Legislature(1999 - 2000)
04/19/1999 01:38 PM Senate HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 117-INSURANCE FOR SCHOOL DISTRICTS
CHAIRMAN MILLER brought SB 117 before the committee.
Number 124
MS. MEL KROGSENG, Staff Aide to Senator Taylor, explained that an
inefficiency was discovered in the administrative regulations
adopted by the Department of Education regarding property insurance
for school facilities and equipment. The Yakutat school brought
this to Senator Taylor's attention. The school is the emergency
shelter in the area in the event of a tsunami, and it had to pay
flood insurance under the current regulations even though it is
situated on the highest point of land in the area. The department
was given a directive in statute to require property insurance for
all schools, and when DOE adopted regulations it didn't consider
that there were schools in no particular flood hazard zone required
to carry flood insurance. Yakutat has paid up to $47,000 a year
for its insurance policy. During the current budget shortfall when
looking for ways to reduce costs, Senator Taylor felt that school
districts could evaluate their potential risk for flood and
earthquake damage and determine whether they need to carry
insurance.
MS. KROGSENG pointed out a discrepancy in the regulations, quoting
from 4 AAC 31.200 Loss Protection Required, "The district shall
carry flood coverage for school facilities and equipment in a flood
plain or flood-prone area." In a subsequent section, it states,
"In addition to the requirements of A and B of this section, an
insurance policy purchased by REAA for any school facility or
equipment owned by the State shall include the State as an
additional insured for earthquake, and (3) flood coverage
regardless of whether the school facilities or equipment are in a
flood plain or flood-prone area." MS. KROGSENG said it doesn't
seem that much thought was given to the reasonableness of the
regulation when it was adopted.
Number 174
MS. CHRISTY MILLER, National Flood Insurance Program Coordinator,
Department of Community & Regional Affairs, Anchorage, stated on-
line that she would answer questions.
MR. PAUL FUHS, representing the Yakutat School District, spoke in
support of SB 117. He stated they had hoped to have a school
official on-line today but were unable to arrange a telecon-
ference. He explained Yakutat is on a glacial moraine, not a flood
plain, and there is no danger of flood. There is danger of
earthquake, and if this bill were to pass, the district would still
buy earthquake insurance. Last year during the school funding
formula discussions, Yakutat heard a lot about districts looking at
ways to cut costs. The flip side of the funding formula is the
cost of providing education. This mandate was very clear for
Yakutat. He asked the committee's support for SB 117.
SENATOR ELTON asked if the bill makes earthquake insurance optional
so that if the district decided to shave costs in the future, it
could discontinue earthquake coverage even though it's in a
sensitive zone.
MR. FUHS replied yes, it could, even though it would not be wise.
MR. MICHAEL MORGAN, Manager of Facility Section in the Department
of Education, stated that when the department made the regulation
change two years ago, it was advised by Christy Miller as well as
the Division of Risk Management. The regulations it passed stated
that people in a flood plain or flood-prone area, not counting
REAAs which have state-owned facilities, would have to buy
insurance. The intent was if a city or borough such as Yakutat was
not in a flood plain or flood-prone area, it would not be required
to buy flood insurance. The requirement for those two designations
was on advice that the Federal Emergency Management Agency (FEMA)
requires flood insurance to participate in any federal disaster aid
when a flood occurs.
Number 216
SENATOR PEARCE asked if the Yakutat school district asked the
department to clarify that under the regulations they don't need
the insurance.
MR. MORGAN answered if they're not in a flood plain or flood-prone
area, they're not required to buy the insurance under current
regulations.
CHAIRMAN MILLER said he was confused and he asked if Yakutat is in
a designated flood plain area.
MR. MORGAN said he didn't know. The department designated "flood
plain" or "flood- prone" area because flood plains are mapped
areas; flood-prone areas are based on the history of the areas that
may not have been mapped yet.
SENATOR ELTON also admitted confusion, and asked what happens if
they're not required to have flood insurance and there is a flood
in the region. Would it affect FEMA's ability to participate in
disaster relief outside of the school if the school doesn't have
coverage?
MR. MORGAN replied, no, it's on a facility by facility basis. The
Federal Emergency Management Act states the Flood and Disaster
Protection Act of 1973 requires the purchase of flood insurance as
a condition for a particular facility.
CHAIRMAN MILLER repeated he is confused about whether Yakutat is in
a flood plain and he requested the sponsor's staff to clarify that.
Number 245
MS. MEL KROGSENG stated she understood from the superintendent at
Yakutat that the school was told they had to carry flood insurance.
The regulation does differentiate between REAAs. Mr. Fuhs also told
her he understood the school district was told by the department
that they had to carry flood insurance. She suggested the
interpretation and implementation of the regulation was different
than it actually reads.
SENATOR WILKEN asked if the bill says the school district does not
have to carry insurance for earthquakes.
MS. KROGSENG replied it does say that. SENATOR WILKEN asked who
rebuilds the school if there's an earthquake in his district and
the school district chose not to carry the insurance. MS. KROGSENG
said the intent was that a major earthquake doing serious damage
would enlist federal assistance to rebuild schools and other
infrastructure. She asked Ms. Christy Miller to discuss the federal
assistance California received during its major quake a few years
ago.
MS. CHRISTY MILLER replied she checked with Walt Robinson at FEMA
Region 10 who told her there were no automatic deductions in
federal assistance if earthquake insurance was not in place at the
time of a disaster. However, districts may be required to obtain
insurance in the future. Mr. Robinson also indicated federal law
may be changing in the future, but right now there is no mandatory
earthquake coverage requirement.
CHAIRMAN MILLER asked Ms. Miller if Yakutat is in a flood plain or
flood zone on the maps at DCRA.
MS. MILLER said that Yakutat is not in a mapped area.
CHAIRMAN MILLER remarked, the city is saying they were told by DOE
they had to buy the insurance and DOE says they didn't tell the
city that, "So we have a problem here."
SENATOR WILKEN suggested that the committee hold the bill and come
back with a CS that takes earthquakes out and clarifies language
that if a school district is not in a flood plain it does not have
to buy flood insurance.
MS. KROGSENG repeated that not all areas of the state are mapped.
Language would have to be included for "flood-prone" areas.
Regarding earthquakes, there is an available map showing the areas
that are part of the "rim of fire," and areas prone to earthquakes.
She suggested language targeting areas more prone to earthquakes
because insurance is very expensive. To require areas with no known
problems to carry it would add an extra, possibly unnecessary,
financial burden.
CHAIRMAN MILLER asked Senator Taylor, who had joined the committee,
to address the problem of reconciling the Yakutat city fathers
saying they are mandated to buy flood insurance and DOE stating
they are not.
Number 315
SENATOR TAYLOR said perhaps he, his staff, the legal drafters and
the city fathers misread the regulation that seemed to mandate it.
CHAIRMAN MILLER responded that DOE said that was not the case, that
it was not mandated coverage if you were not in these areas.
SENATOR TAYLOR countered, that's more reason to pass legislation to
avoid confusion in the future.
CHAIRMAN MILLER said because of confusion and concern by committee
members about earthquakes, he would like to bring SB 117 back next
week with clear language about who needs to be covered and who does
not. He offered to work with Senator Taylor's office and DOE to
ensure the proper language is included.
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