Legislature(2019 - 2020)BUTROVICH 205

04/15/2019 09:00 AM EDUCATION

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Audio Topic
05:01:13 PM Start
05:02:15 PM SB64
05:32:24 PM Confirmation Hearing(s): Professional Teaching Practices Commission
05:53:07 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 5:00 p.m. Today --
-- Please Note Date --
+ Consideration of Governor's Appointees: TELECONFERENCED
Professional Teaching Practices Commission
Chris Reitan - Craig
+= SB 64 REPEAL STATE DEBT REIMBURSE. FOR SCHOOLS TELECONFERENCED
Moved CSSB 64(EDC) Out of Committee
+= SB 79 VIRTUAL ED/TEACHER EXAM./COURSE EXAM. TELECONFERENCED
<Bill Hearing Canceled>
*+ SB 114 VIRTUAL ED; COLL CR FOR HS; MISC ED ADMIN TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
**Streamed live on AKL.tv**
         SB 64-REPEAL STATE DEBT REIMBURSE FOR SCHOOLS                                                                      
                                                                                                                                
5:02:15 PM                                                                                                                    
CHAIR STEVENS announced the consideration of SB 64. He stated                                                                   
his intent to report the bill out of committee.                                                                                 
                                                                                                                                
5:02:55 PM                                                                                                                    
SENATOR COSTELLO moved to adopt Amendment 1, work order 31-                                                                     
GS1091\A.1, Caouette, 3/21/19:                                                                                                  
                                                                                                                                
                          AMENDMENT 1                                                                                       
                                                                                                                                
     OFFERED IN THE SENATE                   BY SENATOR COSTELLO                                                                
         TO: SB 64                                                                                                              
                                                                                                                                
     Page 1, line 1:                                                                                                            
          Delete "repealing"                                                                                                  
          Insert "relating to"                                                                                                
                                                                                                                                
     Page 2, line 29:                                                                                                           
          Delete "former"                                                                                                   
                                                                                                                                
     Page 3, lines 2 - 27:                                                                                                      
          Delete all material and insert:                                                                                       
        "* Sec. 4. AS 14.11.100(a) is amended to read:                                                                      
               (a)   During  each  fiscal year,  the state  shall                                                               
          allocate to a municipality that is a school district                                                                  
          the following sums:                                                                                                   
                    (1)  payments made by the municipality                                                                      
          during  the  fiscal  year two  years  earlier  for  the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          bonds,  notes, or  other  indebtedness incurred  before                                                               
          July 1, 1977, to pay costs of school construction;                                                                    
                    (2)  90 percent of                                                                                          
                         (A)  payments made by the municipality                                                                 
               during the  fiscal year two years  earlier for the                                                               
               retirement   of   principal    and   interest   on                                                               
               outstanding  bonds, notes,  or other  indebtedness                                                               
               incurred after  June 30, 1977, and  before July 1,                                                               
               1978, to pay costs of school construction;                                                                       
                         (B)  cash payments made after June 30,                                                                 
               1976,   and   before    July 1,   1978,   by   the                                                               
               municipality  during  the  fiscal year  two  years                                                               
               earlier to pay costs of school construction;                                                                     
                    (3)  90 percent of                                                                                          
                         (A)  payments made by the municipality                                                                 
               during the  fiscal year two years  earlier for the                                                               
               retirement   of   principal    and   interest   on                                                               
               outstanding  bonds, notes,  or other  indebtedness                                                               
               incurred   after   June 30,   1978,   and   before                                                               
               January 1,   1982,   to   pay  costs   of   school                                                               
               construction      projects     approved      under                                                               
               AS 14.07.020(a)(11);                                                                                             
                         (B)  cash payments made after June 30,                                                                 
               1978,   and   before    July 1,   1982,   by   the                                                               
               municipality  during  the  fiscal year  two  years                                                               
               earlier  to  pay   costs  of  school  construction                                                               
               projects approved under AS 14.07.020(a)(11);                                                                     
                    (4)  subject to (h) and (i) of this section,                                                                
               up to 90 percent of                                                                                              
                         (A)  payments made by the municipality                                                                 
               during the current fiscal  year for the retirement                                                               
               of  principal and  interest on  outstanding bonds,                                                               
               notes,  or   other  indebtedness   incurred  after                                                               
               December 31,   1981,   and   authorized   by   the                                                               
               qualified  voters   of  the   municipality  before                                                               
               July 1,   1983,    to   pay   costs    of   school                                                               
               construction,  additions  to  schools,  and  major                                                               
               rehabilitation  projects that  exceed $25,000  and                                                               
               are approved under AS 14.07.020(a)(11);                                                                          
                         (B)  cash payments made after June 30,                                                                 
               1982,   and   before    July 1,   1983,   by   the                                                               
               municipality  during  the  fiscal year  two  years                                                               
               earlier  to  pay  costs  of  school  construction,                                                               
               additions  to  schools, and  major  rehabilitation                                                               
               projects  that  exceed  $25,000 and  are  approved                                                               
               under AS 14.07.020(a)(11); and                                                                                   
                         (C)  payments made by the municipality                                                                 
               during the current fiscal  year for the retirement                                                               
               of  principal and  interest on  outstanding bonds,                                                               
               notes,  or  other  indebtedness to  pay  costs  of                                                               
               school  construction,  additions to  schools,  and                                                               
               major rehabilitation projects  that exceed $25,000                                                               
               and are  submitted to the department  for approval                                                               
               under  AS 14.07.020(a)(11)  before  July 1,  1983,                                                               
               and  approved  by  the  qualified  voters  of  the                                                               
               municipality  before  October 15,   1983,  not  to                                                               
               exceed a  total project cost of  (i) $6,600,000 if                                                               
               the   annual   growth   rate  of   average   daily                                                               
               membership of the municipality  is more than seven                                                               
               percent  but   less  than  12  percent,   or  (ii)                                                               
               $20,000,000 if  the annual growth rate  of average                                                               
               daily  membership   of  the  municipality   is  12                                                               
               percent or  more; payments made by  a municipality                                                               
               under  this subparagraph  on  total project  costs                                                               
               that exceed  the amounts set  out in (i)  and (ii)                                                               
               of  this subparagraph  are  subject  to (5)(A)  of                                                               
               this subsection;                                                                                                 
                    (5)   subject to (h)  - (j) of  this section,                                                               
               80 percent of                                                                                                    
                         (A)  payments made by the municipality                                                                 
               during  the  fiscal  year for  the  retirement  of                                                               
               principal  and  interest   on  outstanding  bonds,                                                               
               notes,  or other  indebtedness  authorized by  the                                                               
               qualified voters of the municipality                                                                             
                              (i)  after June 30, 1983, but                                                                     
                    before  March 31,  1990,   to  pay  costs  of                                                               
                    school  construction,  additions to  schools,                                                               
                    and   major   rehabilitation  projects   that                                                               
                    exceed   $25,000  and   are  approved   under                                                               
                    AS 14.07.020(a)(11); or                                                                                     
                              (ii)  before July 1, 1989, and                                                                    
                    reauthorized before November 1,  1989, to pay                                                               
                    costs  of school  construction, additions  to                                                               
                    schools,  and  major rehabilitation  projects                                                               
                    that  exceed $25,000  and are  approved under                                                               
                    AS 14.07.020(a)(11); and                                                                                    
                         (B)  cash payments made after June 30,                                                                 
               1983, by  the municipality during the  fiscal year                                                               
               two  years   earlier  to   pay  costs   of  school                                                               
               construction,  additions  to  schools,  and  major                                                               
               rehabilitation  projects that  exceed $25,000  and                                                               
               are  approved  by  the department  before  July 1,                                                               
               1990, under AS 14.07.020(a)(11);                                                                                 
                    (6)  subject to (h) - (j) and (m) of this                                                                   
          section,   70  percent   of   payments   made  by   the                                                               
          municipality during the fiscal  year for the retirement                                                               
          of principal and interest  on outstanding bonds, notes,                                                               
          or  other  indebtedness  authorized  by  the  qualified                                                               
          voters of the municipality  on or after April 30, 1993,                                                               
          but  before  July 1,  1996,  to  pay  costs  of  school                                                               
          construction,   additions   to   schools,   and   major                                                               
          rehabilitation  projects that  exceed $200,000  and are                                                               
          approved under AS 14.07.020(a)(11);                                                                                   
                    (7)  subject to (h) - (j) and (m) of this                                                                   
          section,   70  percent   of   payments   made  by   the                                                               
          municipality during the fiscal  year for the retirement                                                               
          of principal and interest  on outstanding bonds, notes,                                                               
          or  other  indebtedness  authorized  by  the  qualified                                                               
          voters of  the municipality  after March 31,  1990, but                                                               
          before  April 30,   1993,  to   pay  costs   of  school                                                               
          construction,   additions   to   schools,   and   major                                                               
          rehabilitation projects;                                                                                              
                    (8)  subject to (h), (i), (j)(2) - (5), and                                                                 
          (n) of  this section and  after projects funded  by the                                                               
          bonds, notes, or other  indebtedness have been approved                                                               
          by  the commissioner,  70 percent  of payments  made by                                                               
          the  municipality  during  the   fiscal  year  for  the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          bonds, notes,  or other indebtedness authorized  by the                                                               
          qualified  voters  of  the  municipality  on  or  after                                                               
          July 1, 1995, but before July 1,  1998, to pay costs of                                                               
          school  construction, additions  to schools,  and major                                                               
          rehabilitation  projects that  exceed $200,000  and are                                                               
          approved under AS 14.07.020(a)(11);                                                                                   
                    (9)  subject to (h), (i), (j)(2) - (5), and                                                                 
          (n) of  this section and  after projects funded  by the                                                               
          bonds, notes, or other  indebtedness have been approved                                                               
          by  the commissioner,  70 percent  of payments  made by                                                               
          the  municipality  during  the   fiscal  year  for  the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          bonds, notes,  or other indebtedness authorized  by the                                                               
          qualified  voters  of  the  municipality  on  or  after                                                               
          July 1, 1998, but before July 1,  2006, to pay costs of                                                               
          school  construction, additions  to schools,  and major                                                               
          rehabilitation  projects that  exceed $200,000  and are                                                               
          approved under AS 14.07.020(a)(11);                                                                                   
                    (10)  subject to (h), (i), and (j)(2) - (5)                                                             
          [, AND (o)] of this  section, and after projects funded                                                               
          by the  bonds, notes,  or other indebtedness  have been                                                               
          approved by  the commissioner,  70 percent  of payments                                                               
          made  by the  municipality during  the fiscal  year for                                                               
          the   retirement   of   principal   and   interest   on                                                               
          outstanding   bonds,  notes,   or  other   indebtedness                                                               
          authorized by the qualified  voters of the municipality                                                               
          on  or after  June 30,  1998, to  pay  costs of  school                                                               
          construction,   additions   to   schools,   and   major                                                               
          rehabilitation  projects  that   exceed  $200,000,  are                                                               
          approved   under  AS 14.07.020(a)(11),   and  are   not                                                               
          reimbursed under (n) of this section;                                                                                 
                    (11)  subject to (h), (i), and (j)(2) - (5)                                                                 
          of  this  section, and  after  projects  funded by  the                                                               
          bonds, notes, or other  indebtedness have been approved                                                               
          by the commissioner,  70 percent of payments  made by a                                                               
          municipality during the fiscal  year for the retirement                                                               
          of principal and interest  on outstanding bonds, notes,                                                               
          or  other  indebtedness  authorized  by  the  qualified                                                               
          voters of  the municipality on or  after June 30, 1999,                                                               
          but  before January 1,  2005, to  pay  costs of  school                                                               
          construction,   additions   to   schools,   and   major                                                               
          rehabilitation    projects     and    education-related                                                               
          facilities  that exceed  $200,000,  are approved  under                                                               
          AS 14.07.020(a)(11), and  are not reimbursed  under (n)                                                               
          [OR (o)] of this section;                                                                                             
                    (12)  subject to (h), (i), and (j)(2), (3),                                                                 
          and (5)  of this section,  60 percent of  payments made                                                               
          by  a  municipality  during the  fiscal  year  for  the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          bonds, notes,  or other indebtedness authorized  by the                                                               
          qualified  voters  of  the  municipality  on  or  after                                                               
          June 30,  1999,  but  before January 1,  2005,  to  pay                                                               
          costs  of school  construction,  additions to  schools,                                                               
          and  major   rehabilitation  projects   and  education-                                                               
          related facilities  that exceed $200,000,  are reviewed                                                               
          under  AS 14.07.020(a)(11),  and   are  not  reimbursed                                                               
          under (n) [OR (o)] of this section;                                                                                   
                    (13)  subject to (h), (i), and (j)(2) - (5)                                                             
          [, AND (p)] of this  section, and after projects funded                                                               
          by the  tax exempt bonds, notes,  or other indebtedness                                                               
          have been  approved by the commissioner,  70 percent of                                                               
          payments made by a municipality  during the fiscal year                                                               
          for  the  retirement  of   principal  and  interest  on                                                               
          outstanding   tax  exempt   bonds,   notes,  or   other                                                               
          indebtedness authorized by the  qualified voters of the                                                               
          municipality  on or  after  June 30,  1999, but  before                                                               
          October 31, 2006, to pay  costs of school construction,                                                               
          additions   to   schools,  and   major   rehabilitation                                                               
          projects and  education-related facilities  that exceed                                                               
          $200,000, are  approved under  AS 14.07.020(a)(11), and                                                               
          are not reimbursed under (n) [OR (o)] of this section;                                                                
                    (14)  subject to (h), (i), and (j)(2), (3),                                                             
          and  (5) [,  AND (p)]  of this  section, 60  percent of                                                               
          payments made by a municipality  during the fiscal year                                                               
          for  the  retirement  of   principal  and  interest  on                                                               
          outstanding   tax  exempt   bonds,   notes,  or   other                                                               
          indebtedness authorized by the  qualified voters of the                                                               
          municipality  on or  after  June 30,  1999, but  before                                                               
          October 31, 2006, to pay  costs of school construction,                                                               
          additions   to   schools,  and   major   rehabilitation                                                               
          projects and  education-related facilities  that exceed                                                               
          $200,000, are  reviewed under  AS 14.07.020(a)(11), and                                                               
          are not reimbursed under (n) [OR (o)] of this section;                                                                
                    (15)  subject to (h), (i), and (j)(2) - (5)                                                             
          [, AND (q)] of this  section, and after projects funded                                                               
          by the  bonds, notes,  or other indebtedness  have been                                                               
          approved by  the commissioner,  90 percent  of payments                                                               
          made by a  municipality during the fiscal  year for the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          bonds, notes,  or other indebtedness authorized  by the                                                               
          qualified  voters  of  the  municipality  on  or  after                                                               
          June 30,  1999, but  before  October 31,  2006, to  pay                                                               
          costs  of school  construction,  additions to  schools,                                                               
          and  major   rehabilitation  projects   and  education-                                                               
          related facilities  that exceed $200,000,  are approved                                                               
          under   AS 14.07.020(a)(11),   meet  the   10   percent                                                               
          participating share requirement  for a municipal school                                                               
          district under  the former participating  share amounts                                                               
          required under AS 14.11.008(b),  and are not reimbursed                                                               
          under (n) [OR (o)] of this section;                                                                                   
                    (16)  subject to (h), (i), and (j)(2) - (5)                                                                 
          of this section,  and after projects funded  by the tax                                                               
          exempt bonds,  notes, or  other indebtedness  have been                                                               
          approved by  the commissioner,  70 percent  of payments                                                               
          made by a  municipality during the fiscal  year for the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          tax   exempt  bonds,   notes,  or   other  indebtedness                                                               
          authorized by the qualified  voters of the municipality                                                               
          on  or after  October 1,  2006,  but before  January 1,                                                               
          2015, to  pay costs  of school  construction, additions                                                               
          to  schools,  and  major  rehabilitation  projects  and                                                               
          education-related facilities  that exceed  $200,000 and                                                           
          [,] are  approved under AS 14.07.020(a)(11) [,  AND ARE                                                               
          NOT REIMBURSED UNDER (o) OF THIS SECTION];                                                                            
                    (17)  subject to (h), (i), and (j)(2), (3),                                                                 
          and (5)  of this section,  60 percent of  payments made                                                               
          by  a  municipality  during the  fiscal  year  for  the                                                               
          retirement  of principal  and  interest on  outstanding                                                               
          tax   exempt  bonds,   notes,  or   other  indebtedness                                                               
          authorized by the qualified  voters of the municipality                                                               
          on  or after  October 1,  2006,  but before  January 1,                                                               
          2015, to  pay costs  of school  construction, additions                                                               
          to  schools,  and  major  rehabilitation  projects  and                                                               
          education-related facilities  that exceed  $200,000 and                                                           
          [,] are  reviewed under AS 14.07.020(a)(11) [,  AND ARE                                                               
          NOT REIMBURSED UNDER (o) OF THIS SECTION.                                                                             
                    (18)  REPEALED                                                                                              
                    (19)  SUBJECT TO (h), (i), AND (j)(2) - (5)                                                                 
          OF THIS SECTION,  AND AFTER PROJECTS FUNDED  BY THE TAX                                                               
          EXEMPT BONDS,  NOTES, OR  OTHER INDEBTEDNESS  HAVE BEEN                                                               
          APPROVED BY  THE COMMISSIONER,  50 PERCENT  OF PAYMENTS                                                               
          MADE BY A  MUNICIPALITY DURING THE FISCAL  YEAR FOR THE                                                               
          RETIREMENT OF PRINCIPAL OF  AND INTEREST ON OUTSTANDING                                                               
          TAX   EXEMPT  BONDS,   NOTES,  OR   OTHER  INDEBTEDNESS                                                               
          AUTHORIZED BY THE QUALIFIED  VOTERS OF THE MUNICIPALITY                                                               
          ON  OR AFTER  JULY  1,  2020, TO  PAY  COSTS OF  SCHOOL                                                               
          CONSTRUCTION,   ADDITIONS   TO   SCHOOLS,   AND   MAJOR                                                               
          REHABILITATION    PROJECTS     AND    EDUCATION-RELATED                                                               
          FACILITIES  THAT EXCEED  $200,000,  ARE APPROVED  UNDER                                                               
          AS 14.07.020(a)(11), AND  ARE NOT REIMBURSED  UNDER (o)                                                               
          OF THIS SECTION;                                                                                                      
                    (20)  SUBJECT TO (h), (i), AND (j)(2), (3),                                                                 
          AND (5)  OF THIS SECTION,  40 PERCENT OF  PAYMENTS MADE                                                               
          BY  A  MUNICIPALITY  DURING THE  FISCAL  YEAR  FOR  THE                                                               
          RETIREMENT OF PRINCIPAL OF  AND INTEREST ON OUTSTANDING                                                               
          TAX   EXEMPT  BONDS,   NOTES,  OR   OTHER  INDEBTEDNESS                                                               
          AUTHORIZED BY THE QUALIFIED  VOTERS OF THE MUNICIPALITY                                                               
          ON  OR AFTER  JULY  1,  2020, TO  PAY  COSTS OF  SCHOOL                                                               
          CONSTRUCTION,   ADDITIONS   TO   SCHOOLS,   AND   MAJOR                                                               
          REHABILITATION    PROJECTS     AND    EDUCATION-RELATED                                                               
          FACILITIES  THAT EXCEED  $200,000,  ARE REVIEWED  UNDER                                                               
          AS 14.07.020(a)(11), AND  ARE NOT REIMBURSED  UNDER (o)                                                               
          OF THIS SECTION].                                                                                                     
        * Sec. 5. AS 14.11.100(s) is amended to read:                                                                         
               (s)  Notwithstanding any other provision of law,                                                                 
          the  commissioner may  not approve  an application  for                                                               
          bond  debt reimbursement  made  by  a municipality  for                                                               
          school   construction   or    major   maintenance   for                                                               
          indebtedness authorized by the  qualified voters of the                                                               
          municipality on or after January  1, 2015 [, BUT BEFORE                                                               
          JULY 1, 2020].                                                                                                        
        * Sec. 6. AS 14.11.102(c) is amended to read:                                                                         
               (c)  The commissioner may not allocate funds to a                                                                
          municipality under  AS 14.11.100 for the  retirement of                                                               
          the  principal  of  and interest  on  outstanding  tax-                                                               
          exempt bonds,  notes, or other  indebtedness authorized                                                               
          by  the  qualified voters  of  the  municipality on  or                                                               
          after January 1, 2015 [, BUT BEFORE JULY 1, 2020]."                                                                   
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 6, lines 9 - 14:                                                                                                      
          Delete all material.                                                                                                  
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 6, line 15:                                                                                                           
          Delete "14.11.100, 14.11.102, and AS 37.15.011(b)(2)"                                                                 
          Insert "14.11.100(o), 14.11.100(p), and 14.11.100(q)"                                                                 
                                                                                                                                
     Page 6, following line 15:                                                                                                 
          Insert new bill sections to read:                                                                                     
      "* Sec. 10. Section 6, ch. 3, SLA 2015, is repealed.                                                                  
        * Sec. 11. The uncodified law of the State of Alaska is                                                               
     amended by adding a new section to read:                                                                                   
          APPLICABILITY.   This   Act   applies  to   bond   debt                                                               
     reimbursement for school construction and major maintenance                                                                
     incurred by a municipality on or after the effective date                                                                  
     of this Act."                                                                                                              
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 6, line 21:                                                                                                           
          Delete all material and insert:                                                                                       
        "* Sec. 13. This Act takes effect July 1, 2019."                                                                    
                                                                                                                                
5:03:03 PM                                                                                                                    
CHAIR STEVENS objected for purposes of discussion.                                                                              
                                                                                                                                
5:03:17 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
5:04:27 PM                                                                                                                    
CHAIR STEVENS reconvened the meeting.                                                                                           
                                                                                                                                
TOM   WRIGHT,  Staff,   Senator   Mia   Costello,  Alaska   State                                                               
Legislature, Juneau,  explained that Amendment 1  will not affect                                                               
the  moratorium after  January 1,  2015. It  would reinstate  the                                                               
language for  the debt on  bond debt  that was incurred  prior to                                                               
that  date. He  explained  that municipalities  issued bond  debt                                                               
under an agreement  with [the State of  Alaska] for reimbursement                                                               
at a certain percentage ranging  from 60 to 90 percent. Amendment                                                               
1 would  [prevent the  bill from affecting  the state's  share of                                                               
bond debt that is outstanding  and would instead limit the repeal                                                               
of the  bond reimbursement  program to bonds  issued on  or after                                                               
January 1, 2015]. Amendment 1  also contains substantial language                                                               
that references all the debt  that was incurred before January 1,                                                               
2015, he said.                                                                                                                  
                                                                                                                                
CHAIR  STEVENS  recapped that  Amendment  1  would not  have  any                                                               
impact  after  January 1,  2019,  but  it would  reinstate  prior                                                               
arrangements on [school construction bond] debt.                                                                                
                                                                                                                                
MR.  WRIGHT  answered  yes,  subject   to  appropriation  by  the                                                               
legislature.                                                                                                                    
                                                                                                                                
SENATOR  BEGICH  asked  for  clarification  that  the  bill  with                                                               
Amendment 1 would still terminate  the program, but not the prior                                                               
debt for municipalities.                                                                                                        
                                                                                                                                
MR. WRIGHT replied that is correct.                                                                                             
                                                                                                                                
5:06:20 PM                                                                                                                    
SENATOR BEGICH  asked for clarification that  debt payments would                                                               
still be subject to appropriation for those prior years.                                                                        
                                                                                                                                
MR. WRIGHT replied that is correct.                                                                                             
                                                                                                                                
SENATOR  STEVENS acknowledged  that this  was short  notice on  a                                                               
complex issue.                                                                                                                  
                                                                                                                                
5:06:48 PM                                                                                                                    
SENATOR HUGHES said she understood  that the state would still be                                                               
responsible for  [school construction  bond debt] prior  to 2015.                                                               
She  further understood  that  a moratorium  has  been in  effect                                                               
since  2015.  She asked  whether  Amendment  1 would  repeal  the                                                               
moratorium  going forward.  If so,  organized boroughs  would pay                                                               
100  percent   of  school  construction  costs   and  unorganized                                                               
boroughs  would still  be able  to  access 100  percent of  state                                                               
funding for their capital projects for schools.                                                                                 
                                                                                                                                
MR. WRIGHT  deferred to  the department,  but he  understood that                                                               
was correct.                                                                                                                    
                                                                                                                                
SENATOR BEGICH  remarked that even  the unorganized  boroughs are                                                               
required  to do  some minimal  capital matching,  perhaps two  or                                                               
five percent.                                                                                                                   
                                                                                                                                
MR.  WRIGHT responded  that Amendment  1 has  some references  to                                                               
subsections  [AS 14.11.100}  (o), (p),  and (q)  [related to  the                                                               
amount   of    school   construction   projects    approved   for                                                               
reimbursement by  the department] scattered throughout  the bill.                                                               
In his  discussions with  the department  prior to  this hearing,                                                               
DEED indicated its preference to  retain these references because                                                               
of some nuances with the  school bond debt reimbursement program.                                                               
The department  can further explain  the rationale  for retaining                                                               
the  references.  In  response  to  Chair  Stevens,  he  directed                                                               
attention to page and line references in Amendment 1:                                                                           
                                                                                                                                
     Page 4, line 16: [,AND (o)]                                                                                                
     Page 5, line 1                                                                                                             
     Page 5, line 8                                                                                                             
                                                                                                                                
CHAIR STEVENS clarified that the concern was about "and."                                                                       
                                                                                                                                
MR.  WRIGHT reiterated  the references  were to  subsections (o),                                                               
(p), and (q). He referred to page 5, line 10.                                                                                   
                                                                                                                                
CHAIR STEVENS said he didn't see an (o) there                                                                                   
                                                                                                                                
MR. WRIGHT  replied that  page 5,  line 10  referenced subsection                                                               
(p).                                                                                                                            
                                                                                                                                
MR.  WRIGHT directed  attention  to the  following references  in                                                               
Amendment 1:                                                                                                                    
                                                                                                                                
     Page 5, line 18: [OR (o)]                                                                                                  
     Page 5, line 19: [AND (p)]                                                                                                 
     Page 5, line 26: [OR (o)]                                                                                                  
     Page 5, line 27: [AND (q)]                                                                                                 
     Page 6, line 5: [OR (o)]                                                                                                   
                                                                                                                                
MR. WRIGHT  referred to page 6,  line 15 of Amendment  1. He said                                                               
the department  recommended this  language be reinstated  and not                                                               
be deleted:                                                                                                                     
                                                                                                                                
     [,AND ARE NOT REIMBURSED UNDER (o) OF THIS SECTION].                                                                       
                                                                                                                                
                                                                                                                                
MR.  WRIGHT  referred  to  page  6,  lines  22-23.  He  said  the                                                               
department recommended the following language be reinstated:                                                                    
                                                                                                                                
     [, AND ARE NOT REIMBURSED UNDER (o) OF THS SECTION.                                                                        
                                                                                                                                
CHAIR STEVENS asked for further  clarification that this language                                                               
would not be deleted.                                                                                                           
                                                                                                                                
MR. WRIGHT said that is correct.                                                                                                
                                                                                                                                
MR.  WRIGHT referred  to  page  8 line  [5]  of  Amendment 1.  He                                                               
explained that [language on line 5 would be deleted, which read:                                                                
                                                                                                                                
     "14.11.100, 14.11.102, and AS 37.15.011(b)(2)."                                                                            
                                                                                                                                
He referred  to language on  page 8, line  6, which would  not be                                                               
deleted. It read:                                                                                                               
                                                                                                                                
     Insert "14.11.100(o), 14.11.100(p) and 14.11.100(q).                                                                       
                                                                                                                                
CHAIR STEVENS asked for further clarification on the reference.                                                                 
                                                                                                                                
MR.  WRIGHT remarked  that the  department just  informed him  of                                                               
these changes.                                                                                                                  
                                                                                                                                
CHAIR  STEVENS asked  the department  to explain  the recommended                                                               
changes.                                                                                                                        
                                                                                                                                
5:12:44 PM                                                                                                                    
ELWIN BLACKWELL, School Finance  Manager, Department of Education                                                               
and Early Development (DEED), Juneau,  said that subsections (o),                                                               
(p), and  (q) in Amendment 1,  reference the part of  the statute                                                               
that  sets  some limits  on  the  amount  of principal  that  the                                                               
department  could approve  for capital  projects. The  department                                                               
noticed that  subsections (m) and  (n) were left in  Amendment 1.                                                               
These  subsections also  set  limits on  how  much principal  the                                                               
department could approve during those earlier timeframes.                                                                       
                                                                                                                                
MR. BLACKWELL explained  that it didn't seem  reasonable to leave                                                               
some limitations in  but remove others. One  concerns in removing                                                               
those  limitations  was  the  possibility  of  some  prior  voter                                                               
authorization  for  bonds not  yet  sold  so jurisdictions  could                                                               
later request  department approval.  While he  was unsure  if any                                                               
prior  bond approval  exists, the  possibility  exists, he  said.                                                               
Therefore, the  department recommended  leaving that  boundary in                                                               
place since  it would not  affect the purpose. Amendment  1 would                                                               
keep any  new [state school  debt reimbursement]  from occurring,                                                               
but  the program  would remain  active to  reimburse the  current                                                               
outstanding [school construction] debt.                                                                                         
                                                                                                                                
5:14:46 PM                                                                                                                    
HEIDI   TESHNER,  Director,   Administrative  Services   Section,                                                               
Department of Education and Early  Development (DEED), Juneau, in                                                               
response to  an earlier question  from Senator  Hughes, explained                                                               
that  the  major  maintenance  and  school  construction  program                                                               
currently  set out  in statute  would  continue. REAAs  [Regional                                                               
Educational Attendance Areas], cities  and boroughs can apply for                                                               
reimbursement  under  the  program. These  entities  could  still                                                               
request reimbursement  for a school construction  project that is                                                               
not debt related.                                                                                                               
                                                                                                                                
SENATOR  HUGHES  recalled  that  Senator  Begich  indicated  that                                                               
perhaps  some  of the  borough  schools  have a  requirement  for                                                               
matching funds.                                                                                                                 
                                                                                                                                
MS. TESHNER  replied that  any project  approved under  the major                                                               
maintenance  or   school  construction  grant  programs   have  a                                                               
participating  share, similar  to  matching  funds. She  reported                                                               
that the  participating share was  20 percent  for municipalities                                                               
and two percent for the REAAs.                                                                                                  
                                                                                                                                
CHAIR STEVENS asked whether the  department agreed to the changes                                                               
that Mr. Wright specifically identified for Amendment 1.                                                                        
                                                                                                                                
MS. TESHNER answered that the department approved the changes.                                                                  
                                                                                                                                
SENATOR BEGICH asked whether a  conceptual amendment to Amendment                                                               
1 was required to incorporate those changes.                                                                                    
                                                                                                                                
CHAIR STEVENS replied yes.                                                                                                      
                                                                                                                                
5:16:09 PM                                                                                                                    
SENATOR BEGICH moved  Conceptual Amendment 1 to  Amendment 1 [for                                                               
Legislative Legal Services to incorporate  the changes Mr. Wright                                                               
described for Amendment 1].                                                                                                     
                                                                                                                                
CHAIR  STEVENS  reiterated the  motion  was  to offer  Conceptual                                                               
Amendment 1  to Amendment 1  to incorporate the  changes outlined                                                               
by Mr. Wright.                                                                                                                  
                                                                                                                                
5:16:17 PM                                                                                                                    
SENATOR  BEGICH   explained  that   Conceptual  Amendment   1  to                                                               
Amendment 1 would ensure that  the language previously identified                                                               
by Mr. Wright was appropriately removed from Amendment 1.                                                                       
                                                                                                                                
5:16:40 PM                                                                                                                    
SENATOR COSTELLO  suggested an amendment to  Conceptual Amendment                                                               
1  to  Amendment 1  to  retain  sections  (o),  (p), and  (q)  in                                                               
[Amendment 1].                                                                                                                  
                                                                                                                                
CHAIR STEVENS found  no objection and Conceptual  Amendment 1, as                                                               
amended, to  Amendment 1  was adopted.  Amendment 1,  as amended,                                                               
was before the committee.                                                                                                       
                                                                                                                                
CHAIR STEVENS removed his objection.                                                                                            
                                                                                                                                
SENATOR  COSTELLO  remarked  that   it  was  important  that  the                                                               
legislative branch  maintain trust  with the public  and entities                                                               
with  which the  state  conducts business.  She  said she  viewed                                                               
Amendment 1,  as amended,  as an effort  [by the  legislature and                                                               
the state] to keep its word.                                                                                                    
                                                                                                                                
5:17:41 PM                                                                                                                    
CHAIR STEVENS  found no  objection and  Amendment 1,  as amended,                                                               
was adopted. He solicited a motion to move the bill.                                                                            
                                                                                                                                
5:18:11 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
5:18:36 PM                                                                                                                    
CHAIR STEVENS reconvened the meeting.                                                                                           
                                                                                                                                
5:18:37 PM                                                                                                                    
SENATOR HUGHES moved to report  SB 64, work order 31-GS1091\A, as                                                               
amended,  from  committee  with  individual  recommendations  and                                                               
attached fiscal note.                                                                                                           
                                                                                                                                
CHAIR STEVENS objected for purposes of discussion.                                                                              
                                                                                                                                
SENATOR BEGICH expressed a number  of concerns about the bill. He                                                               
acknowledged  that [SB  64, as  amended]  would meet  one of  the                                                               
state's  obligations, which  is to  pay past  debts. However,  he                                                               
recalled  that when  the bill  was presented,  the administration                                                               
commented  that voters  knew risk  was involved  when voting  for                                                               
school bond  debt reimbursement.  He argued  that when  voters do                                                               
not  have lawyers  [in  the  voting booth]  to  explain the  fine                                                               
detail  on measures  before them.  Instead, voters  vote in  good                                                               
faith on ballot measures.                                                                                                       
                                                                                                                                
SENATOR  BEGICH  said  that he  agreed  with  Senator  Costello's                                                               
[remarks].  However, the  actual bill,  SB 64,  would damage  the                                                               
long-term future of  the state in terms of  eliminating a program                                                               
that is  used to guarantee  adequate facilities for  students, he                                                               
said.                                                                                                                           
                                                                                                                                
SENATOR   BEGICH   offered  his   belief   that   the  bill   has                                                               
constitutional  problems.   In  2010,   a  mechanism   passed  to                                                               
partially address  the Kasayulie  suit, which was  finely crafted                                                               
as  part of  a consent  decree. That  mechanism ensured  that the                                                               
main issue  of the lawsuit  was the  arbitrary nature of  how the                                                               
state  funded schools.  In fact,  the court  found the  state was                                                               
arbitrary in its processes to  fund schools. The mechanism [in AS                                                               
14.100] was designed to correct  that inequality. It relied on an                                                               
understanding by  municipalities that  the amount of  school bond                                                               
debt the  state funded would  be matched by an  equivalent amount                                                               
for rural  schools. The  purpose of the  equivalent funds  was to                                                               
address existing needs and to  compensate for the past inadequate                                                               
process the state used to build schools in Alaska.                                                                              
                                                                                                                                
He  said that  eliminating  the Bond  Debt Reimbursement  Program                                                               
would invalidate that piece. One  section of SB 64 indicates that                                                               
won't  happen  and  that  for  a period  of  time  deposits  will                                                               
continue  to  be made  to  the  rural  education fund,  he  said.                                                               
However,  no legislature  cannot  bind a  future legislature.  He                                                               
predicted  that the  net consequence  of  abolishing the  program                                                               
under SB 64 would result in litigation.                                                                                         
                                                                                                                                
SENATOR BEGICH  characterized the  1999 court decision  as pretty                                                               
dramatic. The state  was required to change  its arbitrary system                                                               
for  school  construction  decisions.  The  court  decision  also                                                               
called for  a reconstitution of  the Public Schools  Lands Trust.                                                               
In  1999, the  estimate  was $200  million  to reconstitute  that                                                               
trust. He said  he could not imagine today's  estimated costs. He                                                               
indicated he  would be a "do  not pass" on this  bill because the                                                               
entire bill  presents a substantial  risk to the  legislature and                                                               
the state. He reminded members a  bill must have one "do pass" to                                                               
pass out of  committee, so he encouraged members  to consider the                                                               
long term  consequences of  their votes. Although  he said  he is                                                               
not  opposed  to strong  and  sensible  fiscal solutions  to  the                                                               
state's issues,  he expressed grave concern  about constitutional                                                               
issues that passage of SB 64 could bring.                                                                                       
                                                                                                                                
5:23:00 PM                                                                                                                    
CHAIR STEVENS related his understanding  that the requirement for                                                               
a bill to receive one "do pass"  means it must have one "do pass"                                                               
in the process, not necessarily from this committee.                                                                            
                                                                                                                                
SENATOR  COSTELLO said  that she  recently  reviewed the  Uniform                                                               
Rules and  it is possible for  a bill to reach  the floor without                                                               
any "do  pass" votes  through the  process. A  vote on  the floor                                                               
would  allow  satisfy the  requirement.  She  said the  committee                                                               
addresses serious  concerns and  significant bills,  which should                                                               
move through the process to allow  committees to have a chance to                                                               
review them. She offered to  provide the committee members with a                                                               
copy of the rule, if needed.                                                                                                    
                                                                                                                                
CHAIR STEVENS said his  key point is that it does  not need a "do                                                               
pass" to move  out of the Senate Education  Committee and happens                                                               
to the  bill after  that is  up to the  system. He  asked whether                                                               
Senator Costello agreed with his interpretation.                                                                                
                                                                                                                                
SENATOR COSTELLO answered yes.                                                                                                  
                                                                                                                                
5:24:36 PM                                                                                                                    
SENATOR BIRCH said,  "I don't like this bill. I  don't like it at                                                               
all.  I think  it breaks  with a  constitutional obligation."  He                                                               
recalled  working   on  school   issues  during   the  mid-1980s,                                                               
following the Molly Hootch case. In  that case, a young woman had                                                               
the  courage to  say  that the  state  constitution requires  the                                                               
State  of Alaska  to provide  an educational  program and  system                                                               
that fulfilled  those education  requirements. He  indicated that                                                               
what  troubled him  about  this  proposal was  that  it dumped  a                                                               
significant financial burden on  his constituents and others. For                                                               
example, the  Mat-Su Borough  has a  $100 million  liability [for                                                               
school construction  debt.] Organized  boroughs in the  state are                                                               
burdened   with   school   construction   costs   because   these                                                               
communities  have  a  structure   for  raising  taxes,  he  said.                                                               
However, in  communities slightly  north of  the Mat-Su,  such as                                                               
Glennallen  or Tok,  or  other areas  outside  of an  unorganized                                                               
borough, the state has full  responsibility and basically "writes                                                               
a check" for  all aspects of education. The  legislature wants to                                                               
spend  responsibly,  which  he   absolutely  supports,  he  said.                                                               
However, problems  exist with the  division of  authority between                                                               
local  school  districts  and  the  state  with  respect  to  how                                                               
individual school districts are managed.  For example, he did not                                                               
believe the  districts had  any control  over contract  terms and                                                               
labor costs.                                                                                                                    
                                                                                                                                
SENATOR  BIRCH  said he  is  very  troubled  about [SB  64.].  He                                                               
referred to [the transmittal letter]  from the governor and read,                                                               
"The  program, while  well-intentioned, has  become unsustainable                                                               
and  unnecessary."  He  offered   his  belief  that  these  terms                                                               
"unsustainable  and unnecessary"  are  not  optional for  schools                                                               
because  the state  has an  underlying  fiscal responsibility  to                                                               
maintain  the  [state  school  construction  debt  reimbursement]                                                               
program.  He offered  that the  amendment  the committee  adopted                                                               
[Amendment 1] was  a step in the right direction,  of course, but                                                               
he  expressed concern  that the  bill was  "pulling the  rug out"                                                               
from his municipality and any organized borough in the state.                                                                   
                                                                                                                                
SENATOR HUGHES  said the Constitution  of the State of  Alaska is                                                               
required to establish  and maintain the K-12  system, which could                                                               
be interpreted to involve the  actual facilities. She echoed some                                                               
of  Senator  Birch's concerns.  She  lamented  that she  was  not                                                               
prepared to offer  an amendment to extend  the moratorium instead                                                               
of  repealing  the  [school  debt  reimbursement'  program].  She                                                               
related  her understanding  that  it was  not currently  possible                                                               
[given the  state's financial condition]  to do so.  She remarked                                                               
that the  state and  legislature are working  to get  the state's                                                               
fiscal house  in order, including currently  working to diversify                                                               
the economy.                                                                                                                    
                                                                                                                                
She asked  to correct  an earlier statement  she made  in another                                                               
committee, that  the state  was building schools  in her  area at                                                               
the  rate of  one  new school  per year,  which  is actually  one                                                               
school  every  three to  four  years.  She  pointed out  the  Joe                                                               
Reddington High School was built  three years ago, and it already                                                               
has eight  portables so the  communities will soon need  to build                                                               
another high school.                                                                                                            
                                                                                                                                
SENATOR HUGHES  expressed concern [that  passage of SB  64] meant                                                               
that one  hundred percent of the  burden would fall on  the local                                                               
taxpayers   in  organization   boroughs.  Her   constituents  are                                                               
concerned about property tax increases,  she said. Some residents                                                               
in some communities  do not share the  [school construction debt]                                                               
costs in  the same way.  She suggested  that once the  state gets                                                               
its  fiscal house  in order,  the legislature  should consider  a                                                               
fair and  more equitable system  to provide  capital construction                                                               
for schools statewide.                                                                                                          
                                                                                                                                
CHAIR  STEVENS, based  on  his  service as  a  borough mayor  and                                                               
school board  member, expressed  concern about  the effect  SB 64                                                               
would have on communities.                                                                                                      
                                                                                                                                
5:29:44 PM                                                                                                                    
At ease.                                                                                                                        
                                                                                                                                
5:29:49 PM                                                                                                                    
CHAIR STEVENS  reconvened the meeting.  He removed  his objection                                                               
and there being  no further objection, CSSB  64(EDC) was reported                                                               
from the Senate Education Standing Committee.                                                                                   

Document Name Date/Time Subjects
SEDC_ConfirmationHearing_PTPC_Reitan_15April2019_combined.pdf SEDC 4/15/2019 9:00:00 AM
Confirmation Hearing - PTPC - Chris Reitan - April 15, 2019
15_SB064_DebtReimbursement_Amendment_A1.pdf SEDC 4/15/2019 9:00:00 AM
SB 64
16_SB064_DebtReimbursement_Amendment_A1_LegalMemo.pdf SEDC 4/15/2019 9:00:00 AM
SB 64
SB079_Ed Transformation Act_Bill Text_Version S.pdf SEDC 4/15/2019 9:00:00 AM
SB 79
SB079_Ed Transformation Act_Support_AK Digital Academy_11April2019.pdf SEDC 4/15/2019 9:00:00 AM
SB 79
SB079_EducationTransformation_Sectional_Version S_14April2019.pdf SEDC 4/15/2019 9:00:00 AM
SB 79
SB079_EducationTransformation_Explanation of Changes From Version U to S _14April2019.pdf SEDC 4/15/2019 9:00:00 AM
SB 79