Legislature(1997 - 1998)

05/09/1998 11:25 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
- MEETING WILL CONVENE AT A CALL OF THE CHAIR -
SB 36
SB 151
SB 216
<PENDING REFERRAL>
SB 219
<PENDING REFERRAL>
SB 231
SB 263
SB 264
SB 340
SB 347
SB 360
BILLS PREVIOUSLY HEARD
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             HOUSE FINANCE COMMITTEE                                           
      May 9, 1998                                                              
                           11:25 P.M.                                          
                                                                               
TAPE HFC 98 - 165, Side 1.                                                     
TAPE HFC 98 - 165, Side 2.                                                     
TAPE HFC 98 - 166, Side 1.                                                     
TAPE HFC 98 - 166, Side 2.                                                     
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Hanley called the House Finance Committee meeting                     
to order at 11:25 P.M.                                                         
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Hanley   Representative Kelly                                         
Co-Chair Therriault   Representative Kohring                                   
Representative J. Davies  Representative Martin                                
Representative G. Davis  Representative Moses                                  
Representative Foster  Representative Mulder                                   
Representative Grussendorf                                                     
                                                                               
ALSO PRESENT                                                                   
                                                                               
Speaker Gail Phillips; Representative Scott Ogan; Larry                        
LaBolle, Staff, Representative Richard Foster; James                           
Derringer, Staff, Representative Pete Kelly; Mary Lou                          
Burton, University of Alaska, Fairbanks; Nico Bus,                             
Administrative Services Manager, Division of Support                           
Services, Department of Natural Resources; John Bitney,                        
Alaska Housing Finance Corporation (AHFC), Anchorage; Mike                     
Kriever, Staff, Representative Vic Kohring; Rick Cross,                        
Deputy Commissioner, Department of Education; Eddy Jeans,                      
Manager, School Finance Section, Department of Education.                      
                                                                               
SUMMARY                                                                        
                                                                               
SB 36 An Act relating to transportation of public                              
school students; relating to school construction                               
grants; relating to the public school foundation                               
program and to local aid for education; and                                    
providing for an effective date.                                               
                                                                               
 SB 36 was HELD in Committee for further                                       
consideration.                                                                 
                                                                               
SB 231 An Act making and amending capital appropriations                       
and reappropriations and capitalizing funds; and                               
providing for an effective date.                                               
                                                                               
 SB 231 was HELD in Committee for further                                      
consideration.                                                                 
                                                                               
SB 360 An Act authorizing the issuance of bonds in the                         
amount of $257,600,000 by the Alaska Housing                                   
Finance Corporation for certain capital projects;                              
relating to those bonds and to the appropriation                               
of revenue of the Alaska Housing Finance                                       
Corporation; and providing for an effective date.                              
                                                                               
SB 360 was HELD in Committee for further                                       
consideration.                                                                 
SENATE BILL NO. 231                                                            
                                                                               
"An Act making and amending capital appropriations and                         
reappropriations and capitalizing funds; and providing                         
for an effective date."                                                        
                                                                               
Co-Chair Hanley spoke to SB 231, Amendment #1, providing a                     
sectional analysis.  [Copy on File].  Representative Martin                    
asked to divide the amendment, with a deletion of the                          
deposit of the Permanent Fund, creating a separate                             
amendment.  Co-Chair Hanley agreed and MOVED to ADOPT                          
Amendment #1(a).  There being NO OBJECTION, #1(a) was                          
adopted.                                                                       
                                                                               
Co-Chair Hanley MOVED to ADOPT #1(b), the last page of the                     
original amendment #1.  Representative Martin OBJECTED.  He                    
noted that he would not support making the deposit to the                      
earnings reserve into the principle of the Permanent Fund.                     
                                                                               
A roll call vote was taken on the motion to adopt #1(b).                       
                                                                               
IN FAVOR: J. Davies, G. Davis, Foster, Grussendorf,                            
Moses, Mulder, Hanley, Therriault                                              
OPPOSED:  Kelly, Kohring, Martin                                               
                                                                               
The MOTION PASSED (8-3).                                                       
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #2.  [Copy on                         
File].  Representative Martin OBJECTED for the purpose of                      
discussion.  Co-Chair Hanley explained that it was a                           
technical change to help implement a new phase in the                          
computer system, not only in the design of it.                                 
Representative Martin WITHDREW the OBJECTION, and Amendment                    
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #3.  [Copy on                         
File].  Co-Chair Hanley explained that it would fund a                         
supplemental request for attorney fees for the Alaska                          
Commission on Judicial Conduct.  There being NO OBJECTION,                     
it was adopted.                                                                
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #4.  [Copy on                         
File].  There being NO OBJECTION, it was adopted.                              
                                                                               
Representative Mulder MOVED to ADOPT Amendment #5.  [Copy                      
on File].  He explained that Amendment #5 would provide                        
$500 thousand dollars, federal receipts, to be appropriated                    
to the Department of Corrections for procurement and                           
development of a computerized management information                           
system.  There being NO OBJECTION, it was adopted.                             
                                                                               
Representative Mulder MOVED to ADOPT Amendment #6.  [Copy                      
on File].  He explained that the amendment would remove                        
$100 thousand dollars from the University of Alaska Library                    
placing it toward the Alaskan Public Broadcasting                              
Commission for equipment purchase grant, and would then add                    
$70 thousand dollars for paving and improvements to Basher                     
Road in Anchorage.                                                             
                                                                               
Representative J. Davies questioned why Basher Road was                        
receiving an allocation.  He asked if that area received                       
road matching funds or local taxes.                                            
                                                                               
Representative J. Davies MOVED to DIVIDE the question                          
between the add ons.  There being NO OBJECTION to dividing                     
the question, Representative Mulder MOVED to ADOPT #6(a),                      
the add-on to for Alaska Public Broadcasting Commission.                       
There being NO OBJECTION, it was adopted.  Representative                      
Mulder explained a technical change to Amendment #6.  He                       
noted that the bolded UAA Deferred maintenance/code                            
compliance should be removed.  Representative Mulder MOVED                     
to ADOPT #6(b).  There being NO OBJECTION, it was adopted.                     
                                                                               
Representative Foster MOVED to ADOPT Amendment #7.  [Copy                      
on File].                                                                      
                                                                               
LARRY LABOLLE, STAFF, REPRESENTATIVE RICHARD FOSTER,                           
explained that the amendment would provide a language                          
change which would allow for an upgrade of a Junior College                    
facility in the rural area.  There being NO OBJECTION, it                      
was adopted.                                                                   
                                                                               
Representative MOVED to ADOPT Amendment #8.  [Copy on                          
File].  Mr. LaBolle noted that the amendment would provide                     
general fund dollars to the City of Nome, with a $100                          
thousand dollar match, for the purchase of a new                               
fire/rescue truck.                                                             
                                                                               
Co-Chair Hanley OBJECTED.  He pointed out that the request                     
was straight general fund dollars.                                             
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Foster, Grussendorf, Martin, Moses, J.                               
Davies                                                                         
OPPOSED: G. Davis, Kelly, Kohring, Mulder,                                     
Therriault, Hanley                                                             
                                                                               
The MOTION FAILED (5-6).                                                       
                                                                               
Representative Foster MOVED to ADOPT Amendment #9,                             
submitted by Representative Ivan.  [Copy on File].                             
Representative Mulder explained that the funds were being                      
appropriated to the Division of Energy to work in                              
conjunction with Nuvista Light and Power on a feasibility                      
study to identify options for regionizing the power systems                    
in western Alaska.  Co-Chair Hanley OBJECTED.                                  
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  Grussendorf, Moses, Mulder, J. Davies                               
OPPOSED: Foster, Kelly, Kohring, G. Davis, Hanley,                             
Therriault                                                                     
                                                                               
The MOTION FAILED (4-7).                                                       
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #10.                         
[Copy on File].  He explained that amendment would                             
establish $4 million dollar federal receipts for the                           
Fairbanks Municipal Area transportation study.  There being                    
NO OBJECTION, it was adopted.                                                  
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #11.                         
[Copy on File].  He explained that the project was                             
requested because the sub-port was being closed.  This                         
funding would provide for a replacement facility in                            
Southeast Alaska.                                                              
                                                                               
Co-Chair Hanley OBJECTED.                                                      
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  Grussendorf, Moses, J. Davies, Foster                               
OPPOSED: Kelly, Kohring, Martin, Mulder, G. Davis,                             
Therriault, Hanley                                                             
                                                                               
The MOTION FAILED (4-7).                                                       
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #12.                         
[Copy on File].  He explained that the funding would be                        
used for upgrading the Mountainview Community Recreation                       
Center in the amount of $330 thousand dollars for the                          
project completion.                                                            
                                                                               
Co-Chair Hanley OBJECTED.                                                      
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR:  Moses, J. Davies, Grussendorf                                       
OPPOSED: Kelly, Kohring, Martin, Mulder, G. Davis,                             
Foster, Therriault, Hanley                                                     
                                                                               
The MOTION FAILED (3-8).                                                       
                                                                               
Representative G. Davis MOVED to ADOPT Amendment #13.                          
[Copy on File].  He explained that the amendment would                         
provide money from the Exxon Valdez Oil Spill Restoration                      
Fund earnings to be used for specific purposes.  He listed                     
the numerous appropriation specifications contained in                         
Amendment #13.                                                                 
                                                                               
Co-Chair Hanley asked if Amendment #13 would replace                           
Section #12 of the current bill.  Representative G. Davis                      
noted it would.                                                                
                                                                               
(Tape Change HFC 98- 165, Side 2).                                             
                                                                               
Representative G. Davis reiterated that the amendment would                    
replace Section #12 and would eliminate subsection (b).  He                    
added that subsection (b) would be addressed in a future                       
amendment.  There being NO OBJECTION, it was adopted.                          
                                                                               
Representative G. Davis MOVED to ADOPT Amendment #14.                          
[Copy on File].  He commented that the amendment would                         
provide for "clean up" of the interest earned from the                         
Alyeska settlement fund in the amount of $400 thousand                         
dollars.                                                                       
                                                                               
Co-Chair Hanley MOVED to AMEND Amendment #14, on line #4,                      
replace "grant" with "low interest loan".  He pointed out                      
that there are five companies currently in the same                            
situation as Chenega and located in that spill area.  Co-                      
Chair Hanley disagreed with the State paying for power                         
generation equipment for communities.                                          
                                                                               
Representative G. Davis OBJECTED to the change proposed by                     
Co-Chair Hanley.  He pointed out that the settlement fund                      
is required to be used for projects within Prince Williams                     
Sound.  Following Committee discussion with Co-Chair                           
Hanley, Representative Davis WITHDREW his OBJECTION and                        
Amendment #14 was adopted as amended.                                          
                                                                               
Representative G. Davis MOVED to ADOPT Amendment #15.                          
[Copy on File].  He explained that these sport fish license                    
fees are available to be appropriated to the Department of                     
Fish and Game for boat wake erosion studies and studies                        
including volume, time and location and operation of                           
vessels on the Kenai River.  There being NO OBJECTION, it                      
was adopted.                                                                   
                                                                               
Representative G. Davis MOVED to adopt Amendment #16,                          
intent language.  [Copy on File].  He commented that the                       
language relates to hazardous substance contamination sites                    
and the need for a higher degree of professionalism when                       
addressing those concerns.                                                     
                                                                               
Representative J. Davies OBJECTED.  He acknowledged that                       
there are occasional disagreements between local citizens                      
and the Department of Environmental Conservation (DEC),                        
however, DEC is sensitive to each situation and most often                     
does act with a high degree of "professionalism".                              
Representative J. Davies WITHDREW his OBJECTION, although,                     
noted that he did not want to indicate that there is a                         
"big" problem with DEC's behavior.                                             
                                                                               
There being NO OBJECTION, Amendment #16 was adopted.                           
                                                                               
Representative Kelly MOVED to ADOPT Amendment #17.  [Copy                      
on File].  He explained that the amendment would provide                       
for project planning money that had been listed on the                         
Statewide Transportation Improvement Plan (STIP) program                       
for Fairbanks.  He pointed out that these funds have been                      
placed into a series of neighborhood projects.  There being                    
NO OBJECTION, it was adopted.                                                  
                                                                               
Representative Kelly MOVED to ADOPT Amendment #18.  [Copy                      
on File].                                                                      
                                                                               
JAMES DERRINGER, STAFF, REPRESENTATIVE PETE KELLY, stated                      
that the amendment would provide for a statewide library                       
consortium database.                                                           
                                                                               
MARY LOU BURTON, UNIVERSITY OF ALASKA, FAIRBANKS, pointed                      
out that this project had been placed on the Board of                          
Regents priority list.  There being NO OBJECTION to                            
Amendment #18, it was adopted.                                                 
                                                                               
Representative Kelly MOVED to ADOPT Amendment #19.  [Copy                      
on File].  He noted that this amendment would provide                          
funding for the Mt. Edgecumbe power generation building,                       
chemical contamination and seal facility clean up.  There                      
being NO OBJECTION, it was adopted.                                            
                                                                               
Representative Kelly MOVED to ADOPT Amendment #20.  [Copy                      
on File].                                                                      
                                                                               
NICO BUS, ADMINISTRATIVE SERVICE MANAGER, DEPARTMENT OF                        
NATURAL RESOURCES, noted that Amendment #20 would delete                       
funding from the Mt. McKinley Meat and Sausage Plant.  That                    
funding would be used for replacement of the micrographic                      
equipment in the recorder's office.                                            
                                                                               
Representative J. Davies spoke strongly in favor of the                        
proposed legislation, noting that it was a much-needed                         
effort for that office.  There being NO OBJECTION,                             
Amendment #20 was adopted.                                                     
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #21.                         
[Copy on File].  Representative Mulder OBJECTED.                               
Representative J. Davies explained that the Alaska                             
Craftsman Home Program is very popular statewide and                           
provides building professional training for building five                      
star homes.  He believed that Alaska Housing Finance                           
Corporation (AHFC) had corporate receipts to fund the                          
request.                                                                       
                                                                               
JOHN BITNEY ALASKA HOUSING FINANCE CORPORATION (AHFC),                         
ANCHORAGE, spoke in favor of supporting the program.  He                       
noted that AHFC supports this program as a competitively                       
bid program within AHFC, with the intent to assist                             
statewide home building industry.                                              
                                                                               
Representative Mulder spoke against the amendment.  He                         
suggested that there are many other programs which need                        
funding if an extra $300 thousand dollars exists.                              
Representative J. Davies countered that this program has                       
performed well for many years and that it is a program that                    
builders throughout the state are enthusiastic about.                          
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf,                             
Kelly                                                                          
OPPOSED: Martin, Mulder, Foster, Kohring, Hanley,                              
Therriault                                                                     
                                                                               
The MOTION FAILED (5-6).                                                       
                                                                               
Representative Martin MOVED to ADOPT Amendment #22.  [Copy                     
on File].  Representative Martin MOVED to change the                           
amendment by deleting "general fund" and replacing it with                     
"UAA deferred maintenance".  He noted that the funding                         
would help the University to replace instruments which had                     
been damaged last September in the Music Department.  Co-                      
Chair Hanley noted that it is essential to clarify that                        
this funding will be allocated not appropriated should it                      
become insurance reimbursable.  There being NO OBJECTION,                      
Amendment #22 was adopted.                                                     
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #23.  [Copy on                    
File].  He explained that the funds would provide an                           
appropriation to the Alaska Court System for the assessment                    
and remediation of the "Year 2000" related computer                            
problems.  There being NO OBJECTION, it was adopted.                           
                                                                               
Representative Kohring MOVED to ADOPT Amendment #24.  [Copy                    
on File].  He stated that the funding would be used for the                    
City of Wasilla ground water contamination investigation.                      
There being NO OBJECTION, it was adopted.                                      
                                                                               
Representative J. Davies MOVED to RESCIND action taken on                      
Amendment #21.  There being NO OBJECTION, Amendment #21 was                    
before the Committee for reconsideration.                                      
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #21.                         
Representative Mulder OBJECTED.                                                
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: J. Davies, G. Davis, Grussendorf, Kelly,                             
Kohring, Moses                                                                 
OPPOSED:  Mulder, Foster, Martin, Hanley, Therriault                           
                                                                               
The MOTION PASSED (6-5).                                                       
                                                                               
REAPPROPRIATIONS                                                               
                                                                               
Co-Chair Hanley MOVED to adopt the draft reappropriation,                      
File].  There being NO OBJECTION, it was adopted as                            
Amendment #25.                                                                 
                                                                               
Representative Moses MOVED to ADOPT Amendment #R-1.  [Copy                     
on File].  This funding would provide for design and                           
construction of the Bethel public health facility.  He                         
pointed out that adoption of this amendment would replace                      
previous action taken in the bill.  There being NO                             
OBJECTION, it was adopted.                                                     
                                                                               
Representative Kohring MOVED to ADOPT Amendment #R-2.                          
[Copy on File].  He explained that the amendment would                         
provide funding to the Homer area for addressing the                           
Matanuska River erosion mitigation.                                            
                                                                               
REPRESENTATIVE SCOTT OGAN emphasized that the dikes on the                     
Matanuska River require maintenance as the river erodes                        
them away.  Representative J. Davies OBJECTED to process of                    
converting a loan to a reappropriation.                                        
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: J. Davies, G. Davis, Foster, Grussendorf,                            
Kohring, Martin, Moses, Mulder                                                 
OPPOSED:  Kelly, Hanley, Therriault                                            
                                                                               
The MOTION PASSED (8-3).                                                       
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-3.  [Copy on                       
File].  He commented that the amendment would provide a                        
change to one of the municipal matching grants which had                       
inadvertently been left out.  There being NO OBJECTION, it                     
was adopted.                                                                   
                                                                               
Representative Kohring MOVED to ADOPT Amendment #R-4.                          
[Copy on File].  He stated that this amendment would                           
provide a reappropriation to an Anchorage Senior Housing                       
program to include road construction and water connection.                     
Mr. Bitney noted that this reapporpriation would allow                         
funds to be placed in the same project intended last year.                     
The language of the amendment would correct technical                          
language that the U.S. Housing and Urban Development (HUD)                     
agency had last year.  There being NO OBJECTION, the                           
amendment was adopted.                                                         
                                                                               
(Tape Change HFC 98 - 166, Side 1).                                            
                                                                               
Representative Moses MOVED to ADOPT Amendment #R-5.  [Copy                     
on File].  He commented that the appropriation would be                        
used on behalf of the Adak Reuse Corporation.  There being                     
NO OBJECTION, it was so ordered.                                               
                                                                               
Representative Martin MOVED to ADOPT Amendment #R-6.  [Copy                    
on File].  Co-Chair Hanley explained that the funding would                    
be used for mailing, electronic registration and licensing                     
systems.  There being NO OBJECTION, it was adopted.                            
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-7.  [Copy on                       
File].  There being NO OBJECTION, it was adopted.                              
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-8.  [Copy on                       
file].  There being NO OBJECTION, it was adopted.                              
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-9.  [Copy on                       
File].  There being No OBJECTION, it was adopted.                              
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendments #R-10, #11, and                      
changes.  There being NO OBJECTION, they were adopted.                         
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendments #R-13 & #14.                         
[Copy on File].  The amendment would allow for the purchase                    
of election related equipment.  There being NO OBJECTION,                      
they were adopted.                                                             
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-15 which would                     
provide for a title change expansion within the Department                     
of Health and Social Services.  [Copy on File].  There                         
being NO OBJECTION, it was adopted.                                            
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-16 which would                     
provide for the Department of Public Safety to purchase                        
four patrol vessels.  [Copy on File].  There being NO                          
OBJECTION, the motion was adopted.                                             
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendments #R-17 & #18,                         
changes to airport projects.  [Copy on File].  There being                     
NO OBJECTION, the motion was adopted.                                          
                                                                               
Representative Martin MOVED to ADOPT Amendment #R-19.                          
[Copy on File].  There being NO OBJECTION, the motion was                      
adopted.                                                                       
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #R-20.  [Copy on                      
File].  He explained that this would be lapse money                            
allocated to the City of Sitka, to assist with the final                       
payment to the Corps of Engineers for the inner-harbor                         
facility improvements, and to the City of Ouzinkie, interim                    
solution for moorage during the completion of a breakwater                     
dredging and construction.  [Copy on File].  There being NO                    
OBJECTION, it was adopted.                                                     
                                                                               
Representative Mulder MOVED to ADOPT Amendment #26.  [Copy                     
on File].  He stated that this would be money dispersed to                     
Anchorage for economic development of the Ship Creek area,                     
as well as library books for the University of Anchorage,                      
boys and girls clubs, blood banks, digital technology and                      
citizens patrol.                                                               
                                                                               
Representative J. Davies OBJECTED.  He pointed out that the                    
back-up information regarding potential projects indicates                     
that no Minority members had been polled.  Representative                      
Mulder acknowledged that an attempt had been made to have                      
an Anchorage caucus meeting in order to address these                          
projects.  He added that the vast majority of the House and                    
Senate membership supported the amendment.                                     
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: G. Davis, Foster, Grussendorf, Kelly,                                
Kohring, Martin, Moses, Mulder, Therriault                                     
OPPOSED:  J. Davies, Hanley                                                    
                                                                               
The MOTION PASSED (9-2).                                                       
                                                                               
SB 231 was HELD in Committee for further consideration.                        
SENATE BILL NO. 360                                                            
                                                                               
"An Act authorizing the issuance of bonds in the                               
amount of $257,600,000 by the Alaska Housing Finance                           
Corporation for certain capital projects; relating to                          
those bonds and to the appropriation of revenue of the                         
Alaska Housing Finance Corporation; and providing for                          
an effective date."                                                            
                                                                               
Co-Chair Hanley spoke to Amendment #1, #0-LS1780\K.3, Cook,                    
5/9/98.  [Copy on File].  He explained that Amendment #1                       
would adopt changes made in the authorization bill which                       
had been made to the appropriation bill and which would                        
include authorization for certain bond projects.                               
                                                                               
Co-Chair Hanley advised that Amendment #1 would make the                       
changes based on Amendment #1, SB 231.  He added when the                      
amendment is moved, it will include the other amendments in                    
the appropriations bill so as to conform these changes with                    
the AHFC bonding bill.                                                         
                                                                               
Co-Chair Hanley MOVED to ADOPT Amendment #1 with the                           
addition of necessary technical changes so that the                            
authorization bill will conform.  There being NO OBJECTION,                    
it was adopted.                                                                
                                                                               
SB 360 was HELD in Committee for further consideration.                        
SENATE BILL NO. 36                                                             
                                                                               
"An Act relating to transportation of public school                            
students; relating to school construction grants;                              
relating to the public school foundation program and                           
to local aid for education; and providing for an                               
effective date."                                                               
                                                                               
Representative Mulder MOVED that work draft #0-LS0070\J,                       
Ford, 5/8/98, be the version before the Committee. [Copy on                    
File].  There being NO OBJECTION, it was so ordered.                           
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #1.  [Copy on                     
File].                                                                         
                                                                               
EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, DEPARTMENT OF                     
EDUCATION, explained that the amendment would add money                        
appropriated for single site funding to the base in order                      
to calculate the funding floor.  There being NO OBJECTION,                     
it was adopted.                                                                
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #2.  [Copy on                     
File].  Mr. Jeans explained that Amendment #2 would add a                      
transition section defining "basic need" for the purpose of                    
calculating the required local effort.  For some school                        
districts, local effort requirement will be 45%.  There                        
being NO OBJECTION, it was adopted.                                            
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #3.  [Copy on                     
File].  Mr. Jeans explained that Amendment #3 would allow                      
the pro-ration of the quality school grant funds.  Co-Chair                    
Therriault added that these schools would be treated the                       
same way, noting that the pro-ration formula which also                        
applies to the general formula.  Mr. Jeans commented the                       
action would delete "competitive" before "grant".  There                       
being NO OBJECTION, Amendment #3 was adopted.                                  
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #4.  [Copy on                     
File].  Mr. Jeans commented that Amendment #4 would delete                     
the language which the Department of Education recommended                     
on Line 7, Page 5.  There being NO OBJECTION, the motion                       
was adopted.                                                                   
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #5.  [Copy on                     
File].                                                                         
                                                                               
RICK CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION,                      
explained that Amendment #5 would modify the quality school                    
language.  The substantive change is that the accreditation                    
process would be removed.                                                      
                                                                               
Mr. Cross advised that during the past week, Commissioner                      
Holloway had been holding meetings with school communities                     
in the State in order to discuss the proposed language.                        
Mr. Cross pointed out that Amendment #5 was the result of                      
those conversations, and has the support of the Department                     
of Education.                                                                  
                                                                               
Co-Chair Therriault asked if school districts would be                         
required to continue reporting.  Mr. Cross replied that                        
there would continue to be a testing and reporting of                          
student results in order to insure that students are                           
meeting high standards.  Such action provides a tool to                        
identify schools in crisis and decline, requiring them to                      
submit improvement plans.  If during the next two-year                         
cycle improvement was not occurring, those school districts                    
would then have to submit a report to the State Board of                       
Education.                                                                     
                                                                               
There being NO OBJECTION, Amendment #5 was adopted.                            
                                                                               
Co-Chair Therriault stated that Amendment #6 would be HELD.                    
[Copy on File].  He asked Mr. Cross to address the                             
problematic impact of "bumping up" the determination need                      
for two schools or two programs.                                               
                                                                               
Mr. Cross replied that Amendment #6 would move the                             
definition of "school" from regulation to statute,                             
establishing definition for application of a foundation                        
formula.  The definition provided during a previous                            
Committee meeting included a "breaking" point as to where                      
to begin running an elementary or secondary program in                         
communities that were greater than 50 and up to 75                             
students.  Amendment #6 would change that number from 50 to                    
100.  Additionally, for those communities over 750,                            
alternative schools would be counted separately when having                    
over 200 students.  At this time, Alaska does not have                         
alternative schools with over 200 students.                                    
                                                                               
In response to Representative G. Davis, Mr. Cross explained                    
that prior to SB 36, there has not been a definition of                        
schools for the specific purpose of computing state aid.                       
This is the first bill which uses schools as a point of                        
focus.  The definition was created for the purpose of                          
applying state aid and was made in consultation with                           
McDowell Group.                                                                
                                                                               
Co-Chair Therriault stated that Amendment #6 would be HELD                     
for further consideration.  Representative Foster                              
questioned the impact of the proposed amendment.  Co-Chair                     
Therriault replied that the impact would be to those school                    
districts with over 50 children, which are counted as two                      
schools.  Amendment #6 would raise the break point of one                      
school up to 100 students.  Co-Chair Therriault remarked                       
that the Committee would need more time to consider the                        
number of schools which that change would impact.                              
                                                                               
Co-Chair Therriault MOVED to ADOPT Amendment #7.  [Copy on                     
File].  He explained that Amendment #7 would provide a two-                    
year phase-in for districts benefiting under the new                           
proposed formula.  There being NO OBJECTION, it was                            
adopted.                                                                       
                                                                               
Representative J. Davies MOVED to ADOPT Amendment #8.                          
[Copy on File].  Co-Chair Therriault OBJECTED.                                 
Representative J. Davies noted that the amendment would                        
delete the comparison of administrative to instructional                       
costs.  He explained that the "average" recommended in the                     
proposed legislation was heavily weighted toward larger                        
districts.  Amendment #8 provides language to address this                     
concern.                                                                       
                                                                               
Co-Chair Therriault questioned the Department's procedures                     
when viewing district records, moving them into compliance,                    
filing information.  Mr. Jeans responded that school                           
districts are statutorily required to have an annual                           
financial audit.  The problem, which the McDowell Group                        
discovered, is that the Chart of Account used is only a                        
guide, and that there are 53 different school districts                        
interpreting that information differently.  He guaranteed                      
that there will be inconsistencies without the Department                      
staff comparing expenditures.                                                  
                                                                               
Co-Chair Therriault asked if the Department had proposed                       
regulations that could define the chart, which would                           
hopefully lead to a more consistent reporting.  Mr. Jeans                      
replied that the Department did initiate that process and                      
that the State Board of Education had adopted a revised                        
Chart of Accounts.  The definitions are now tighter.                           
Representative J. Davies pointed out that currently, there                     
has not been enough time to gauge for the efficiency                           
follow-up.                                                                     
                                                                               
(Tape Change HFC 98 - 166, Side 2).                                            
                                                                               
Mr. Cross understood that the language referenced by                           
Representative Mulder would indicate that an analysis would                    
occur in order to guarantee that a school district                             
complies.  If they do not comply, they would need to                           
petition the Department to receive justification.  If a                        
waiver were granted, it would be forwarded to the                              
Legislative Budget and Audit Committee (LBA) for review.                       
He believed that a standard was being established in which                     
most districts in the State would not be able to comply,                       
consequently, the Department believes that the exemptions                      
will become standard.                                                          
                                                                               
Mr. Cross pointed out that the operative portion of                            
Amendment #8 would provide oversight to insure that the                        
administrative costs are minimized.  The idea is consistent                    
with what the McDowell Study recommended.  All the audits                      
done in the State are independent and must apply with                          
generally acceptable accounting principles.  Therefore,                        
there are wide differences in how each district reports                        
information.  Until there is an agreement within the                           
districts to gain consistency in reporting, it will be                         
difficult to establish targets and goals.  The Department                      
needs to provide the oversight and to work in partnership                      
with the school districts.                                                     
                                                                               
Co-Chair Therriault inquired the percentage of districts                       
which operate efficiently.  Mr. Cross replied that would be                    
an impossible question to answer because of the vast                           
differences which exist in our school districts.                               
                                                                               
A roll call vote was taken on Amendment #8.                                    
                                                                               
IN FAVOR:  Grussendorf, Moses, J. Davies                                       
OPPOSED: Foster, Kelly, Kohring, Martin, Mulder, G.                            
Davis, Therriault                                                              
                                                                               
Representative Hanley was not present for the vote.                            
                                                                               
The MOTION FAILED (3-7).                                                       
                                                                               
Representative Grussendorf MOVED to ADOPT Amendment #9.                        
[Copy on File].  He explained that the amendment would                         
address the true and assessed value of a borough.  The                         
North Slope Borough is afraid that they will not be capable                    
to continue to make a high payment as they have in the                         
past.  Passage of the amendment would allow them to                            
contribute the same amount as in prior years.                                  
                                                                               
Mr. Cross commented that when the current foundation                           
formula was developed ten years ago, everyone believed that                    
the assessed valuation of the North Slope Borough (NSB) was                    
the "high" number.  The formula was written with that                          
amount and the excess contribution was based on $12 million                    
dollars.  When SB 36 was drafted, the high number was used                     
and the North Slope Borough based their calculations on                        
that understanding.  Current law was written to allow a                        
high local contribution for the NSB.  Representative                           
Grussendorf emphasized that Amendment #9 is essential to                       
continue the practice currently used in that community.                        
                                                                               
Co-Chair Therriault questioned the impact.  Mr. Cross                          
explained that NSB has both a required local effort and an                     
excess local effort to arrive at their cap which is 23% of                     
the basic need.  NSB does not have a cap because it falls                      
outside the disparity test, resting in the high five                           
districts of the State.  The crafters of the current                           
foundation formula wanted some limit on the amount that NSB                    
should contribute.  Two (2) mills was used, based on the                       
belief that to use the higher accessed number would                            
determine the value.  He continued, 2 mills was under the                      
target and, thus, was allowed.                                                 
                                                                               
Representative J. Davies pointed out that the community                        
does not want to be limited by the lower amount and that                       
the language of the amendment stipulates that they could                       
use last year's amount.  Co-Chair Therriault noted that if                     
the pending litigation determines that the assessed                            
valuation is the lower amount, they would be able to use                       
prior years-actual local contribution or the 2 mills.                          
                                                                               
Mr. Jeans explained that currently, NSB is contributing                        
approximately $27 million dollars toward their school-                         
operating budget.  The proposed language would allow them                      
to continue to contribute at the $27 million dollar level.                     
                                                                               
Co-Chair Therriault noted that Amendment #9 would be HELD                      
in Committee.                                                                  
                                                                               
SB 36 was HELD in Committee for further consideration.                         
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 2:40 A.M.                                             
                                                                               
H.F.C. 17 5/09/98 p.m.                                                         

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