Legislature(1997 - 1998)
04/29/1998 03:13 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
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+ teleconferenced
= bill was previously heard/scheduled
HJR 58 - CONST AM: EDUCATION FUND Number 1902 CHAIRMAN BUNDE announced the next order of business was HJR 58, Proposing amendments to the Constitution of the State of Alaska relating to the educational fund. At the previous hearing, the committee had asked Representative Cowdery to check into the possible use of National Petroleum Reserve in Alaska (NPRA) monies. Number 1950 ANNETTE DEAL, Researcher to Representative John Cowdery, said the Legislative Legal Division staff has advised those funds are already spoken for, which basically leaves HJR 58 as it currently stands. CHAIRMAN BUNDE called an at-ease at 3:53 p.m. Chairman Bunde reconvened the meeting at 3:55 p.m. Number 1985 REPRESENTATIVE GREEN said, "As I read the bill, this would in effect add another 40 percent dedication to the already constitutionally dedicated 25 percent and statutorily dedicated 25 percent in addition. This would then constitutionally add another 40 percent, so that there would only be, in effect, 10 percent left for allocation other than the 90 percent mandated. And my concern is that when we do that, are we binding ourselves to the point that -- as I understand the original intent of the permanent fund was that it would take care of government expenditures when oil revenue no longer was capable, such as the situation ...." CHAIRMAN BUNDE interjected, "Earnings of the permanent fund ...." REPRESENTATIVE GREEN continued, "Yah, not the corpus. This would take of that which we can now allocate, it would dedicate it to schools and leave only 10 percent for other allocations because 50s already spoken for. Is that fiscally responsible?" CHAIRMAN BUNDE said it becomes a policy call. Number 2060 MARCO PIGNALBERI, Legislative Assistant to Representative John Cowdery, said another way to look at it is the money going into this fund is an offset to other general fund monies that would otherwise be going to education. For example, if there was $100 million in the fund, that's $100 million less that would have to be taken out of the general fund to fund education. REPRESENTATIVE GREEN noted the difference is significant; in one case it's a constitutional amendment which means going to the people for a vote if there's a problem in the future; whereas, if it's done by statute, the allocation is done each year by the legislature and statutes can be changed each year. Number 2100 MR. PIGNALBERI said in looking at the first five years of revenue (indisc.) projections, for example, about $75 million would go into the fund - the state's current educational expenditures are running upwards of $700 million. Again, the money going into this fund means less that would be taken out of the general fund and other sources to pay for education. He added it would be quite a long period of time before this fund had enough money in it to be the primary funding source for education. He said, "The point I'm trying to make is that you're not locked in - this resolution would not lock in expenditures until it got to be so large that you had to go to this fund for all funding for educational expenditures. And until it gets that large, you could look at it as an offset of the general fund." REPRESENTATIVE GREEN said if that's the case, what is to be gained by making it a constitutional amendment. MR. PIGNALBERI said it is a way of incrementally getting to a point where there's a stable source of education funds in the state. It may take some years to reach the level of $700 million plus, and may never reach it in our lifetime, but it's a start and future legislatures may find other revenue sources to add to the fund. The overall goal is to establish a stable source of educational funding so it's not so subject to the economic situation of the state. Number 2185 REPRESENTATIVE DYSON said he had two fundamental problems; first, should any government agency have reserved funds and therefore not have to compete with other government services for funding; and secondly, if any government organization should have a noncompetitive standing for funding, is education the appropriate one? He noted it's a philosophical question, but he would appreciate Mr. Pignalberi's remarks. MR. PIGNALBERI said there has been a lot of thought given to the question and basically, when this approach is compared to the approach that's been put forth by this Governor, as well as previous Governors, for an educational endowment, this is a milder, more incremental approach which is still subject to annual legislative appropriation. REPRESENTATIVE GREEN inquired if funds would have to be appropriated under this approach? MR. PIGNALBERI responded yes, this is a funding source; funds would still have to be appropriated to the particular educational programs. REPRESENTATIVE GREEN asked if Mr. Pignalberi meant the revenue from this fund. MR. PIGNALBERI confirmed that. REPRESENTATIVE DYSON inquired if the money would simply remain in the fund and couldn't be used for anything else if it didn't get appropriated. CHAIRMAN BUNDE stated his belief that there were two purposes in the legislation; one was to build a steady source of income for education and the other was to encourage people to have another look at their interest in either developing or not developing ANWR. Number 2279 CHAIRMAN BUNDE observed the committee lacked a quorum at this time. He expressed his appreciation to Representative Cowdery bringing the issue up for discussion. He asked if there were further questions from the committee. There being none, he thanked Mr. Pignalberi for his comments and indicated HJR 58 would remain in committee.
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