Legislature(2001 - 2002)
03/14/2002 03:03 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 451-MUNICIPAL BOND REIMBURSEMENT Number 0241 CHAIR DYSON announced the first order of business, HOUSE BILL NO. 451, "An Act relating to municipal bond reimbursement for school construction; and providing for an effective date." Number 0292 HEATH HILYARD, Staff to Representative Jeannette James, Alaska State Legislature, presented HB 451 on behalf of Representative James, sponsor. He referred to the sponsor statement in the committee packet and offered his understanding that current statute requires for grant proposals for municipal school construction that there be a preventative maintenance plan in place prior to the grant's being funded. The bill would clarify statute under the bond reimbursement for school construction. He said it is simple: all it does is "clean up statutory differences between the two processes." CHAIR DYSON said this is also his understanding. Number 0333 EDDY JEANS, Manager, School Finance and Facilities Section, Education Support Services, Department of Education and Early Development (EED), reminded members that about three years ago the legislature passed a requirement that school districts have a five-part preventative maintenance plan in place as an eligibility [requirement] for school construction grants; this is found in [AS] 14.11. Also in this statute is the reimbursement program [for school construction]. The provision [for a preventative maintenance plan] was not attached to the debt-reimbursement program. Therefore, HB 451 places the same requirement on the debt-reimbursement programs that currently exists under the grant program. Number 0389 REPRESENTATIVE WILSON sought confirmation that in order for schools to be on the capital improvement [project (CIP) list], they must have a preventative maintenance program in place. MR. JEANS answered in the affirmative. REPRESENTATIVE WILSON said some schools choose not to be on the [CIP list]. She added, "And I could be wrong in this, so ... I'm going to ask you this: some schools go ahead and bond without being on the list ... and ... take care of it themselves and then ask for reimbursement afterwards. Are those schools required to be on the CIP?" MR. JEANS replied that the debt-reimbursement process is a separate process that districts have to go through. Currently, there is no additional debt authorization under the debt- reimbursement program; the legislature would have to pass a bill authorizing additional debt for reimbursement from the state. He said this typically is allocated based on community size; it is up to districts to submit projects to [EED] for eligibility. Right now, the projects under the debt-reimbursement program don't have to have a preventative maintenance program in place. He offered that since the legislation of approximately three years ago, [EED] has been reviewing all districts' preventative maintenance plans, even those under the debt-reimbursement program. He said [EED] has been working with districts to meet those five categories [in the preventative maintenance plan]. Number 0504 REPRESENTATIVE JOULE inquired about feedback from school districts affected by [HB 451] and whether they have plans. MR. JEANS answered that all districts have a plan of some type. These plans might not conform to the five required parts [in statute], however, and [EED] has been working with all the districts to assist them in conforming to the law. He added, "Under the grant program, this just mirrors that same requirement for the debt-reimbursement program." Number 0546 REPRESENTATIVE STEVENS offered that this is a reasonable request of districts; it is a lot to do, but any district should be able to have a preventative maintenance plan if it plans on [facility] renewal and replacement. He asked if this preventative maintenance is beyond any district's ability to accomplish. MR. JEANS replied, "I believe you're correct." He reiterated that [EED] is working with school districts to meet all five requirements. Tools such as a renewal-and-replacement schedule are available on EED's web site to assist districts. He added that this bill was submitted by Representative James at the request of the bond reimbursement [and] grant review committee that oversees all school construction and major maintenance regulations in the state. This committee supports this inclusion of the debt reimbursement under the requirements for the grant program. Number 0627 CHAIR DYSON referenced page 3, line 11, of the bill and asked if "cardex" is a brand name. MR. JEANS said he was unable to answer that question. CHAIR DYSON offered his opinion that it is. He added, "And it's no big deal. I think [it] ... probably communicates what we want; and if it is a brand name, it's probably not smart to put it in state law, but I don't think it's something that ought to hang us up." Number 0671 REPRESENTATIVE JOULE noted the need for preventative maintenance plans. He recounted comments he has heard from school districts indicating that the many maintenance requirements necessitate hiring personnel to do the paperwork; so much needs to be reported that this takes personnel away from performing the maintenance. He said these [district] budgets are already constrained. He asked about the impact of the extra maintenance personnel costs on the 70/30 ratio and whether districts are granted waivers for this. MR. JEANS replied that Representative Joule had raised a good question. School districts have raised this issue with [EED]; the additional expense incurred under this provision of law works against districts in meeting the 70 percent requirement for instruction. He said: My only response to that is: if this is one of the contributing factors, then the department will support a waiver, if that's one of the items that's causing them not to meet the 70 percent on instruction. But ... I would suggest that this isn't the only thing that's going to cause them not to meet the 70 percent instructional requirement. REPRESENTATIVE JOULE pointed out that if districts are getting close [to the 70 percent requirement], this might cause them to [go below that]. He affirmed that all districts are working hard to [achieve the 70/30 ratio for instruction and administration, respectively]. EDDY JEANS concurred. He reiterated that [EED] will take that into consideration when reviewing a district's waiver request. Number 0800 CHAIR DYSON said part of the problem is that the 70/30 ratio reflects good intentions but doesn't work really well. He suggested that in smaller schools, particularly those with unsophisticated physical plants, this may be overkill. He added, "The only thing I would add to the contrary is, as we work more ... on school safety sorts of things - alarm systems and sprinklers ... - [those] have some additional reporting requirements that ... make us need to work [at that]." Number 0860 REPRESENTATIVE WILSON pointed out that schools need to hire an engineer or some other expert to [put these plans in place]. Large expenses can be incurred by districts in rural areas because of transportation, housing, and other expenses associated with contracting with these experts. If districts are approaching the 70/30 ratio, they could easily go over [the 30 percent administrative-cost allocation]. Number 0904 CHAIR DYSON suggested perhaps the 70/30 [ratio] should be revisited, "and put some school building facility size and remoteness caveats in there or something." REPRESENTATIVE STEVENS said he has traveled to visit schools in varying states of repair and disrepair. He offered that the reason there is such a problem in some rural schools is due to the lack of renewal-and-replacement schedules. He emphasized the necessity of requiring [preventative maintenance plans]. Number 0958 CHAIR DYSON responded that local people should take on the responsibility to [maintain facilities of their own volition]; it shouldn't require a law. He offered his experience regarding facility-and-machinery preventative maintenance, that when money gets tight, "guess what gets cut?" REPRESENTATIVE WILSON agreed that this maintenance must be done, noting that the state has over a billion dollars of deferred maintenance currently. She said [the legislature] expects the school districts that are short of funds to [properly maintain facilities], although legislators have not [provided funding] for the state's deferred maintenance. Number 1015 CHAIR DYSON said, "Or at least document that they have a plan to take care of it when they go for bonds or bond reimbursement, which is the subject we have at hand." Number 1033 DEE HUBBARD, Member, Bond Reimbursement and Grant Review Committee, testified via teleconference, noting that she has been a member of that committee since its establishment in 1993. She said in 1993 the legislature decided to establish a committee to take all the school construction issues together, to create a fair statewide system. She noted that this is just what the committee has done, and it has a good record, according to school districts. Upon review of regulations, the committee discovered that the preventative maintenance required by law did not affect the projects being considered for bond reimbursement; this is the justification for proposing the bill, she said. MS. HUBBARD told members she is glad the [House Health, Education and Social Services Standing Committee] understands the problems encountered when meeting any maintenance requirement. "It is the thing that gets cut first," she said. Anyone who has lived in Anchorage has witnessed this, she offered. [The legislature] has determined that districts must create a maintenance program to save money in [new] construction costs by allowing districts to spend money to maintain schools, she pointed out. The review committee recommended the program to the [State Board of Education and Early Development] and the commissioner, and it realized that additional costs would be incurred with this program by putting it into law. MS. HUBBARD agreed with Mr. Jeans' comments that [EED] similarly recognizes this problem and is willing to work with school districts. She reported that a person has been traveling through the state to work with [district] maintenance personnel; this has helped districts find simpler solutions [to maintenance problems] so that districts can qualify under the program. She expressed appreciation for this committee's hearing the issue and acknowledging the problems that the 70/30 [funding ratio] is causing. Number 1218 CHAIR DYSON stated to Representative Joule that he would entertain, pending committee approval, some meaningful adjustments to the 70/30 ratio, as a committee bill. He characterized this as a heavy-handed action that legislators tend to do in attempts to "get everybody to shape up and do the right thing, and it often is counterproductive." He conveyed his preference for a better law that neither forces [EED] into the position of entertaining waivers nor causes well-meaning people and organizations to continue to try to "cook the books ... in the most favorable sort of way - not to do something bad, but to meet an arbitrary and capricious guideline that was somewhat thoughtlessly put in place." REPRESENTATIVE WILSON moved to report HB 451 out of committee with individual recommendations and the accompanying zero fiscal note. REPRESENTATIVE JOULE observed that some of the best maintenance plans he has seen have been from some of the smaller districts. He noted that this is a concern for the smaller districts because they are trying to meet the [70/30 ratio requirement]. CHAIR DYSON related his impression that [maintenance plans] are almost entirely dependent on whether the local people who are involved really care, not on whether a state law mandates them. Number 1327 CHAIR DYSON announced that there being no objection, HB 451 was moved out of the House Health, Education and Social Services Standing Committee.
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