Legislature(2001 - 2002)
05/09/2002 09:37 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 451 am
"An Act relating to municipal bond reimbursement for school
construction; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
HEATH HILYARD, Staff to Representative Jeannette James, the bill's
sponsor, informed the Committee that current State statute mandates
that a five-point maintenance plan accompany school grant
proposals; however he explained, there is no such requirement for
school bond reimbursement proposals. He stated that this bill
corrects that disparity by requiring a five-point maintenance plan
accompany both components.
Senator Austerman asked how school districts currently develop
preventive maintenance plans and whether those plans are working.
Mr. Jeans stated that the Department has "taken an incremental
approach" to the five-step requirement whereby, through the
regulatory process, districts could apply for waivers if they meet
some, but not all five, of the steps. He informed the Committee
that the Department has been allocated an additional position to
monitor schools' implementation of their maintenance plans. He
stated, that during site visits, implementation of the five-point
plan is discussed; however, he noted, no district currently meets
all five of the plan components. He asserted that progress is being
made and that most districts would implement the five-point plan
within a few years.
Senator Austerman asked whether this legislation could assist in
moving districts closer to that goal.
Mr. Jeans asserted "it is a step in the right direction" as this
legislation places the same eligibility requirement that exist for
the grant program as a "qualification for the debt reimbursement
program." He added that this directive only affects municipalities.
Senator Leman communicated that one criticism of the current
preventive maintenance plan is that it gets "bogged down in
details," and that the school districts must spend time dealing
with petty details such as the number of light bulbs required. He
stressed that the intent of the original legislation was to develop
plans to address, for instance, school roof maintenance, but not to
delve into minutia. He stated that he is "hesitant to extend this
interpretation" to other programs.
Mr. Jeans voiced concern that the Department might have presented
overly burdensome regulations to the State Board of Education
regarding the interpretation of the original intent of the
legislation. He further explained that recommendations are reviewed
and submitted to the Board of Education through the bond
reimbursement and grant program process. He stated that the
Department has requested school districts to furnish reports
regarding their preventative maintenance plans at an upcoming
scheduled meeting, and he noted that, at that same meeting, bond
reimbursement representatives would be present to listen to school
district concerns. He anticipated that the State Board of Education
would be presented with revised regulations that would loosen up
some of the requirements.
Senator Leman voiced appreciation for the Department's efforts to
address concerns, and he recommended that changes should occur.
Senator Austerman verified that numerous Legislators have heard
these concerns.
Senator Green asked whether Section 5 of the committee substitute
removes the expiration date for available funds.
Co-Chair Kelly responded that is correct; however, he noted that
the proposed committee substitute was not yet been adopted.
Senator Wilken moved to adopt HB 451, Version 22-LS1524\J as a
working document.
Senator Green objected.
Co-Chair Donley asked what specific changes are included in the
Version "J" committee substitute.
Co-Chair Kelly noted the Version "J" removes the ending date
regarding bond availability.
Co-Chair Donley asked how the removal of this date would impact
school districts.
Mr. Jeans responded that this "would affect the unobligated
balances under Senate Bill 11 to the Fairbanks North Star Borough
School District and the unobligated balances under House Bill 281
for Fairbanks, Sitka and Petersburg" school districts. He continued
that, "there is authorization on the books to issue debt for school
construction" to these communities; however, those school districts
have not, as of yet, submitted projects nor received local voter
approval to issue that debt.
Senator Green asserted that the removal of the ending date would
extend this program and would result in allowing the funding "to
sit there even if it is not being used and no one else has the
opportunity to use that money." She stated that the original
legislation was "date certain."
Senator Green informed the Committee that a new school construction
funding request is pending "for her school district which is
continually in need and is willing to go to bond, and as long as
this money is allowed to sit there and a district not use it, other
districts would never be able to get a bond package put forward."
Co-Chair Donley asked for further information as to how this
situation would prohibit other school districts bond requests from
being furthered.
Senator Green responded that the likelihood of receiving voter
approval of a school bond bill for a facility in "just one
district" is slim. She stressed that statewide support is required
to issue school bonds, and she voiced that allowing money to just
"sit there and wait for a district that is not taking advantage of
them" undermines the ability of other school districts to get
support for their projects.
Co-Chair Kelly ascertained that the funding allocated to the
aforementioned districts is not connected to future school bonding
proposals.
Senator Green countered that they are.
Co-Chair Donley qualified that as long as a large district has
access to available funds, there would be no statewide support for
funding projects in other regions of the State.
Co-Chair Kelly asked for further information about how this
amendment would affect future bonding packages.
Senator Green reiterated that, in order to receive Legislative
support, a bond package must include projects from a variety of
statewide school districts. She exampled that a bond package might
encompass five Municipality of Anchorage school projects, two Mat-
Su Borough school projects in addition to projects from numerous
other communities. She stressed that allowing districts to have
unallocated funds "takes the issue off the table" for other
districts because it undermines statewide support for future school
bond packages.
Co-Chair Kelly insisted that "some Legislators actually support
other districts when they need things."
Senator Green contended that the legislative process involved in a
school bond package requires Statewide interest and support. She
exampled various school district projects included in previous
school bond packages. She stated that the Municipality of Anchorage
usually fully funds their school projects with an expectation that
State funding support would follow, and that the Mat-Su Borough
traditionally supports "70/30 bonding proposals."
Co-Chair Kelly commented that the Municipality of Anchorage
traditionally has supported Statewide school bond packages even
though they usually fund their own school projects.
Senator Green clarified that while the Municipality of Anchorage
does fund its own projects, the City anticipates that State funding
would become available, and she informed the Committee that such
funding did materialize in the majority of these instances.
Senator Green voiced acceptance of a one-year extension for the
expiration date, but stated that she could not support there being
no ending date. She argued that a bond proposal package anticipates
that all the specified monies would be used rather than set aside
indefinitely for a district's project. She argued that the majority
of State funded allocations are time-certain.
Senator Wilken stated that money is not actually set aside for some
districts, but rather that the authorization to expend monies is
granted.
Senator Green concurred.
Senator Wilken voiced that school districts should not be "rushed"
into a project because of a specified timeline. He stated that the
Fairbanks North Star Borough School District has projects "in the
cue waiting to be voted upon, knowing that this authorization is in
place." He stated that he does not take issue with the open-ended
dates.
Co-Chair Kelly furthered the position that the un-spent monies
allocated to some school districts has no "connection to other
projects in the State."
Co-Chair Donley confirmed Senator Green's understanding that the
most recent Municipality of Anchorage school bond projects were
approved by the city's voters with the expectation that the city
would receive State bonding reimbursement.
Co-Chair Donley additionally supported Senator Green's position
that school districts "that have money available to them at any
given time," might not necessarily provide the necessary consensus
to support other school bond packages. He voiced support for a
designated time-certain approach to the funding, and suggested that
a one-year extension would be acceptable.
Co-Chair Kelly concurred that a one-year extension would not be a
problem as, he noted that the Fairbanks North Star School District
would be voting on their school projects within that timeframe.
However, he asserted, the ending date should not be an issue, and
he questioned whether the need for an ending date is based "upon
the internal politics of getting a bond package passed" or other
reasons that are unclear.
Senator Green asked whether a five-year sunset date is designated
in State statute for most State programs, and she asked, were this
the case, whether a project that extends beyond that time would
require re-authorization. She asked why this authorizing and
obligating of State funds should be treated differently than
established procedures.
Senator Wilken suggested that one difference is that the voters of
the Fairbanks North Star Borough must approve 100 percent Borough
funding for school projects that would subsequently be reimbursed
by the State. He continued that the local voter authorization of a
school bonding project provides "the filter" that it is "okay to
spend the money" whether it is spent in two years or six years. He
avowed that the State should only be concerned with the fact that
local voters have agreed that the money should be spent in their
community to provide better schools and education programs.
Co-Chair Donley attested that the five-year sunset is to necessary
to control the timeframe in which the State would be obligated to
pay for the debt service. He stated that if the timeframe were
unlimited, a local community might undertake a project at a time
when the State could not afford the reimbursement. He stressed that
specified sunset dates place reasonable timeframes on a community
regarding the State's debt service obligations.
Senator Wilken countered that, as the end of the five-year
timeframe approaches, the State's obligations increase as
communities rush to get their projects underway; whereas were there
no specified ending dates, the State's obligations would level out
over time.
Co-Chair Donley contended that the Legislature "could not predict
the State's fiscal situation in an unlimited future amount of
years." He stressed that the five-year time limits were established
in order to define the State's obligations rather than having other
entities control the financial situation.
Senator Leman asked the amount of the unused authorized funds in
question.
Mr. Jeans stated that approximately $42 million is authorized for
the Fairbanks School District and that approximately $300,000 is
authorized each for Sitka and Petersburg.
Senator Leman commented that a sunset date does not seem
unreasonable. He voiced support for allowing a timeframe that would
permit the Fairbanks North Star School District to adequately
address it projects.
SFC 02 # 92, Side B 07:26 PM
Senator Leman asked whether the Fairbanks North Star Borough school
projects could be implemented within a two-year timeframe.
Senator Wilken and Co-Chair Kelly concurred that this would be a
manageable timeframe.
AT EASE 7:27 PM / 7:36 PM
Senator Wilken moved to withdraw the motion to adopt committee
substitute, Version "J."
There being no objection, the motion to adopt committee substitute,
Version "J," was WITHDRAWN.
Co-Chair Kelly ordered the bill HELD in Committee pending further
discussion with the bill's sponsor.
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