Legislature(2001 - 2002)

03/14/2002 03:03 PM HES

Audio Topic
* first hearing in first committee of referral
+ 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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