It tied the two together even though they couldn't do it in the same bill ... so, we can work with you and people from all parts of the state to craft a plan that will be a win-win for everybody, particularly in this year of high oil prices. 12:00:53 PM CHAIR NEUMAN asked Representative Gruenburg to explain how schools would be funded and how an unorganized borough will manage to get their part of the debt bond reimbursement. REPRESENTATIVE GRUENBURG explained that the state floats bonds and pays the cost of repaying those bonds. In the areas that have the bonding capacity, he said, the state pays a smaller percentage because the municipality has the ability to pay the rest. He described projects receiving a 60 or 70 percent reimbursement depending on whether they meet certain construction specifications. He said the municipality has the ability to pay a partial match but in the areas that don't, the state pays the full cost. 12:02:33 PM In response to Chair Neuman's question, Representative Gruenburg clarified that municipalities do not have the ability to propose construction. He explained that voters know every project they're funding. CHAIR NEUMAN asked how funding for schools is appropriated. REPRESENTATIVE GRUENBURG said that in the past cash was used for schools. Now, he related, bonds will be used and this spreads the cost of projects over time. He pointed out that as the generations that use those schools reach maturity, they bear part of the cost of repaying the bonds. REPRESENTATIVE GARA stated that money will not reach the unorganized boroughs. He discussed that when the bond bill passed, it was decided that the money would go to all districts. 12:05:29 PM REPRESENTATIVE GRUENBURG explained that he would like to make this part of a broader package of legislation. REPRESENTATIVE GARA clarified that this bill, without any amendments, is strictly for the organized boroughs. REPRESENTATIVE GATTO stated that there is a need to construct schools and whether or not this bill covers all of the needs in districts, it deals with an existing need that is easily identifiable. He explained that it is simply a matter of extending a "sunset" date to existing legislation that was already approved and functioning. 12:08:12 PM REPRESENTATIVE GARA stated that though he supports [HB 13] there are portions in the state that won't benefit from this bill. He inquired as to the bond package and if it allows school districts unlimited bonding capacity. 12:09:02 PM REPRESENTATIVE GRUENBURG stated that under [HB 13] there is no cap. When the package of legislation passed, he related, the amounts of the bonds were known and it was known how much was going to be bonded for all of the projects. 12:10:13 PM EDDY JEANS, Director, School Finance, Department of Education and Early Development, (EED), stated that he would like to make clarifications on the previous discussion. He said that there were two bills that were passed in 2002: one was a state "geo" bond package that had a list of schools of approximately $171 million dollars that required a statewide vote of all Alaskans before the state would issue state "geo" bonds to pay for that $171 million dollars in school construction throughout Alaska. Contingent upon an affirmative vote, which did occur, the debt reimbursement program was extended for a two year period, no caps, that allowed reimbursement of 60 or 70 percent, dependent on the individual project. If it met the Department of Education's eligibility criteria, it qualified for 70 percent reimbursement; if the district wanted to go beyond the department's eligibility criteria, the project was eligible for 60 percent reimbursement. The debt reimbursement program also required that you get those bonds approved by the local voters, so there was a two step approval process there, one at the local level and one at the state of Alaska level. Once that approval occurred ... then the local municipality can go and issue bonds for a minimum for 10 years, and the state will reimburse on the principal and interest of those bonds over the life of those bonds, subject to annual appropriation by the legislature. "HB 2003" also required the Department of Education to prepare a report back to the legislature next January ... on the effectiveness of this dual system, the "geo" bonds for the rural schools and the debt reimbursement program for the municipal school districts. The department is opposed to this piece of legislation because we believe that we need to have time to do our analysis to give you good information in your decision making process ... through the last two years, the department and municipal governments have approved $728 million dollars in construction projects in municipal school districts ... so we need time to do our analysis, to be able to tell you what the long term fiscal impacts on the state will be for this program before we go and extend it again. And the legislation actually foresaw us needing that time, and provided us that time through the intent language to do this report. 12:13:24 PM CHAIR NEUMAN asked about how this could affect bonds that the state is trying to move forward on. MR. JEANS said that he would defer that question to the Department of Revenue, as they are the experts in that area. REPRESENTATIVE WILSON asked if the Department of Revenue has been asked about their position in this situation. REPRESENTATIVE GRUENBURG stated that he realizes the necessity of doing this study, but as there is additional money now, and the [monetary] situation is unpredictable from quarter to quarter, the study conducted may not be valid in the near future. 12:15:12 PM MR. JEANS commented that the State of Alaska will be paying on the debt reimbursement program for 10 to 20 years. He explained that the debt reimbursement budget this year is $88 million, and school districts have not issued all of the bonds for the $728 million that have been authorized in the last two years. He said that the state's annual obligation for those bonds is unknown until the analysis is complete. REPRESENTATIVE THOMAS inquired as to how many schools need to be built and/or replaced and if other communities report to the EED if they are in need. MR. JEANS explained that the EED does not receive applications from all of the school districts so it is difficult to accurately give a statewide need number. He commented that the EED has a school construction list and a major maintenance list that have been prioritized for the legislature. He expressed his surprise that the debt reimbursement program authorized over $700 million in projects two years ago. He explained that the two proposals went together two years ago, and what is being asked now is, how would we move forward and fund grant projects for REAA's while funding debt projects. He concluded that this piece of legislation extends the debt program two additional years. 12:17:58 PM REPRESENTATIVE THOMAS mentioned that the reason the school district in Haines got behind was the lack of money from the state over the years of rebuilding and remodeling schools. REPRESENTATIVE SALMON asked Mr. Jeans how much time he needed to complete the analysis and if he was opposed to HB 13. MR. JEANS said that the EED is required to provide a report back to the legislature next January. He stated that the EED is opposed to this bill. 12:20:08 PM REPRESENTATIVE GATTO clarified that the EED is opposed to the bill because the analysis is not complete. MR. JEANS stated that he can't say whether the EED is opposed with the analysis. He expressed that the EED wants to complete the analysis so that a good recommendation can be provided to the legislature. He said that extending the debt reimbursement program for an additional two years without caps, will incur additional long-term liability on the State of Alaska. REPRESENTATIVE GARA stated that the prioritization of school districts that can qualify for debt reimbursement is left up to the local communities. It is assumed, he explained, that if the local community will pay 20 or 30 percent, then it is an important project and is paid for by the state. He inquired as to how local projects are ranked. 12:21:42 PM MR. JEANS said that under the debt reimbursement program that just "sunsetted", there was no ranking process and there were no caps in place. He explained that if there was local approval, the project was submitted to the EED and approved for 60 or 70 percent reimbursement. He described the grant program and that the EED prioritizes projects based on need and projects are submitted to the governor and the legislature for consideration. He pointed out that the department does not provide a 100 percent reimbursement for any school, even the REAA's who are required to make a 2 percent contribution to their schools. REPRESENTATIVE GRUENBURG asked if there is any federal money for this program. MR. JEANS replied that they are state funded programs and are subject to annual state appropriation. In response to Representative Thomas's question, Mr. Jeans stated that REAA's contribute through their state foundation aid or their federal impact aid dollars. 12:24:04 PM KIM FLOYD, Spokeswoman, Matanuska-Susitna Borough School District, (MSBSD), stated that in the past five years alone, MSBSD schools have averaged annual enrollment growth of 450 to 500 students and bond debt reimbursement is essential to insuring that students are educated in safe and effective learning environments. She explained that this rapid growth has placed significant strain on existing facilities; more than 13 percent of the total enrollment, or about 1800 students, are taught in temporary facilities. She said that the school board has been actively working with developers and major contractors in the boroughs to determine current and future school needs. She said that she understands the state's concern with total bond indebtedness, "however, we have been extremely good stewards with our bonding projects. We haven't taken advantage or treated the program as if it is an open checkbook, and I truly hope that our conservative approach won't hurt us now when we need it most. Without schools our community will be faced with solutions as drastic as double shifting our Palmer and Wasilla area elementary schools, for that reason among others we ask for full support from the legislature for extending this program, again, we are not responsible for the growth, but we must respond and we owe it to our children to do so." CHAIR NEUMAN asked Ms. Floyd to inform the committee on any steps that have been taken by the MSBSD in moving forward on any bonding. MS. FLOYD stated that the MSBSD has been conservative. She explained that if there is state support, then the MSBSD will decide how to move forward with funding. She related a bond package is anticipated for three elementary schools that if opened next year, would be full. She said that it is unknown if that will go through without any state reimbursement. 12:27:32 PM REPRESENTATIVE GATTO inquired as to the "assembly" passing a bond package that is contingent upon the state's passing HB 13. MS. FLOYD said that is unlikely as the MSBSD is a conservative area. ANNE KILKENNY explained the overcrowding issues in the elementary schools. She emphasized that the bond debt reimbursement is absolutely critical for the Mat-Su area. She commented that, as a parent, she wants her child in a safe environment and in a class with a reasonable number of children. 12:31:08 PM GEORGE VAKALIS, Assistant Superintendent, Anchorage School District, (ASD), stated that the ASD supports the reinstatement of this bill for many reasons including major maintenance of older facilities, and schools in need of major renovation and/or replacement. He said that debt reimbursement is necessary in order to make this happen, and in the past, the legislature has supported debt reimbursement programs. He explained that the ASD wants this bill reinstated at the 60 and/or 70 percent level to allow flexibility for the districts to serve qualifying schools as well as school related facilities. [HB 13 was held over.]
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