Legislature(2009 - 2010)
04/17/2010 05:22 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| SB230 | |
| SB238 | |
| SB236 | |
| SB24 | |
| SB25 | |
| SB284 | |
| SB237 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 237(FIN)
"An Act establishing a formula and a fund for school
construction grant funding for regional educational
attendance areas; extending the deadline for
authorizing school construction debt reimbursed by the
state; and requiring a report from the commissioner of
revenue."
9:17:52 PM
JOHN BITNEY, STAFF, REPRESENTATIVE JOHN HARRIS, SPONSOR,
described the bill as an attempt to provide a funding
mechanism for school construction and maintenance across
the state. He reported that provisions in the legislation
referenced litigation the state has faced since 1999.
Mr. Bitney provided an overview of the sections of the Q
version of the bill. Section 1 consists of the findings; no
changes have been made in the CS. Section 2 contains
provisions of HB 180 sponsored by Representative Joule that
attempts to deal with contribution rates required by local
communities to match school projects; some communities were
having difficulty meeting the 30 percent matching rates, so
the formula in the CS would bring the match rate down to 20
percent.
Co-Chair Hawker added that the committee had heard the bill
before.
Mr. Bitney characterized Section 3 as the main provision of
the bill. The section establishes a funding mechanism for
schools in Regional Education Attendance Areas (REAAs). The
litigation addressed the fact that there is no statute
mechanism other than annual legislative appropriation
decisions to provide funding for the REAA schools; the bill
would provide that mechanism.
Mr. Bitney explained that the formula (subsection (b), page
2) would help identify basic need related to the cost of
building new schools. The formula is derived by taking the
annual legislative payments to municipalities for debt
service (not the total amount of indebtedness). The number
(which is just over $100 million in the current budget) is
divided by the percentage of REAA schools. The intent is to
arrive at a number representing the total cost of schools
statewide.
9:22:27 PM
Mr. Bitney identified the percent calculated by the
department as 0.683, which is further multiplied by a
number on top of page 3, or 0.244; the total would be
approximately $38 million.
Mr. Bitney referred to two Department of Education and
Early Development (DEED) fiscal notes. Co-Chair Hawker
pointed out that the fiscal note represented about $38
million per year coming into the program. He had concerns
about language missing from the fiscal note. He explained
that the formula was contrived to result in enough money
going into the fund to pay for one school on the school
construction list [per year] for the foreseeable future. He
noted that the debt service referred to was the annual debt
service on the DEED bond debt reimbursement program;
language in the CS made that clear and he wanted it in the
fiscal note. The bond debt was approximately $106 million
per year currently; he believed that dividing it by the
percentage of all schools would impute the number up. He
claimed that the 0.244 percent figure was a reverse
calculation number to make a permanent source for the REAAs
based on urban school funding. The formula dealt with the
inequity.
9:26:26 PM
Representative Austerman asked whether the section was new.
Co-Chair Hawker responded that the calculations in the
previous version of the bill were not clear.
Representative Doogan inquired whether all schools in rural
school districts would qualify whether or not they have
debt. Co-Chair Hawker responded in the affirmative.
Representative Doogan asked whether the numbers would still
work out if five hypothetical schools were built. Co-Chair
Hawker responded that the numbers would be the same because
they are not based on the number of schools built but the
relative number of urban and rural schools. Representative
Doogan restated the question. Co-Chair Hawker responded
that the variable would move slightly with more schools;
the calculation would also respond to debt service moving
up or down; if the amount of annual funding for debt
service under the debt reimbursement program goes down (or
up), the amount of money going to the rural schools would
go down (or up).
Representative Doogan asked how robust the legislation was.
He wondered how flexible the number would be if school
districts stopped bonding or if more districts built
schools. Co-Chair Hawker responded that the number was
infinitely flexible.
Representative Doogan wondered whether the program would be
at risk because of other changing variables. Mr. Bitney
offered that the variable would increase if a municipal
school district used local bonds to build a new school. He
noted that the sunset date had been removed so that the
program would continue and become a matter of annual
approval by DEED and subject to approval by local voters.
Co-Chair Hawker added that he thought Representative Doogan
was looking for information about volatility. He emphasized
that the formula was designed to make sure that rural
schools receive a fair and just portion of state money for
school debt construction. He added that the formula would
not be volatile as the variables evolve with added
districts or changed debt.
9:31:26 PM
Representative Gara thought the bill was a balanced and
reasonable approach and stated that he supported it. He
believed the intent was to do more in years when the state
had more money.
Co-Chair Hawker stressed that the formula was intended to
be reasonable and understandable and to result in
predicable funding for rural schools.
Mr. Bitney turned to Section 3; the last part asks DEED to
provide an annual report beginning in February 2012 (tied
to the July 1, 2012 effective date).
Representative Joule queried the purpose of the effective
date. Co-Chair Hawker responded that the sponsor felt the
two-year-out date was appropriate as there are currently
other schools in the bond debt package; he did not want to
overheat the construction process in rural areas.
Representative Joule pointed out that the date would also
give the administration time to settle the Kasayulie v.
State of Alaska case.
Mr. Bitney continued with Section 4, the school debt
reimbursement program statutes, which are lengthy because
various authorizations done over the years have never been
repealed as the bonds go on until they are paid off. The
changes begin on page 8. The amendment on page 8, lines 6
to 7 is a technical change to a previous authorization. The
heart of the section is the removal of the limitations on
line 14 and line 22; there would be no ending date for the
authorizations for the municipal debt reimbursement
program.
Co-Chair Hawker detailed that the sunset on the urban bond
debt reimbursement program would be eliminated.
Mr. Bitney turned to Section 5, a retroactive provision
applying to Section 2 and going back to when the local
contribution rates were enacted.
9:36:09 PM
Mr. Bitney explained that the department had modified the
two projects in the current capital budget up to a total of
$32,000 to reflect the change in the contribution rates in
Nome. He noted that in the fiscal notes, the committee
would need to address rates for projects funded over the
last two fiscal years.
Mr. Bitney concluded that Section 6 addresses the effective
date of July 1, 2012; the rest of the bill would take
effect immediately.
Representative Kelly queried the drop of the sunset date.
Co-Chair Hawker recalled that the sponsor wished to end the
Kasayulie Case. The original version proposed setting up a
$100 million fund; the amount has been dropped to $70
million to allow for latitude after the $38 million
projected for one school was spent. He viewed the fund as a
"mini capital budget" to meet the commitment to construct
one school each year. He had not been comfortable with
letting the fund build to $100 million. In addition, the
annual numbers were brought down, in exchange for letting
go of the sunset date.
9:40:10 PM
Vice-Chair Thomas MOVED to ADOPT HCS CSSB 237(FIN), (26-
LS1342\Q, Mischel, 4/17/10) as a working document before
the committee. There being NO OBJECTION, it was so ordered.
EDDY JEANS, DIRECTOR, SCHOOL FINANCES AND FACILITIES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, stated that
the department was neutral regarding the legislation. He
stated that remarks that had been made in committee about
the bill were accurate.
Co-Chair Hawker MOVED to ADOPT Conceptual Amendment 1:
Purpose: to clarify that "annual debt service" on page
2, line 30 means the annual debt service of the school
construction debt reimbursement program.
Page 2, line 30, following "be the"
Delete "annual debt service amount"
Insert "annual debt service on debt incurred under AS
14.11.100(a)"
Vice-Chair Thomas OBJECTED for discussion.
Co-Chair Hawker explained that the amendment would affect
page 2, line 30. He had been troubled with the definition
of "annual debt service amount". Since the state has $375
million each year of annual debt service, he thought the
definition should be more specific. He pointed out that the
bond debt reimbursement program statutes (AS 14.11.100(a))
are located in Section 4 of the bill. The amendment
clarifies by changing "annual debt service amount" to
"annual debt service on debt incurred under" the bond debt
reimbursement program statutes.
9:44:32 PM
Representative Gara thought the amendment made sense. He
asked the opinion of the sponsor.
JAY LIVEY, STAFF, SENATOR LYMAN HOFFMAN, SPONSOR, spoke in
support of the amendment.
Vice-Chair Thomas WITHDREW his OBJECTION. There being NO
further OBJECTION, Conceptual Amendment 1 was ADOPTED.
Representative Salmon referred to page 3 and queried the
number (0.244). Mr. Livey explained that the number used in
the past was 0.27, but the entire basis of the formula had
been changed based on Co-Chair Hawker's analysis; the
number had to change to accommodate the new formula. He
stated that the sponsor agreed with the change.
Representative Salmon asked how the number impacts the
amount. Mr. Livey replied that the difference would be
about $2 million less than the previous formula in the
original bill. Co-Chair Hawker thought the number was
higher.
9:48:01 PM
Vice-Chair Thomas MOVED to ADOPT Amendment 2 (26-
LS1342\C.6, Mischel, 4/17/10):
Page 1, line 1, following "Act":
Insert "relating to energy consumption and costs,
operating costs, and energy efficiency standards for
school construction and major maintenance by the
Department of Education and Early Development;"
Page 2, following line 5:
Insert new bill sections to read:
"*Sec. 2. AS 14.07.020(a) is amended to read:
(a) The department shall
(1) exercise general supervision over the
public schools of the state except the University
of Alaska;
(2) study the conditions and needs of the
public schools of the state, adopt or recommend
plans, administer and evaluate grants to improve
school performance awarded under AS 14.03.125,
and adopt regulations for the improvement of the
public schools;
(3) provide advisory and consultative
services to all public school governing bodies
and personnel;
(4) prescribe by regulation a minimum course
of study for the public schools; the regulations
must provide that, if a course in American Sign
Language is given, the course shall be given
credit as a course in a foreign language;
(5) establish, in coordination with the
Department of Health and Social Services, a
program for the continuing education of children
who are held in detention facilities in the state
during the period of detention;
(6) accredit those public schools that meet
accreditation standards prescribed by regulation
by the department; these regulations shall be
adopted by the department and presented to the
legislature during the first 10 days of any
regular session, and become effective 45 days
after presentation or at the end of the session,
whichever is earlier, unless disapproved by a
resolution concurred in by a majority of the
members of each house;
(7) prescribe by regulation, after
consultation with the state fire marshal and the
state sanitarian, standards that will assure
healthful and safe conditions in the public and
private schools of the state, including a
requirement of physical examinations and
immunizations in pre-elementary schools; the
standards for private schools may not be more
stringent than those for public schools;
(8) exercise general supervision over pre-
elementary schools that receive direct state or
federal funding;
(9) exercise general supervision over
elementary and secondary correspondence study
programs offered by municipal school districts or
regional educational attendance areas; the
department may also offer and make available to
any Alaskan through a centralized office a
correspondence study program;
(10) accredit private schools that request
accreditation and that meet accreditation
standards prescribed by regulation by the
department; nothing in this paragraph authorizes
the department to require religious or other
private schools to be licensed;
(11) review plans for construction of new
public elementary and secondary schools and for
additions to and major rehabilitation of existing
public elementary and secondary schools and, in
accordance with regulations adopted by the
department, determine and approve the extent of
eligibility for state aid of a school
construction or major maintenance project; for
the purposes of this paragraph, "plans" include
educational specifications, schematic designs,
projected energy consumption and costs, and final
contract documents;
(12) provide educational opportunities in
the areas of vocational education and training,
and basic education to individuals over 16 years
of age who are no longer attending school;
(13) administer the grants awarded under AS
14.11;
(14) establish, in coordination with the
Department of Public Safety, a school bus driver
training course;
(15) require the reporting of information
relating to school disciplinary and safety
programs under AS 14.33.120 and of incidents of
disruptive or violent behavior;
(16) establish by regulation criteria, based
on low student performance, under which the
department may intervene in a school district to
improve instructional practices, as described in
AS 14.07.030(14) or (15); the regulations must
include
(A) a notice provision that alerts the
district to the deficiencies and the
instructional practice changes proposed by
the department;
(B) an end date for departmental
intervention, as described in AS
14.07.030(14)(A) and (B) and (15), after the
district demonstrates three consecutive
years of improvement consisting of not less
than two percent increases in student
proficiency on standards-based assessments
in math, reading, and writing as provided in
AS 14.03.123 (f)(2)(A); and.
(C) a process for districts to petition
the department for continuing or
discontinuing the department's intervention;
(17) notify the legislative committees
having jurisdiction over education before
intervening in a school district under AS
14.07.030(14) or redirecting public school
funding under AS 14.07.030(15).
*Sec. 3. AS 14.11.014(b) is amended to read:
(b) The committee shall
(1) review the department's priorities among
projects for which school construction grants are
requested;
(2) make recommendations to the board
concerning school construction grants and make
recommendations to the commissioner concerning
projects for which bond reimbursement is
requested;
(3) develop criteria for construction of
schools in the state; criteria developed under
this paragraph must include requirements intended
to achieve cost effective school construction;
(4) analyze existing prototypical designs
for school construction projects;
(5) establish a form for grant applications;
(6) establish a method of ranking grant
projects;
(7) recommend to the board necessary changes
to the approval process for school construction
grants and for projects for which bond
reimbursement is requested;
(8) set standards for energy efficiency for
school construction and major maintenance to
provide energy efficiency benefits for all school
locations in the state and that address energy
efficiency in design and energy systems that
minimize long-term and operating costs.
*Sec. 4. AS 14.11.135(6) is amended to read:
(6) "major maintenance" means a project
described in AS 14.11.013(a)(1)(C), [OR] (D), or
(E);
*Sec. 4. AS 14.11.135(7) is amended to read:
(7) "school construction" means a project
described in AS 14.11.013(a)(1)(A), (B), [(E),]
(F), or (G)."
Renumber the following bill sections accordingly.
Page 8, line 5:
Delete "sec. 3"
Insert "sec. 7"
Co-Chair Hawker OBJECTED for discussion.
Vice-Chair Thomas explained that energy consumption costs
are projected when a school is designed and energy
efficiency standards are set. The amendment would address
the actual cost of designing a school.
Representative Austerman asked whether Amendment 2
corresponded with version Q. Co-Chair Hawker responded that
it did.
Vice-Chair Thomas further explained that rural communities
have high energy costs. The amendment would make sure the
schools are built efficiently and are affordable to
operate. He provided the example of a rural school district
that designed a new, smaller school but doubled heating
costs because of high ceilings.
9:51:26 PM AT EASE
9:51:52 PM RECONVENED
Mr. Livey stated that the sponsor supported the amendment.
Mr. Jeans reported that the department had no problem with
the amendment.
Co-Chair Hawker WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment 2 was ADOPTED.
9:53:11 PM
Co-Chair Hawker asked whether the sponsor approved of the
bill as amended. Mr. Livey responded in the affirmative.
Representative Doogan asked about the fiscal notes.
Mr. Jeans explained the fiscal notes. The first one was for
$37,960,000; the first appropriation would occur in 2013
and would fund the rural education school construction
grant program. The first expenditures would occur in FY 13.
The other fiscal note was for $3,700,000, the three-year
average of the actual increases in the debt reimbursement
program. Due to timing, he anticipated the first increase
in the debt reimbursement program to occur in FY 13.
Co-Chair Hawker questioned whether the second fiscal note
should be indeterminate. Mr. Jeans responded that the note
should be indeterminate, but the department had been
informed that indeterminate notes were not well received
and did their best to estimate costs. Co-Chair Hawker noted
that the numbers were informational only.
Representative Joule pointed out that the new section might
have a fiscal component. Mr. Jeans explained that the
school districts impacted in the FY 11 budget are the only
two projects affected. He was unsure how the retroactive
clause should be addressed.
Mr. Bitney detailed that the local contribution rate has
been changed from 30 to 20 [percent]; the cumulative
increase in the state share for those projects would be
$2,648,600. He suggested that there could be a lump-sum
fiscal note for prior fiscal years. He had asked
Legislative Legal Services to draft an amendment to correct
past-year errors; the item could be a technical amendment.
9:58:07 PM
Co-Chair Hawker thought it was a good idea to include the
amendment in the capital budget. Mr. Jeans concurred.
Co-Chair Stoltze noted that he preferred the sunset
provision.
Vice-Chair Thomas MOVED to report HCS CSSB 237 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 237 was REPORTED out of Committee with a "do pass"
recommendation and with two new attached fiscal impact
notes by the Department of Education and Early Development.
Co-Chair Hawker directed Legislative Legal to make
technical conforming changes.
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