Legislature(1993 - 1994)

03/09/1993 03:00 PM House HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  Number 230                                                                   
  CHAIR G. DAVIS invited Gary Bader to testify.                                
  SERVICES, DEPARTMENT OF EDUCATION, testified in support of                   
  HB 82 and HB 83, which would receive money if HB 156 and                     
  HB 157 were passed.  He said HB 82 would establish two                       
  categories of grants:  construction and major maintenance                    
  grants, which would build on the existing school funding                     
  process known as the HB 37 process, and would establish a                    
  requirement that school districts match state grants with                    
  their own funds, ranging from 5 percent to 40 percent of the                 
  state grant for FY94, depending on the wealth of the                         
  districts.  That matching percentage, for schools with more                  
  than $100,000 average daily membership (ADM), would increase                 
  5 percent each year.  The match for Rural Education                          
  Attendance Areas (REAAs) would be set at 3.8 percent,                        
  phased in over four years, increasing by nothing in FY94, 1                  
  percent in FY95, 2.4 percent in FY96, and 3.8 percent in                     
  Number 260                                                                   
  MR. BADER spoke to HB 83, including 24 projects the                          
  Department of Education had classified as health-life-safety                 
  projects, and two previously funded projects totalling $6                    
  million, making a total of $771 million in projects                          
  submitted by school districts.  Section 1 of HB 83                           
  appropriates $107,688,000 to the school construction grant                   
  fund for all priority one projects submitted, and the first                  
  11 unhoused student programs, he said.  Mr. Bader said HB 83                 
  also appropriates $42,312,000 for the major maintenance fund                 
  to deal with category three and four before they became                      
  health-life-safety projects.                                                 
  REP. G. DAVIS apologized for letting Mr. Bader testify on                    
  HB 82 and HB 83, when discussion had begun on HB 156 and                     
  HB 157.                                                                      
  Number 295                                                                   
  REP. VEZEY asked for a definition of ADM.                                    
  MR. BADER answered that ADM meant "average daily                             
  REP. VEZEY asked for examples of communities with "full                      
  value" of property less than $100,000 per ADM, as referred                   
  to in HB 82, page 2.                                                         
  MR. BADER answered that the Railbelt Denali Borough, St.                     
  Mary's, Hydaburg, Klawock, Nenana, Kake and Hoonah were                      
  communities with less than $100,000 in taxable real value                    
  per student.                                                                 
  REP. VEZEY asked which communities had between $100,000 and                  
  $200,000 worth of property per student.                                      
  MR. BADER answered they were Tanana, Galena, Yakutat, Lake                   
  and Peninsula Borough, Craig, Nome, Northwest Arctic and                     
  REP. VEZEY asked which communities had between $200,000 and                  
  $600,000 worth of property per student.                                      
  MR. BADER answered they were Fairbanks, Aleutians East,                      
  Dillingham, Wrangell, Anchorage, Petersburg, Haines, Sitka,                  
  Juneau and more.                                                             
  REP. VEZEY asked which communities had more than $600,000                    
  value of property per student.                                               
  MR. BADER answered they were Bristol Bay, Unalaska, Valdez,                  
  and the North Slope Borough.                                                 
  Number 320                                                                   
  (Rep. Bunde arrived at 3:28 p.m.)                                            
  REP. G. DAVIS proposed taking testimony on HB 156 and                        
  HB 157, and attempted to yield the chair to Rep. Bunde, who                  
  Number 354                                                                   
  via teleconference from Soldotna on HB 156 and HB 157.  He                   
  said the borough supported state aide for school                             
  construction and maintenance funds.  He said the current AS                  
  14.11.05-19 needed to be rewritten, as the current process                   
  was not working for larger school districts.  While the                      
  district supported any reasonable funding source, including                  
  bonds, permanent fund undistributed income account, new                      
  taxes, settlements, he said legislators, not school                          
  districts, should make such decisions.  He praised the                       
  administration for addressing a major school issue.                          
  Number 374                                                                   
  REP. BUNDE asked Mr. Gilman if he would support any funding                  
  source, including new taxes.                                                 
  MR. GILMAN answered yes.                                                     
  REP. BUNDE said Mr. Gilman was a brave man.                                  
  CHAIR G. DAVIS, hearing no further public testimony on                       
  HB 156 and HB 157, brought HB 82 and HB 83 to the table.                     
  REP. B. DAVIS asked if the board planned any action on                       
  HB 156 and HB 157.                                                           
  CHAIR G. DAVIS answered no; the committee would just hold                    
  hearings.  Hearing no other requests to testify, he invited                  
  Mr. Gilman to testify on HB 82 and 83.                                       
  HB 82 - SCHOOL CONSTRUCTION MAINTENANCE GRANTS                               
  HB 83 - APPROP: PUBLIC SCHOOLS/FACILITIES FUND                               
  Number 394                                                                   
  MR. GILMAN said that HB 84 did not go far enough in changing                 
  school funding.  He said the state should scrap the HB 37                    
  funding process for schools as too bulky and time-consuming.                 
  He said he supported creation of different two funds:  for                   
  school construction and for major maintenance.  He said                      
  every school district in the state had maneuvered to get its                 
  projects to the top of the list, and much of the $770                        
  million in requests for FY94 was not truly what the                          
  districts needed and, if school districts were honest with                   
  themselves and the state, they would establish different                     
  funding priorities if given the chance.  He expressed                        
  support for matching funding on a sliding scale based on                     
  ADM, but opposed the 5 percent per year increase in the                      
  sliding scale, because it would encourage districts to hurry                 
  to have their projects built in the earlier years, and                       
  because the public would balk at voting for school                           
  construction bonds without being sure of the final cost for                  
  the work.                                                                    
  Number 442                                                                   
  REP. BUNDE asked Mr. Gilman what he would consider a fair                    
  maximum local contribution.                                                  
  MR. GILMAN said that many districts felt that a 30 percent                   
  local contribution, or a sliding scale up to 30 percent, was                 
  REP.BUNDE asked what would be a fair minimum, and noted that                 
  the bill called for a minimum of 3.8 percent phased in over                  
  several years.                                                               
  MR. GILMAN said he did not know, as he did not know the                      
  financial situation of the REAAs, though he knew it was hard                 
  for them to come up with cash for matching funds.  He said                   
  the REAAs should be required to make some matching                           
  contribution, either in sweat equity, land, or something to                  
  ensure some local contribution.                                              
  Number 465                                                                   
  CHAIR G. DAVIS ended discussion on HB 82 and HB 83 and said                  
  no action was planned on those two bills during the meeting.                 
  Number 474                                                                   
  testified from Juneau via teleconference answering                           
  questions.  He said the department had issued a written                      
  opinion saying the BP settlement did not have to be                          
  deposited in the constitutional budget reserve fund.  He                     
  pointed out that other bills pending in the legislature                      
  would have the opposite effect.  He noted the question of                    
  whether some of the appropriation under HB 157 would have to                 
  go into the mental health trust.  He cautioned the committee                 
  top avoid making double deposits to the trust through                        
  HB 157.  He said the attorney general had asked him to make                  
  clear that the current legislature should not feel bound by                  
  a previous legislature's policy decision to deposit six                      
  percent of general fund income into the mental health trust                  
  income account, as provided in AS 37.14.011, and that the                    
  actual amount of contribution could be varied up or down.                    
  CHAIR G. DAVIS acknowledged Mr. Baldwin's advice, and noted                  
  that committee members had been given copies of the attorney                 
  general's 21-page opinion on the issue.  Chair Davis said,                   
  "It seems strange to me, not being an attorney, I read that                  
  statute and I thought it was pretty plain language, and I                    
  feel my interpretation does belong there, although I have 21                 
  pages of testimony here by our experienced attorneys that                    
  says I'm wrong.  I'll be looking forward to reading that."                   
  Number 530                                                                   
  REP. BUNDE commented, "Not really a question, thank you, Mr.                 
  Chairman, just something to clarify, perhaps.  I'm not an                    
  attorney, but I am the chairman of this committee, and that                  
  money will not be used to move a bill out of this                            
  REP. VEZEY asked what would happen if the legislature passed                 
  HB 82 and HB 83, and the measure were later challenged in                    
  court, and if the Alaska Supreme Court were to order the BP                  
  settlement money to be deposited into the budget reserve.                    
  Number 540                                                                   
  MR. BALDWIN answered that he understood that HB 156 would                    
  create a reserve fund into which HB 157 would appropriate                    
  funds.  He said he did not know of further plans to spend                    
  from the reserve fund.  He said under the bill, money is                     
  transferred to the mental health trust income account.  He                   
  said that, if Rep. Vezey's scenario were to pass, that                       
  "there will have to be some readjusting of the books.  In                    
  other words, revenues would have to be deposited to make up                  
  the difference, if amounts are expended from the reserve                     
  fund.  And what we've said in our opinion basically is that                  
  the constitutional budget reserve fund should be interpreted                 
  in a way that leaves all valid dedicated funds intact.  So                   
  to the extent that the mental health trust income account is                 
  a valid dedicated fund, the constitutional budget reserve                    
  fund should not be interpreted in a way to interrupt any                     
  amount of revenue that would go to that fund.                                
  So under statute, if six percent is mandated to go there,                    
  and it is considered a dedicated fund, then that money would                 
  have properly gone there under our interpretation (of the)                   
  constitutional budget reserve fund, and I don't see that the                 
  supreme court interpreting the constitutional budget reserve                 
  fund as being an implied amendment to the other dedicated                    
  funds which are properly created in the constitution, for                    
  example, the Alaska permanent fund, I don't see them doing                   
  that, so I don't think there's going to be a lot of                          
  disruption on that part.  And to the extent that amounts are                 
  not expended from the reserve fund, which is created in 156,                 
  then the legislature would have the option of going back and                 
  transferring the money from the reserve fund to the                          
  constitutional budget reserve fund.  So I'm not sure a whole                 
  lot of chaos would result.  It only, it's potentially the                    
  amount expended and removed from the control of the state                    
  Number 570                                                                   
  REP. VEZEY asked whether Mr. Baldwin had said that if the                    
  supreme court overruled the attorney general's opinion, if                   
  the money was deposited in other statutorily created funds                   
  before that decision, that they would not have to be                         
  MR. BALDWIN said that it would have to be restored, but he                   
  agreed with Mr. Stastny that the reserve fund created by                     
  HB 157 would be under the legislature's complete control and                 
  could be appropriated for any purpose, including being                       
  returned to the constitutional budget reserve fund if                        
  necessary.  He said the department would defend its opinion                  
  Number 585                                                                   
  REP. VEZEY said he had been disappointed by supreme court                    
  action before.  He asked whether the state would have to                     
  expend general funds to reimburse school districts if they                   
  should issue bonds and begin building schools under the                      
  provisions of HB 156 and HB 157, but then later saw the                      
  supreme court overturn the bills' spending plans.                            
  MR. BALDWIN said he could not answer the question without                    
  more information, but the state should not promise to                        
  reimburse municipalities' should they decide to issue bonds                  
  under the bills, and everyone should understand the inherent                 
  risk of potential litigation.                                                
  TAPE 93-31, SIDE B                                                           
  Number 000                                                                   
  MR. BALDWIN said the department had hoped the legislature                    
  would have, in the interim before the current session, have                  
  come up with bills to interpret the constitution in a way                    
  that was agreeable to both the administration and the                        
  legislature, and such actions were in the offing.  He said                   
  the department was trying to remove some of the doubt that                   
  is dependant upon any possible litigation.                                   
  Number 045                                                                   
  ASSOCIATION-ALASKA, testified in Juneau supporting HB 156                    
  and HB 157.  She referred to a position paper on the bills                   
  she had sent to committee members.  MS. DOUGLAS said, "I                     
  just think it's a courageous step on the part of our                         
  governor and the administration.  It's forward thinking in                   
  terms of children and the future of our state.  It's a                       
  wonderful opportunity for this legislature to provide new                    
  opportunities for communities and children.  It's                            
  interesting to me that the debate is not over so much                        
  whether these funds are needed.  I mean, if you go -- a week                 
  ago I was in a school in Anchorage that was East High School                 
  where they have big buckets that's collecting water that's                   
  dripping from the ceilings.  And you can go to communities                   
  in Anchorage and Fairbanks where you see portables that are                  
  hooked up on the side of buildings where kids are having to                  
  go from one part of the main building to a portable unit.                    
  You know, you look at small schools that have, for example,                  
  in Fairbanks, the, they don't really have a gymnasium, they                  
  have a multi-purpose room that has everything from the                       
  lunchroom program to any activities they have.                               
  "And so I guess I just have a real concern that I think that                 
  again we're going to be hung up on whether we're going to                    
  save money or somehow put it into a fund that maybe should                   
  be or shouldn't be, rather than looking at the real needs of                 
  children and communities of this state.  And so I just ask                   
  all of you as representatives of our communities to                          
  seriously and thoughtfully look at ways we can get this                      
  money into our communities in a very, very, positive,                        
  forward-thinking, futuristic way of helping provide the best                 
  that we can give the kids in this state.                                     
  "So, I know that it's a complex decision, and I just hope                    
  that you'll maybe be courageous and make that decision to                    
  put that money into some funds that are desperately needed                   
  in communities.  Thank you."                                                 
  Number 090                                                                   
  REP. BUNDE said,  "Thank you, Ms. Douglas.  I can assure you                 
  that -- I'll assume the chair again, Rep. Davis has to leave                 
  -- as chair here I will be very courageous and put the money                 
  where it belongs, in the constitutional budget reserve.                      
  Having said that, let me assure you that I believe you, that                 
  all these school needs do exist.  It's just that this money                  
  isn't available to meet them.  We have to find the money                     
  somewhere else."                                                             
  Number 106                                                                   
  (Rep. Brice departed at 3:59 p.m.)                                           
  name is Dennis Gregory.  I'm a teacher.  I am a member of                    
  NEA-Alaska.  I'm here not at taxpayers' expense, and I'm                     
  here on my own time.  This is my spring break.  It's a                       
  little bit hard to speak after the comments of the chairman.                 
  In our school district we have the same kind of bucket                       
  problems, in Wasilla High School, Wasilla Junior High                        
  School.  We have a desperate need for new buildings.  We're                  
  overcrowded.  We have 60 percent of our buildings over                       
  capacity.  We're in a position where we have portables in                    
  most of our buildings.  I teach at one of the smaller                        
  buildings, and next year we will have portables.  We face a                  
  real desperate need here.  We have a possibility, an                         
  opening, an opportunity.  And yet in the middle of public                    
  testimony, we hear from the chairman of this committee he                    
  will not allow it.  Excusing my upset and concern about                      
  this, I think that's quite arrogant.  It's been said that                    
  power corrupts and absolute power corrupts absolutely, and I                 
  think that's what's happened here, sir."                                     
  CHAIR BUNDE responded, "If you would care for a response, I                  
  certainly would.  I am a life-long teacher, and my wife is a                 
  life-long teacher.  I understand the needs of education.  I                  
  also understand that we don't solve the needs of education                   
  by having a one-time only, get-rich-quick scheme.  And five                  
  or ten years down the road, when the state will have less                    
  money, how are you going to fund your bucket problem then?"                  
  Number 145                                                                   
  CHAIR BUNDE continued, "You see there may be a misconception                 
  about the constitutional budget reserve.  I didn't create                    
  that.  I read the constitution; I think we're hearing                        
  attorney opinions that are playing semantic games with us.                   
  And it says the money goes there.  Then, if the majority of                  
  your legislators want that money spent on education, it                      
  takes a supermajority and we can do it.  Have to pay it                      
  back, but we can do it.  But, I would disagree with you.                     
  The power that you refer to comes from 9,000-plus registered                 
  voters that have told me, `Get state spending in line.                       
  Don't do another get-rich-quick scheme.  Find a little pot                   
  of money, spend it and put off the day of reckoning to                       
  another day.' In my opinion, that money isn't available                      
  directly to education.  It's certainly available to                          
  education or any other state cause that requires funding,                    
  with a majority vote from the legislature.  Now, I'm sorry                   
  if you take personal offense.  None was intended.  I'm                       
  saying, let's not kid ourselves that we can spend ourselves                  
  out of the deficit that the state is facing.  Obviously, one                 
  of the highest priorities for me is investing in education.                  
  I strongly ascribe to that notion that, if you think                         
  education is expensive, try ignorance.  But I can't do it in                 
  good conscience on anything less than a fiscally-sound                       
  manner.  Something that will cause us even greater problems                  
  some five or 10 years down the road is not a way to solve                    
  Alaska's educational problems.  We need to fund education,                   
  no question about it.  I see the portable, I see the                         
  maintenance problems.  There isn't any ...  I'll be happy to                 
  do it.  However, I have to live by the constitution, as we                   
  all do, and that money isn't available directly to                           
  Number 182                                                                   
  REP. NICHOLIA said, "I would just like to state for the                      
  record that I do not agree with the chairman of the                          
  committee, that I feel that if you don't take care of the                    
  problems, the construction and the maintenance problems now,                 
  then 10 years and 20 years down the road, you're going to                    
  find a worse problem, and it's going to cost the state more                  
  money.  And that is why I disagree with what you just said.                  
  Thank you."                                                                  
  Number 200                                                                   
  CHARLIE CRANGLE, A TEACHER FROM SEWARD, testified in Juneau                  
  in support of HB 156 and HB 157, saying that if Chair Bunde                  
  believes the BP settlement is not available for school                       
  construction, then he should support increasing the                          
  instructional unit formula to $64,000 instead of $61,000.                    
  He said teachers were looking for an answer, and possibly                    
  were asking the legislature to do something                                  
  unconstitutional.  He predicted more social problems later                   
  if schools were not funded now, and said teachers would keep                 
  knocking on doors until something was done.                                  
  (Rep. Brice returned at 4:07 p.m.)                                           
  Number 234                                                                   
  CHAIR BUNDE informed all teachers listening that for each                    
  teacher seeking for more money, there were 10 other citizens                 
  saying that you cannot solve education problems by throwing                  
  money at them.  He said there is a need of additional                        
  educational investment in Alaska, in addition to the current                 
  funding level.  He stated that schools cost $3 million per                   
  day to run, and his mandate has been not to increase state                   
  spending.  He asked teachers to tell him what other social                   
  program they would have the state cut, such as roads,                        
  prisons, or health services.  He said he would even support                  
  more taxes if that was the will of his constituents.  He                     
  said the state was approaching the point at which residents                  
  would have to pay for the services they want.                                
  Number 258                                                                   
  REP. B. DAVIS replied, "I believe that we all have the same                  
  concern here.  We care about education.  It depends, I                       
  guess, on what your train of thought is where we should get                  
  the money, and I think that should not be the concern right                  
  now.  As the HESS Committee, we serve on this committee,                     
  even though we want to be fiscal conservatives and make sure                 
  that we do the right things.  In the end, it's not this                      
  committee that's going to decide where the finances will                     
  come from.  In the end, all bills that has this kind of note                 
  on it will go to the Finance Committee.  They will then, in                  
  turn, decide if they think they should bring that to us or                   
  make the adjustments.  I think what we need to be                            
  concentrating on right now, is this a valid bill?  Do we                     
  need to look at this and say, `Yeah, our schools are falling                 
  apart and we need to come up with some money for                             
  construction.  And where the money's going to come from is                   
  an issue that we will decide later.' I can't blame people                    
  for coming up saying, `Yeah, you got $630 million, or $680                   
  million, and you ought to take that money and use it.'                       
  Because all our constituents are telling us that, not just                   
  educators, but other people are coming saying use it for                     
  other projects.  But in the end, we have to decide if we're                  
  going to use that money from some of the savings that we                     
  have, or from the general funds money that comes in every                    
  year.  But we don't have to decide that here and now.  I                     
  think what we ought to be sticking to is, are these bills                    
  valid ...?"                                                                  
  REP. B. DAVIS said that the need remained for school                         
  maintenance and construction, and that the need would                        
  increase in the future as state revenues declined.  She                      
  encouraged committee members to return to the issue at a                     
  later time after having considered that the committee should                 
  deal with school construction needs, and not how to pay for                  
  them.  She disputed that the state lacked the money, saying                  
  it was a matter of deciding where to take it from.  She said                 
  not all the money from the BP settlement had to go to                        
  education, and she applauded the governor's effort to                        
  address the issue.  She said the windfall income was a                       
  welcome surprise, and expressed the hope that the state                      
  would receive more.                                                          
  Number 312                                                                   
  CHAIR BUNDE thanked Rep. B. Davis for her opinion and said                   
  that some people believe that it is fiscally irresponsible                   
  to spend money they don't have.                                              
  Number 317                                                                   
  REP. VEZEY said that if the legislature appropriated money                   
  unconstitutionally, it could face another issue similar to                   
  the mental health trust lands issue.                                         
  Number 330                                                                   
  CHAIR BUNDE said, "I was particularly taken with your idea                   
  of once concrete's poured, what's the state going to do when                 
  they find out they spent the money illegally.  And again,                    
  our focus here is not to decide on where that money goes.                    
  Certainly, I think I speak for the committee when we support                 
  and endorse funding of education in a prudent manner.  No                    
  problem's ever solved by throwing money on it.  But we also                  
  feel, speaking for myself, believe that education needs to                   
  be certainly a priority and well funded.  It's not.  Is                      
  there further testimony on this bill?  I close public                        
  testimony.  And for public information, it is not my                         
  intention to hear this bill again in the near future."                       
  CHAIR BUNDE ADJOURNED the meeting at 4:15 p.m.                               

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