Legislature(1995 - 1996)
03/26/1996 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 appropriately. Number 1473 REPRESENTATIVE ROBINSON wondered about the new needs in the communities that had not been forwarded to the Department of Education. 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 bill. 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 clarification. 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.