Legislature(1995 - 1996)

03/26/1996 08:05 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 546 - G.O. BONDS: SCHOOLS & UNIV.                                        
 The next order of business to come before the House State Affairs             
 Committee was HB 546.                                                         
 CHAIR JAMES announced HB 546 was a House State Affairs Committee              
 bill, but it was similar to a bill by Representative Jerry Mackie,            
 so he would present the introduction.                                         
 Number 0884                                                                   
 REPRESENTATIVE JERRY MACKIE explained several weeks ago he                    
 introduced HB 507 on the last day of the deadline because bonding             
 was important to consider for school construction issues.  It was             
 discovered since then that there simply was not enough money in the           
 capital budget to fund maintenance for public schools.  Therefore,            
 a creative approach was needed.  He asked Chair James to agree to             
 work with him to address this issue.  He said a committee backing             
 was needed to get the attention that this issue was warranted.  He            
 referred the committee members to the handout titled, "Legislative            
 Proposal Relating to Statewide School Major Maintenance and                   
 Construction"  He explained it was prepared by the Southeast                  
 Regional Resource Center (SERRC), an education group that provided            
 technical and professional assistance to school districts around              
 the state.  The resource center outlined the critical needs in the            
 state and the possible ways to accomplish this.  He referred the              
 committee members to page 2, and read some of the recommended                 
 criteria, "health and life safety of students, structural                     
 preservation...."  The current process of the Department of                   
 Education (DOE) was flawed according to any school district, unless           
 it was number one on the list.  The urban communities did not                 
 provide equity and parity to those areas, and it was heavily                  
 weighted to the rural areas.  House Bill 546 contained DOE's entire           
 list for 1996, word for word; and dollar for dollar.  It was a                
 place to start.  However, he felt there was not equity in this bill           
 for Southcentral, Anchorage, Kenai Peninsula, or Mat-Su                       
 communities.  There was about $80 million to $90 million for the              
 Fairbanks region.  The bill was heavily weighted to the rural                 
 areas.  According to the DOE, that was where most of the                      
 maintenance and new construction was needed.  He introduced the               
 bill knowing and understanding that there was not equity, but it              
 was a place to start.  He suggested looking at criteria such as               
 what was offered by SERRC to determine how to equalize the bill.              
 He explained he sent a letter to the caucus leaders in the various            
 regions of concern to ask them what it would take to achieve                  
 equity.  He said to move through the legislature a bill needed to             
 be equitable to all areas of the state.  Furthermore, before the              
 people would approve a bond initiative it would have to have                  
 fairness and equity as well.  He said, "please do not be alarmed at           
 the current structure of the list now."  He would be the first to             
 admit it needed a lot of work.  He suggested looking at the                   
 Anchorage School District and its current bond debt program as a              
 possible solution.  Furthermore, there were many rural schools that           
 did not need to be on the list because some were more critical than           
 others.  That was the case throughout the state.  He reiterated a             
 criteria was needed to determine which schools were more critical             
 than others.  He said he was wide open to come up with a solution.            
 He said this was a billion dollar problem, including the University           
 of Alaska facilities, so it would be hard to scratch the surface,             
 unless a creative approach was taken such as bonding.  The current            
 market for bonds was favorable.  Interest rates were low, the debt            
 was consistently going down, so the time was now to look at                   
 bonding.  The Administration also felt it was an excellent time.              
 In conclusion, there was a big maintenance problem throughout the             
 state that needed to be addressed, or it would cost the state more            
 money in the future to repair if it was left unattended now.                  
 Number 1345                                                                   
 REPRESENTATIVE ROBINSON agreed with the direction of HB 546, 100              
 percent.  She was concerned about the maintenance and school needs            
 that were left unattended.  She wondered what would happen to the             
 existing groups that were already in the capital budget.  Would               
 they move forward, or be taken out of the budget?                             
 Number 1370                                                                   
 REPRESENTATIVE MACKIE said there were one or two schools budgeted             
 for new construction, and four or five budgeted for major                     
 maintenance.  They were included in the bill because they were high           
 on the Administration's priority list.  That money, perhaps, could            
 be taken from the capital budget.  If there was bi-partisan support           
 for this bill those schools would not need to be a part of the                
 capital budget because they would participate under the criteria              
 ranking as all the other schools in the state.                                
 Number 1404                                                                   
 REPRESENTATIVE ROBINSON wondered what would happen if the bond                
 issue was not supported by the people.  How would that affect the             
 schools in the current capital budget?  She was looking out for the           
 schools in her district.                                                      
 Number 1445                                                                   
 REPRESENTATIVE MACKIE said he would be concerned also if that was             
 the situation in his district as well.  The initiative would go to            
 the ballot in November and become effective next year.  Therefore,            
 the current schools in the capital budget would probably not be               
 affected.  He said he was looking at the bigger problem throughout            
 the state, but he reiterated he understood the position of                    
 Representative Robinson.  It would have to be dealt with                      
 Number 1473                                                                   
 REPRESENTATIVE ROBINSON wondered about the new needs in the                   
 communities that had not been forwarded to the Department of                  
 Number 1497                                                                   
 REPRESENTATIVE MACKIE said the reality was that the $1 billion in             
 need would probably turn into $2 billion in need, if it appeared              
 the bill was to move forward.  He believed the most critical needs            
 were identified in the bill right now, however, because it was hard           
 to believe that the DOE would not know about the critical needs in            
 the communities.  It was such a big issue in the state right now              
 due to a lack of attention from previous Administrations, that the            
 bonding approach was the only way to address the problems.                    
 Number 1583                                                                   
 REPRESENTATIVE GREEN stated there were some schools in Anchorage              
 that should be on the list in HB 546.  The kids were skirting                 
 around puddles on the floor from leaking roofs in some schools, for           
 example.  He asked Representative Mackie if the British Petroleum             
 Settlement had been used up?  He also wondered if the money had               
 been misappropriated.  He stated he championed the idea of the                
 Number 1617                                                                   
 REPRESENTATIVE MACKIE replied a number of the Majority's schools              
 were taken care of during the settlement four years ago.  It did              
 take care of a lot of the problems, but there were still major                
 maintenance problems and new construction needs.  He cited a school           
 in Craig that was built for 110 students of which 400 students were           
 attending the school.  That was just one example of the many.                 
 Every district could point to a problem that existed.                         
 Number 1674                                                                   
 REPRESENTATIVE GREEN wondered if Representative Mackie knew the               
 amount that was allocated to the schools from the settlement.  He             
 further wondered if there was a chance that the money would be                
 siphoned off.                                                                 
 Number 1692                                                                   
 REPRESENTATIVE MACKIE said the amount was approximately $200                  
 million in the form of direct grants to the districts for their               
 construction projects.  The money did take care of the identified             
 projects.  He did not see how it could have be misappropriated,               
 however, because the problems were so critical.                               
 Number 1738                                                                   
 REPRESENTATIVE PORTER said he took offense that the majority                  
 benefited from the settlement money while the minority did not.  He           
 asserted that was not the case.  Furthermore, direct grants                   
 probably could not be mismanaged assuming it was justifiable in the           
 first place.  However, if the University of Alaska was included in            
 the bond project, specific language was needed.  He explained money           
 had been appropriated before to the university for a specific                 
 purpose but was never used for that purpose.  He asked                        
 Representative Mackie what would the debt service requirement be              
 for the state?                                                                
 Number 1800                                                                   
 REPRESENTATIVE MACKIE said the DOE was reluctant to provide that              
 information because it was currently working on a bond proposal for           
 the Administration for prisons.  He explained it would depend on              
 the final number for the schools which ranged from $8 million to              
 $30 million depending on the number of schools.  More information             
 would be available at the next scheduled hearing.                             
 Number 1845                                                                   
 CHAIR JAMES said it was obvious after numerous discussions with               
 individuals regarding this issue that many of the larger districts            
 probably had not submitted projects knowing full well that they               
 would not be funded.  She suggested an allocation process based on            
 an estimated need for each district.  She said in the Fairbanks               
 area that would be difficult, however, because it was an active               
 community.  Moreover, in 1993, $20 million of the approximately               
 $173 million spent on schools, went to the Fairbanks Northstar                
 Borough School District along with a bonding package of which the             
 state would pay 70 percent of a bond.  The school district in                 
 Fairbanks went to the people twice with bond projects and each time           
 it was turned down.  It was called the "$65 million high school"              
 discussion in 1993.  A future vote was in the works in May of this            
 year.  She felt it would be passed or the money would be lost to              
 another district.  She agreed the DOE process was not equitable.              
 She believed in more local control.                                           
 Number 2080                                                                   
 REPRESENTATIVE MACKIE stated he did mean any disrespect regarding             
 his comment about the Majority.  The urban areas did not receive              
 the money nor was the DOE's list followed.  It was widely                     
 acknowledged it was not a fair process.  Therefore, the committee             
 process was selected to ensure a fair process.  Furthermore, he did           
 not believe the DOE's process was flawed or unfair.  The department           
 looked at the current needs.  He felt an allocation system to the             
 various school districts was unfair because most rural communities            
 did not have the ability to bond.  The only solution he could think           
 of was a critical needs analysis using an objective criteria rather           
 than a political criteria.  He did not have all the answers,                  
 however, but stated the best way was to include all the regions.              
 He explained the Department of Education was required by law to               
 defend its list in HB 546.  The dollar amount could be used,                  
 according to the DOE, and the legislature could determine the                 
 disparity allocating the additional money needed, for example.                
 Number 2253                                                                   
 CHAIR JAMES said everything that had been applied to the state for            
 was in the list in HB 546.  That, however, was not all the needs.             
 She reiterated there were some areas that probably did not submit             
 anything because they felt like there was not a need.                         
 Number 2267                                                                   
 REPRESENTATIVE IVAN said he was confused about the final list of              
 the DOE.  He explained there was a prior list.  He asked for                  
 Number 2281                                                                   
 CHAIR JAMES replied she had been trying to determine that herself.            
 Moreover, she felt this would have to be a political decision                 
 because every decision made in Juneau was a political decision.  It           
 was a dream to assume that any other type of decision would be                
 made.  There was a political reality to this issue.                           
 Number 2327                                                                   
 REPRESENTATIVE MACKIE said he did not disagree with Chair James.              
 He said the areas that were not equalized needed to be addressed in           
 HB 546 politically, and not according to the DOE's list.  He felt             
 it was necessary to look at the list and use the numbers while                
 looking at the other inequities around the state to come up with a            
 package that would pass the legislature and the voters.  The only             
 way to reach that was through equity.                                         

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