Legislature(2017 - 2018)SENATE FINANCE 532

04/26/2018 09:00 AM FINANCE

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CS FOR HOUSE BILL NO. 135(EDC) am                                                                                             
     "An Act relating to school district participation in                                                                       
     the school construction grant program."                                                                                    
9:12:28 AM                                                                                                                    
9:12:44 AM                                                                                                                    
AT EASE                                                                                                                         
9:13:03 AM                                                                                                                    
Co-Chair  MacKinnon informed  that public  testimony on  the                                                                    
capital budget would be at 1:30pm.                                                                                              
[Vice-Chair  Bishop  made  a  motion  to  adopt  a  CS,  but                                                                    
incorrectly  listed  the bill  draft  number.  It was  later                                                                    
JULI  LUCKY, STAFF,  SENATOR ANNA  MACKINNON, informed  that                                                                    
the  draft number  the Vice-Chair  Bishop  had dictated  was                                                                    
incorrect due to a typographical error.                                                                                         
Vice-Chair   Bishop  MOVED   to  ADOPT   proposed  committee                                                                    
substitute  for   CSHB  135(FIN),  Work   Draft  30-LS0549\J                                                                    
(Laffen, 4/19/18).                                                                                                              
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
Ms.  Lucky spoke  to the  bill.  She related  that the  bill                                                                    
version before the committee included  changes to Sections 2                                                                    
and  3 that  applied a  different approach  but honored  the                                                                    
initial concept  of the bill.  She said that  the three-year                                                                    
timeframe had been  kept in place and an  extension had been                                                                    
added for good cause. She  noted a technical change had been                                                                    
made to  the applicability  language, a citation  that would                                                                    
span statute AS 14.11.008 through AS 14.11.020.                                                                                 
9:16:27 AM                                                                                                                    
Senator Olson  spoke to  Section 2.  He asked  whether there                                                                    
was a specific time applied to the extension period.                                                                            
Ms.  Lucky answered  in the  affirmative. She  reported that                                                                    
there had  been a concern  conveyed that putting a  limit on                                                                    
the extension  could result in  the need to  change statute.                                                                    
She  said  that allowing  the  department  the authority  to                                                                    
determine the  appropriate course of action  had been deemed                                                                    
the appropriate approach to the issue.                                                                                          
Senator  Olson  asked  what  the   sponsor  thought  of  the                                                                    
Ms. Lucky  believed that the  sponsor was supportive  of the                                                                    
changes. She  reiterated that the 3-year  timeframe had been                                                                    
in the original bill.                                                                                                           
Senator  Stevens thought  the CS  made sense.  He questioned                                                                    
the definition  of 'good cause'  and wondered if  there were                                                                    
parameters from the department.                                                                                                 
Ms. Lucky stated that the issue would be discussed further.                                                                     
9:18:04 AM                                                                                                                    
REPRESENTATIVE JOHN LINCOLN, SPONSOR,  stated that he was in                                                                    
support of the CS.                                                                                                              
9:18:50 AM                                                                                                                    
Senator Stevens  restated his question about  the definition                                                                    
of  'good   cause'  and  parameters  as   developed  by  the                                                                    
TIM MEARIG, FACILITIES MANAGER,  DEPARTMENT OF EDUCATION AND                                                                    
EARLY DEVELOPMENT, shared that the  need for the funds would                                                                    
be matched up with the  project's timeline. He said that the                                                                    
timeline may need  to be adjusted to  match the environment;                                                                    
the definition of 'good cause'  would reflect when the money                                                                    
was needed to accomplish the project.                                                                                           
9:20:05 AM                                                                                                                    
Senator Stevens  voiced concern that an  expression of 'good                                                                    
cause' could lead to an indefinite extension.                                                                                   
Mr. Mearig  informed that  participatory share  amounts that                                                                    
were  required to  accomplish the  work on  a project,  as a                                                                    
project moved forward, and  contract agreements were entered                                                                    
into,  obligations  were  made  that those  funds  would  be                                                                    
available for the  payment of contracts. He  said that there                                                                    
had  never been  an instance  where the  participating share                                                                    
had not been provided.                                                                                                          
9:21:02 AM                                                                                                                    
Senator Olson understood  that "good cause' would  be at the                                                                    
subjective discretion of the commissioner.                                                                                      
Mr. Mearig thought  there would need to be  an evaluation of                                                                    
the  project, and  whether  it  satisfied the  participating                                                                    
share. He  admitted that it  would be at  the commissioner's                                                                    
discretion  whether and  extension  was  needed to  properly                                                                    
support a project.                                                                                                              
Senator Olson asked whether there  had been a time where the                                                                    
issue of  'good cause' had  not allowed an  extension within                                                                    
the department.                                                                                                                 
Mr.  Mearig   explained  that  under  current   statute  the                                                                    
department had been unable to offer any extensions.                                                                             
Senator Olson  queried how  disagreements would  be resolved                                                                    
between  school  districts  and  the  department  about  the                                                                    
definition of 'good cause.'                                                                                                     
Mr. Mearig did  not anticipate a lot of  disagreement on the                                                                    
matter.  He said  that  if a  determination  were made  that                                                                    
limited  the funding  due to  a district  there were  appeal                                                                    
processes under regualtion for the district to pursue.                                                                          
9:23:33 AM                                                                                                                    
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further OBJECTION, it was so ordered.                                                                                           
9:23:59 AM                                                                                                                    
Representative Lincoln  stated that the bill  would amend AS                                                                    
14.11.008  to  provide  the   Department  of  Education  the                                                                    
discretion to  extend the deadline  for school  districts to                                                                    
secure  the   match  requirement  for   school  construction                                                                    
projects, only  if the  district could  show good  cause for                                                                    
the extension.   He said  that the Northwest  Arctic Borough                                                                    
School District was close to  meeting, but would not meet, a                                                                    
June  29, 2018  deadline to  secure  the local  share for  a                                                                    
replacement of the  K-12 school in Kivalina.  He stated that                                                                    
state funds  for the school  were appropriated in  2015, and                                                                    
the statute  currently required the school  district to come                                                                    
up with the local match within  3 years. He relayed that the                                                                    
Northwest  Arctic  Borough  had shown  great  leadership  in                                                                    
recent years  as they worked  through negotiations  with the                                                                    
borough's  primary  funding source,  the  Red  Dog Mine.  He                                                                    
stated that  the new  funding agreement  had been  signed in                                                                    
May 2017, the borough would  use revenue from that agreement                                                                    
to secure and re-pay bonding  to provide the local match for                                                                    
Kivalina School. He shared that  in March of 2018 the Alaska                                                                    
Municipal  Bond  Bank  Authority approved  the  issuance  of                                                                    
$12.7 million  in bonds  on behalf of  the borough  to fully                                                                    
cover the  local match  for the school,  but the  bonds were                                                                    
contingent  of funding  being secured  for the  road to  the                                                                    
school. He said that the  construction site was 8 miles from                                                                    
Kivalina, on  solid ground  that was  safe from  the erosion                                                                    
that threatened  the town; the  road was essential  to bring                                                                    
in construction materials and labor  to the site, as well as                                                                    
to provide an emergency  evacuation route for the residents.                                                                    
He related that the  Department of Transportation and Public                                                                    
Facilitates   had  issued   a  final   environmental  impact                                                                    
statement on the road in  January 2018, which found that the                                                                    
road posed  no significant  environmental impacts.  He added                                                                    
that officials  from the  United States  Military Innovation                                                                    
Readiness  Training Program  had expressed  interest in  the                                                                    
bridge portion  of the project.  He lamented  that sometimes                                                                    
the calendar could work  against projects, particularly ones                                                                    
that  were  complicated   by  logistical  and  environmental                                                                    
9:27:03 AM                                                                                                                    
Senator  Stevens  wondered  whether   the  sponsor  had  any                                                                    
concerns  that  the  definition  of  'good  cause'  was  not                                                                    
defined in the bill.                                                                                                            
Representative Lincoln replied that  he had a slight concern                                                                    
but  believed that  the overall  intent  of the  legislation                                                                    
outweighed  any  concern.  He  believed  that  the  projects                                                                    
encompassed by the bill were good projects.                                                                                     
Senator Micciche supported the legislation as written.                                                                          
Vice-Chair Bishop  understood that the  Environmental Impact                                                                    
Statement  (EIS)  for the  Kivalina  school  build had  been                                                                    
completed by DOT&PF.                                                                                                            
Representative Lincoln  informed the committee that  the EIS                                                                    
for the road was issued in January 2018.                                                                                        
Vice-Chair Bishop  supported the CS. He  offered comments on                                                                    
the road. He  noted that to build a road  in the state meant                                                                    
working  with numerous  regulatory  entities.  He said  that                                                                    
permitting  could  take up  to  6  years. He  believed  that                                                                    
common sense would prevail in  extension decisions for 'good                                                                    
cause' projects.                                                                                                                
9:30:59 AM                                                                                                                    
Co-Chair  MacKinnon offered  a financial  concern about  how                                                                    
many  times  money  would  be held,  not  turning  over,  on                                                                    
projects that could be putting  people to work in the state.                                                                    
She spoke  to the issue  of Kivalina. She worried  about the                                                                    
timely  deployment of  assets. She  wondered how  many years                                                                    
was long enough for $70 million  to be sitting in an account                                                                    
and not benefitting students.                                                                                                   
9:34:00 AM                                                                                                                    
Mr. Mearig  thought Co-Chair MacKinnon raised  a great point                                                                    
about  executing  school projects  in  a  timely manner.  He                                                                    
noted  that delays  resulted in  project cost  increases. He                                                                    
thought the issues needed to  be examined by those in charge                                                                    
of the  projects. He  asserted that  districts were  keen to                                                                    
have projects put  in place. He thought the  ability to work                                                                    
with districts to keep projects  in motion was important. He                                                                    
did not  have an answer as  to how many extensions  would be                                                                    
undertaken for  an individual project.  He thought  that the                                                                    
description  of   need,  set  forth  by   the  district  for                                                                    
consideration of  a project by  the commissioner,  would set                                                                    
the parameters.                                                                                                                 
9:35:46 AM                                                                                                                    
Co-Chair MacKinnon asked Mr. Mearig  to provide in writing a                                                                    
definition of  'good cause.' She  said that  the legislature                                                                    
needed to  have some  knowledge of how  much money  would be                                                                    
was sitting in wait for  stalled projects that could be used                                                                    
elsewhere in education.                                                                                                         
9:36:43 AM                                                                                                                    
Co-Chair   MacKinnon  spoke   to  the   possible  delay   in                                                                    
construction  due to  the need  for a  road to  the building                                                                    
site. She  stressed that the  legislature had made  it clear                                                                    
that  the state  was not  going to  pay for  the road  to be                                                                    
Representative  Lincoln understood  that the  road would  be                                                                    
primarily  funded  by the  federal  government.  He cited  a                                                                    
specific  reason for  the delay  as the  establishment of  a                                                                    
funding agreement  between Red Dog  Mine and the  borough; a                                                                    
village infrastructure program  that would fund construction                                                                    
projects and bring additional funds to the state.                                                                               
9:37:56 AM                                                                                                                    
Co-Chair MacKinnon  asked whether  there was a  timeline for                                                                    
the  building of  the road.  She expressed  concern for  the                                                                    
students in Kivalina  who had been waiting  for their school                                                                    
to be built.  She asserted that her primary  focus in trying                                                                    
to help the project along was the students.                                                                                     
Representative Lincoln shared  Co-Chair MacKinnon's feelings                                                                    
for  the people  and  students of  Kivalina.  He stated  the                                                                    
changing  climate and  increasing  severity  of storms  made                                                                    
investing  in  the current  location  would  not be  a  wise                                                                    
decision. He  said that  the students  were excited  for the                                                                    
prospect of  a new  school, rather  than renovating  the old                                                                    
school at  the current  site. He felt  that the  delay would                                                                    
result in a better outcome  for the community. He offered to                                                                    
provide a timeline at a later date.                                                                                             
9:40:26 AM                                                                                                                    
Co-Chair MacKinnon  asked for a  total cost  of construction                                                                    
and design of the road.                                                                                                         
Co-Chair MacKinnon commented that  the committee was looking                                                                    
at the  Regional Educational  Attendance Area  (REAA) school                                                                    
list. She asked about  a study regarding standardized school                                                                    
construction.  She  emphasized that  it  was  her intent  to                                                                    
require  standardization of  building  design. She  wondered                                                                    
what the department  was going to do to reduce  the costs of                                                                    
building schools in the state.                                                                                                  
Mr.  Mearig  responded  that the  department  had  supported                                                                    
standardized  school  design  for instances  where  multiple                                                                    
schools  of the  same size  and  type were  being build.  He                                                                    
pointed out  to the committee  that the first  three schools                                                                    
currently on the priority construction  list were of varying                                                                    
size  and construction  needs. He  said that  the department                                                                    
supported  standardized  components  and  was  working  with                                                                    
districts to actively pursue criteria  for school design and                                                                    
cost affective school construction.                                                                                             
9:43:45 AM                                                                                                                    
Co-Chair Hoffman knew that the  Northwest Arctic had led the                                                                    
way in  trying to compress the  construction timeline, which                                                                    
ultimately  reduced  construction   costs.  He  thought  the                                                                    
concept  of 'design-build'  had been  proved to  the shorten                                                                    
construction  timeline and  save money.  He thought  that if                                                                    
the concept was  working in one region it should  be used in                                                                    
other regions.                                                                                                                  
Mr. Mearig stated that  the department supported alternative                                                                    
project  delivery  methods.  He   relayed  that  there  were                                                                    
guidelines  for helping  districts to  determine when  those                                                                    
guidelines should be used. He  said that on other occasions,                                                                    
the timeline would allow for  a design to be fully developed                                                                    
and  then competitively  bid in  the  traditional sense.  He                                                                    
stated that the  department did not mandate  design build or                                                                    
other  alternative project  delivery  methods but  supported                                                                    
those methods  and worked  with each  district to  examine a                                                                    
project environment that  would result in the  best and most                                                                    
cost-effective project outcome.                                                                                                 
Co-Chair   Hoffman  thought   that  the   department  should                                                                    
encourage the  design-build concept.  He believed  that this                                                                    
would save the state money.                                                                                                     
9:46:38 AM                                                                                                                    
Co-Chair  MacKinnon lamented  that  there  was $100  million                                                                    
dollars  in  one  district.  She praised  the  work  of  Mr.                                                                    
Mearig. She  stated that the legislature  had encouraged the                                                                    
department  to start  taking a  proactive  role in  leading,                                                                    
rather  than   following,  the  districts   in  construction                                                                    
9:48:13 AM                                                                                                                    
Representative  Lincoln appreciated  the conversation  about                                                                    
standardization and project cost  control and stated that it                                                                    
had been a prominent part of the Kivalina project.                                                                              
Co-Chair MacKinnon asked about a Sectional Analysis.                                                                            
9:49:11 AM                                                                                                                    
AT EASE                                                                                                                         
9:50:06 AM                                                                                                                    
Co-Chair MacKinnon OPENED public testimony.                                                                                     
DR.  ANNMARIE  O'BRIEN,   SUPERINTENDENT,  NORTHWEST  ARCTIC                                                                    
BOROUGH SCHOOL DISTRICT,  spoke in support of  the bill. She                                                                    
discussed her  work history. She discussed  current statute,                                                                    
and  the  lack  of  a provision  for  the  consideration  of                                                                    
exceptional  circumstances  that  might  warrant  additional                                                                    
time to secure  a financial match. She  thought that without                                                                    
the  legislation, it  was  possible  that critically  needed                                                                    
school   projects  would   be   forced   to  forfeit   state                                                                    
appropriations.   She said that  the Kivalina project  was a                                                                    
perfect example of why the provision was needed.                                                                                
9:53:29 AM                                                                                                                    
Vice-Chair  Bishop discussed  a  new zero  fiscal note  from                                                                    
Department of Commerce,  Community and Economic Development,                                                                    
OMB component 2737.                                                                                                             
Co-Chair MacKinnon discussed housekeeping.                                                                                      
CSHB 135(EDC) am was HEARD and HELD in committee for                                                                            
further consideration.                                                                                                          
9:55:07 AM                                                                                                                    

Document Name Date/Time Subjects
HB 135 Sectional Analysis.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 135 Sponsor Statement.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 135 - Letters of Support.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 135 Summary of Changes Ver. A to Ver. D.A..pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB150 Additional Document - 2017 Military Pay Chart 3.15.18.pdf SFIN 4/26/2018 9:00:00 AM
HB 150
HB150 Additional Document-Sockeye Fire Spreadsheet from DMVA 3.15.18.pdf SFIN 4/26/2018 9:00:00 AM
HB 150
HB150 Sponsor Statement 3.15.18.pdf SFIN 4/26/2018 9:00:00 AM
HB 150
HB150 Supporting Document-Letter DMVA 3.15.18.pdf SFIN 4/26/2018 9:00:00 AM
HB 150
HB233 Letters of Support.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB233 DOR Education Tax Credit Report CY2017.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB233 Edu Tax Credit Presentation.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB233 Memo of Changes.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB233 Sponsor Statement 2.28.18.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB233 Sectional Analysis ver U.A.PDF SFIN 4/26/2018 9:00:00 AM
HB 233
HB 135 SCS FIN v. J Summary.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 135 SCS work draft version. J.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 233 SCS FIN v. N Summary.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 SCS FINwork draft version. N.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Alaska Pacific University Testimony.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Background Information - Tax Division.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 135 SCS FIN v. J Summary.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 150 Doehl to MacKinnon -- HB 150 -- 04-26-2018.pdf SFIN 4/26/2018 9:00:00 AM
HB 150
HB 135 Sectional Analysis v. J.pdf SFIN 4/26/2018 9:00:00 AM
HB 135
HB 233 Testimony Northrim Bank.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Testimony Alaska Native Heratige Center.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 2018 04 27 - UA Foundation HB 233 Hearing Follow-Up.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Batter.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony King.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Education Tax Credit extension Atkinson.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Cunningham.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 2018 04 28 UAF CFOS ETC Letter.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Kroska.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Seitz.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Manishin.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Nielsen.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Sutton.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Hallinan.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Hassell.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Graham.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Fish.pdf SFIN 4/26/2018 9:00:00 AM
HB 233
HB 233 Public Testimony Figus.pdf SFIN 4/26/2018 9:00:00 AM
HB 233