Legislature(2017 - 2018)SENATE FINANCE 532

05/07/2018 02:00 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 3:00 p.m. --
+= SB 142 APPROP: CAPITAL BUDGET TELECONFERENCED
Moved CSSB 142(FIN) Out of Committee
Bills Previously Heard/Scheduled
+= HB 212 REAA & SMALL MUNI SCHOOL DISTRICT FUND TELECONFERENCED
Heard & Held
+= HB 233 EXTEND EDUCATION TAX CREDITS TELECONFERENCED
Moved SCS CSHB 233(FIN) Out of Committee
CS FOR HOUSE BILL NO. 212(RLS)                                                                                                
                                                                                                                                
     "An  Act relating  to funding  for school  construction                                                                    
     and  major   maintenance;  relating  to   the  regional                                                                    
     educational attendance area  and small municipal school                                                                    
     district fund; and providing for an effective date."                                                                       
                                                                                                                                
3:12:46 PM                                                                                                                    
                                                                                                                                
Co-Chair  MacKinnon  reported the  bill  had  been heard  on                                                                    
April 23,  2018 when the  public hearing had been  heard and                                                                    
closed and the fiscal notes had been reviewed.                                                                                  
                                                                                                                                
Vice-Chair Bishop  MOVED to  ADOPT the  committee substitute                                                                    
for CSHB 212(RLS), Work Draft 30-LS0741\M (Laffen, 5/4/18).                                                                     
                                                                                                                                
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
                                                                                                                                
JULI LUCKY, STAFF, SENATOR ANNA  MACKINNON, reviewed the two                                                                    
changes  in the  CS.  She referenced  previous bill  hearing                                                                    
where there had  been discussion on the  effective date. The                                                                    
effective  date had  been changed  to immediate  in the  CS.                                                                    
Additionally,  the   previous  version   of  the   bill  had                                                                    
specified  20  percent for  major  maintenance.  The new  CS                                                                    
removed the 20  percent specification, but noted  on page 1,                                                                    
lines 10 through 11 that  the fund's primary function was to                                                                    
fund school construction projects.                                                                                              
                                                                                                                                
3:14:09 PM                                                                                                                    
                                                                                                                                
JANE PIERSON,  STAFF, REPRESENTATIVE NEAL  FOSTER, discussed                                                                    
the  bill. She  explained the  bill would  allow more  major                                                                    
maintenance in  Regional Educational Attendance  Area (REAA)                                                                    
and small municipal  school districts. The bill  did not add                                                                    
more money  to increase  the size of  the pie.  She detailed                                                                    
the bill  would reallocate  how the  pie was  cut. Currently                                                                    
the  REAA and  Small  Municipal School  District Fund  could                                                                    
only be  used for  new school  construction. The  bill would                                                                    
allow the fund to be  used for major maintenance in addition                                                                    
to  new  school construction  in  REAA  and small  municipal                                                                    
school district areas,  with construction taking precedence.                                                                    
The  bill would  help reduce  the deterioration  of schools,                                                                    
which would  save millions of  dollars in the long  run. For                                                                    
example, it  was preferable  to be  proactive and  replace a                                                                    
roof than to  be reactive and replace an  entire school. The                                                                    
sponsor  had  reviewed  the  CS  and  was  amenable  to  the                                                                    
changes.                                                                                                                        
                                                                                                                                
Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO                                                                       
further OBJECTION, Work Draft 30-LS0741\M was ADOPTED.                                                                          
                                                                                                                                
Co-Chair MacKinnon MOVED to ADOPT Amendment 1, 30-LS0741\M                                                                      
(Laffen, 5/4/18) (copy on file):                                                                                                
                                                                                                                                
     Page 1, following line 4:                                                                                                  
     Insert new bill sections to read:                                                                                          
                                                                                                                                
     "* Section 1. AS 14.11.013(a) is amended to read:                                                                          
     (a)  With  regard  to projects  for  which  grants  are                                                                    
    requested under AS 14.11.011, the department shall                                                                          
     (1)  annually review  the six-year  plans submitted  by                                                                    
     each district  under AS  14.11.011(b) and  recommend to                                                                    
     the  board  a  revised  and  updated  six-year  capital                                                                    
     improvement  project  grant  schedule that  serves  the                                                                    
     best  interests  of the  state  and  each district;  in                                                                    
     recommending   projects   for    this   schedule,   the                                                                    
     department  shall  verify  that each  proposed  project                                                                    
     meets  the criteria  established under  AS 14.11.014(b)                                                                    
     and qualifies as a project required to                                                                                     
     (A) avert  imminent danger or  correct life-threatening                                                                    
     situations;                                                                                                                
     (B)  house students  who would  otherwise be  unhoused;                                                                    
     for  purposes   of  this  subparagraph,   students  are                                                                    
     considered unhoused  if the  students attend  school in                                                                    
     temporary facilities;                                                                                                      
     (C)   protect   the   structure  of   existing   school                                                                    
     facilities;                                                                                                                
     (D)  correct building  code  deficiencies that  require                                                                    
     major  repair  or  rehabilitation   in  order  for  the                                                                    
     facility  to continue  to be  used for  the educational                                                                    
     program;                                                                                                                   
     (E) achieve an operating cost savings;                                                                                     
     (F) modify  or rehabilitate facilities for  the purpose                                                                    
     of improving the instructional program;                                                                                    
     (G) meet an  educational 1 need not specified  in (A) -                                                                    
     (F) of this paragraph, identified by the department;                                                                       
     (2) prepare an  estimate of the amount  of money needed                                                                    
     to finance each project;                                                                                                   
     (3) provide to the governor,  by November 1, and to the                                                                    
     legislature within  the first  10 days of  each regular                                                                    
     legislative  session, a  revised  and updated  six-year                                                                    
     capital  improvement project  grant schedule,  together                                                                    
     with a proposed schedule of appropriations;                                                                                
     (4) encourage  each school  district to  use previously                                                                    
     approved school construction  design plans and building                                                                    
     systems if the use will  result in cost savings for the                                                                    
     project;                                                                                                                   
     (5)   consider  the   regionally  based   model  school                                                                    
     standards developed under AS 14.11.017(d).                                                                                 
                                                                                                                                
     * Sec. 2. AS 14.11.013(b) is amended to read:                                                                              
     (b) In  preparing the construction grant  schedule, the                                                                    
     department  shall establish  priorities among  projects                                                                    
     for which  grants are requested and  shall award school                                                                    
     construction   grants   in   the  order   of   priority                                                                    
     established. In establishing  priorities the department                                                                    
     shall evaluate at least  the following factors, without                                                                    
     establishing an absolute priority for any one factor:                                                                      
     (1) emergency requirements;                                                                                                
     (2)  priorities   assigned  by  the  district   to  the                                                                    
     projects requested;                                                                                                        
     (3) new local elementary and secondary programs;                                                                           
     (4)   existing   regional,    community,   and   school                                                                    
     facilities,  and their  condition; this  paragraph does                                                                    
     not include administrative facilities;                                                                                     
     (5)  the amount  of district  operating funds  expended                                                                    
     for maintenance; [AND]                                                                                                     
     (6) other  options that would  reduce or  eliminate the                                                                    
     need for the request;                                                                                                      
     (7) the  district's use  of previously  approved school                                                                    
     construction design  plans and building systems  if the                                                                    
     use will result in cost savings for the project; and                                                                       
     (8) consideration  of regionally  1 based  model school                                                                    
     standards under AS 14.11.017(d).                                                                                           
                                                                                                                                
     * Sec. 3. AS 14.11.013(c) is amended to read:                                                                              
     (c) The department may                                                                                                     
     (1) modify a project  request when necessary to achieve                                                                    
     cost-effective school construction;                                                                                        
     (2)  require  that  a school  construction  project  be                                                                    
     phased   for   purposes   of  planning,   design,   and                                                                    
     construction;  [AND] (3)  reject  project requests  and                                                                    
     omit them from the six-year schedule due to                                                                                
     (A)  incomplete information  or documentation  provided                                                                    
     by the                                                                                                                     
     district;                                                                                                                  
     (B)  a determination  by the  department that  existing                                                                    
     facilities   can    adequately   serve    the   program                                                                    
     requirements, or  that alternative projects are  in the                                                                    
     best interests of the state;                                                                                               
     (C)  a determination  that the  project is  not in  the                                                                    
     best interest of the state; and                                                                                            
     (4) require that a  school construction project include                                                                    
     all  or  part  of  the regionally  based  model  school                                                                    
     standards  developed  under  AS 14.11.017(d)  or  reuse                                                                    
     previously approved  design plans and  building systems                                                                    
     that would result in capital  or operating cost savings                                                                    
     for the project.                                                                                                           
                                                                                                                                
     *  Sec. 4.  AS 14.11.017  is  amended by  adding a  new                                                                    
     subsection to read:                                                                                                        
     (d)  The  department  shall  develop  and  periodically                                                                    
     update  regionally  based   model  school  construction                                                                    
     standards  that  describe acceptable  building  systems                                                                    
     and  anticipated  costs  and  establish  school  design                                                                    
     ratios to  achieve efficient and  cost-effective school                                                                    
     construction.   In   developing  the   standards,   the                                                                    
     department  shall consider  the standards  and criteria                                                                    
     developed under AS 14.11.014(b)."                                                                                          
                                                                                                                                
     Page 1, line 5:                                                                                                            
     Delete "Section 1"                                                                                                         
     Insert "Sec. 5"                                                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Vice-Chair Bishop OBJECTED for discussion.                                                                                      
                                                                                                                                
Co-Chair  MacKinnon explained  the  amendment. She  detailed                                                                    
the legislature had been going  through a process for over a                                                                    
decade looking at schools and  how schools were built across                                                                    
Alaska.  The research  had been  to determine  whether there                                                                    
was a different  way the state could do  business that would                                                                    
allow designs  to be  reused and  building components  to be                                                                    
standardized.  A  study  had been  done  by  the  department                                                                    
[Department  of   Education  and  Early   Development]  that                                                                    
specified the changes would not  bring a cost savings unless                                                                    
multiple schools were being built.  There were three schools                                                                    
on the  REAA list in the  same district that were  all being                                                                    
built and  had developed  designs independent of  each other                                                                    
that were  costing the state  $30 million, $35  million, and                                                                    
$40  million-plus  schools.   The  amendment  established  a                                                                    
guideline - if districts allowed  and under the direction of                                                                    
the department - to organize and  try to save the state some                                                                    
money in  design development and building  construction. She                                                                    
relayed  a  process  had  been   conducted  and  the  review                                                                    
committee had  rejected the process  with cost  savings. She                                                                    
asked the department to address the committee.                                                                                  
                                                                                                                                
3:17:26 PM                                                                                                                    
                                                                                                                                
TIM MEARIG, FACILITIES MANAGER,  DEPARTMENT OF EDUCATION AND                                                                    
EARLY DEVELOPMENT  (DEED), relayed the  amendment introduced                                                                    
a  couple  of  provisions  not  currently  in  statute.  The                                                                    
amendment allowed  the opportunity  to develop  the criteria                                                                    
for regionally based model  school construction standards in                                                                    
a  new  paragraph  under  AS  14.11.017(d),  Section  4.  He                                                                    
believed  the  opportunity  to  develop  the  standards  and                                                                    
describe acceptable  building systems  to be used  in Alaska                                                                    
schools was  positive and would allow  the state, districts,                                                                    
and  department to  work  collaboratively.  He detailed  the                                                                    
provision  impacted   other  areas   of  the  bill   as  the                                                                    
department analyzed school  construction grant applications.                                                                    
The other  provision was  based around  considering previous                                                                    
school designs and when they  could appropriately be used in                                                                    
establishing a  design for another  school. There  were some                                                                    
additional provisions in the amendment  that would allow the                                                                    
department   to   encourage,   measure,  and   enforce   the                                                                    
consideration of when previous  school designs could be used                                                                    
when designing other schools.                                                                                                   
                                                                                                                                
Co-Chair MacKinnon asked whether  her staff had been working                                                                    
with Mr.  Mearig on  the amendment.  Mr. Merrick  replied in                                                                    
the affirmative.                                                                                                                
                                                                                                                                
3:19:27 PM                                                                                                                    
                                                                                                                                
Co-Chair MacKinnon  WITHDREW the  OBJECTION. There  being NO                                                                    
further OBJECTION, Amendment 1 was ADOPTED.                                                                                     
                                                                                                                                
Co-Chair MacKinnon asked if Ms.  Pierson had any comments on                                                                    
Amendment  1.  Ms.   Pierson  reported  that  Representative                                                                    
Foster was amenable to the amendment.                                                                                           
                                                                                                                                
Senator  Micciche  spoke  about  the  materials  components,                                                                    
construction   experience,  and   transportation  of   goods                                                                    
related to school  construction. He asked if  the items were                                                                    
something DEED would look at in the future to reduce costs.                                                                     
Mr.   Mearig  answered   that  the   provision  to   develop                                                                    
regionally  based  model  school  standards  would  help  to                                                                    
identify best  practices in the  areas mentioned  by Senator                                                                    
Micciche   as  well,   including   logistics  and   systems.                                                                    
Specifically,  the department  was looking  at standards  of                                                                    
acceptable building systems and  associated costs as well as                                                                    
design ratios that would  achieve efficiency. The department                                                                    
would  measure  things  like the  exterior  envelope  square                                                                    
footage for  the building volume to  identify an appropriate                                                                    
building efficiency.  For example, the process  would ensure                                                                    
a building  did not  end up  with 100  corners. Many  of the                                                                    
costs  mentioned by  Senator Micciche  were not  necessarily                                                                    
things that were  easy for DEED to develop  in standards. He                                                                    
explained  that mobilization  and  shipping  costs would  be                                                                    
difficult  for  DEED  to control.  However,  the  department                                                                    
understood  that   the  heavier   the  material,   the  more                                                                    
expensive the school would be to construct.                                                                                     
                                                                                                                                
Vice-Chair  Bishop appreciated  the amendment.  He asked  if                                                                    
DEED worked  with the Cold  Climate Housing  Research Center                                                                    
(CCHRC) at  the University of  Alaska and whether  that work                                                                    
would  be  incorporated  into  actions  directed  under  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Mr.  Mearig  responded that  DEED  had  not had  significant                                                                    
interaction with  CCHRC with  regard to  commercial building                                                                    
and  schools. He  followed CCHRC's  work and  believed there                                                                    
was  good  opportunity  for collaboration  between  the  two                                                                    
entities in regard to actions under the amendment.                                                                              
                                                                                                                                
Co-Chair   MacKinnon  suggested   that  the   Alaska  Energy                                                                    
Authority (AEA) may be another  natural partner to help with                                                                    
weatherization of  the commercial buildings. She  noted that                                                                    
sometimes there  was a substantial  amount of glass  used in                                                                    
the buildings. Part of the  problem she had with the current                                                                    
design  process  was  that  the  architect  chose  what  the                                                                    
building would  look like and sometimes  beautiful entrances                                                                    
were created that were not  functionally compatible with the                                                                    
climate. She hoped  the amendment would enable  DEED to work                                                                    
with districts  to obtain a beautiful  and functional school                                                                    
design.                                                                                                                         
                                                                                                                                
Co-Chair MacKinnon  communicated the  committee did  not yet                                                                    
have the fiscal note for  the bill, which she believed would                                                                    
be around $300,000.  She believed the bill  would report out                                                                    
the following day.                                                                                                              
                                                                                                                                
CSHB 212(RLS)  was HEARD and  HELD in committee  for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
3:24:34 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:25:37 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB 212 SCS FIN work draft version M.pdf SFIN 5/7/2018 2:00:00 PM
HB 212
HB 212 SCS FIN v. M Explanation.pdf SFIN 5/7/2018 2:00:00 PM
HB 212