Legislature(2001 - 2002)

03/20/2002 01:44 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                SJR 25-CONST. AM: EDUCATION FUND                                                                            
SENATOR JERRY  WARD, prime sponsor  of SJR 25,  encouraged members                                                              
to adopt  a proposed committee  substitute (Version J)  before the                                                              
committee.  He pointed out  that members'  packets also  contain a                                                              
proposed committee substitute to  SB 188, companion legislation to                                                              
SJR 25.  He explained  that the proposed  committee substitute  to                                                              
SJR 25 is an attempt to address some  of the long term needs of K-                                                              
12 education in the state of Alaska.  The University of Alaska was                                                              
removed  from the  proposed committee  substitute  at his  request                                                              
because he wanted the bill to emphasize  K-12. Much of the bill is                                                              
modeled  after similar  legislation  introduced  by Steve  Cowper,                                                              
former Governor. Governor Cowper's  education endowment required a                                                              
mandatory  draw  from  the  Permanent  Fund;  SJR  25  allows  the                                                              
legislature to make such a draw but  does not mandate it to do so.                                                              
Version J allows  the legislature to put 5 million  acres of state                                                              
land into an  education endowment, allows residents  to contribute                                                              
100 percent of their permanent fund  dividends, and leave the door                                                              
open to allow  other funds to  be deposited into the  endowment in                                                              
the future.                                                                                                                     
[SENATOR ELLIS arrived.]                                                                                                        
SENATOR  WARD  informed  members   that  he  and  Senator  Cowdery                                                              
introduced  similar legislation in  1983. They  were told  at that                                                              
time  it  would take  20  years  to  produce  income from  a  land                                                              
endowment.  He believes  the legislature  should have committed  8                                                              
million acres of land to the endowment  at that time. Senator Ward                                                              
said he  is bringing  this concept  forward again  because  he has                                                              
seen  the education  community do  a  good job,  but believes  the                                                              
"boat is  sinking." This year the  legislature will have  to spend                                                              
more  on education  than  any other  component  of government.  He                                                              
wants  to align  the educational  community  with the  development                                                              
community so  that Alaska  can move forward  and begin  to develop                                                              
some of its  more than 106 million  acres of state land.  He noted                                                              
that  a  land  trust  relationship   was  set  up  in  the  Alaska                                                              
Constitution for  the University of  Alaska and the  mental health                                                              
community and the  legislature set up a land trust  for the Alaska                                                              
Railroad Corporation  when it was  purchased in 1983.  He repeated                                                              
that he  wants to  bring advocates  for public  education and  the                                                              
development  community together  so  that, "we  might  be able  to                                                              
overrule  some of  the  non-growth environmental  extremists  from                                                              
outside  that  have been  locking  our  country  up for  the  last                                                              
several decades  and not to  say in the  least for the  last seven                                                              
years." He noted that he spoke with  Governor Cowper when he first                                                              
proposed  this concept  and  urged  him to  use  a land  endowment                                                              
instead  of permanent  fund monies  but  his constituency  opposed                                                              
that plan. He stated the purpose  of this legislation is to create                                                              
another revenue source for education.                                                                                           
SENATOR COWDERY  moved to adopt the proposed  committee substitute                                                              
to SJR 25 (Version J) for the purpose of discussion.                                                                            
VICE-CHAIR DONLEY  noted that  he would leave  that motion  on the                                                              
table until  Senator Therriault returned  and the  committee would                                                              
take public testimony.                                                                                                          
MR. DARROLL  HARGRAVES, Executive  Director of the  Alaska Council                                                              
of  School  Administrators  (ACSA),  informed  members  that  this                                                              
legislation  has not  been  on his  "radar  screen" so  he has  no                                                              
official position from the ACSA.  He said he was happy to see this                                                              
issue surface again because he recalled,  in 1982, the ACSA pushed                                                              
to highlight  the possibilities of  such a fund. ACSA  invited Dr.                                                              
Norman Hall from  Texas to visit: he proposed that  Alaska do what                                                              
Texas  did  with  its  oil revenue  -  restrict  that  revenue  to                                                              
construct  and  maintain  school  facilities.  ACSA  made  such  a                                                              
proposal but  Alaska had so much  money at that time,  he believes                                                              
no  one could  foresee  future  problems.  He favors  limiting  an                                                              
endowment to K-12 education and he  encouraged members to consider                                                              
restricting  its use  to construction  and  major maintenance,  as                                                              
that is what worked  best in Texas. He added that  he believes the                                                              
statehood charter puts  the 16  and 36  section  of every township                                                              
into a  public school land  trust. He was  not sure of  the status                                                              
but offered  to check for members.  He applauded Senator  Ward for                                                              
introducing the legislation  and said he would like  to see a land                                                              
endowment for education come to fruition.                                                                                       
SENATOR WARD acknowledged that Senator  Taylor has worked with him                                                              
on  this bill  and estimated  that  the sections  of  land in  the                                                              
statehood  charter  would  add  about  1.5 million  acres  to  the                                                              
endowment.  He noted that  the Texas  university system  is making                                                              
enough from  its land grants that  it spends excess funds  on K-12                                                              
programs.   He  has spoken  to members  of Alaska's  congressional                                                              
delegation  about this issue  and they  believe the University  of                                                              
Alaska's  land  grant should  stand  on  its own.  The  delegation                                                              
suggested that if a land grant comes  to pass, they would consider                                                              
trying  to donate  an equal  amount of  federal land  to it.  If 5                                                              
million acres  of both  federal and  state land  were put  into an                                                              
endowment,  it would  be  the largest  land  grant  in the  United                                                              
SENATOR COWDERY asked  how much land would be needed  at the start                                                              
and noted that  land sales could encompass one lot  or one million                                                              
SENATOR WARD  replied that he "took  it down to nothing  less than                                                              
40 acres."  He suggested  staying with 640  acres but  pointed out                                                              
40-acre parcels  would not  require surveys so  there would  be no                                                              
transfer cost.                                                                                                                  
SENATOR COWDERY  noted that  he sees no  reference to that  in the                                                              
committee substitute.                                                                                                           
SENATOR WARD  clarified the  details are specified  in SB  188. He                                                              
referred to language on page 4 that reads:                                                                                      
     Each list must  contain not more than 25  percent of the                                                                   
     total acres of land to which  the fund is entitled after                                                                   
     subtracting  previous  conveyances under  this  section,                                                                   
     but  not  less  than  25,000   acres  or  the  remaining                                                                   
     entitlement under this section, whichever is less,                                                                         
and  said that  is  a  formula the  department  came  up with.  He                                                              
maintained  that the  bill should  not contain  a minimum  because                                                              
size  should not  be a  factor; the  legislature  should have  the                                                              
option to  transfer lots if necessary.  He said it is  not helpful                                                              
to the  education of Alaska's children  to leave over  100 million                                                              
acres in state ownership.                                                                                                       
SENATOR WARD said  he purposely did not restrict  contributions to                                                              
permanent fund  dividends so that future legislators  can identify                                                              
other  revenue streams,  such  as  gas line  revenue.  He said  he                                                              
believes  there  is a  serious  misunderstanding  about  education                                                              
funding. The  legislature has  been trying to  put quite a  bit of                                                              
money into  public education for the  last few years but  it never                                                              
seems  to be  enough.  He  believes  the legislature  should  fund                                                              
transportation, public  safety and education  well, and it  is not                                                              
doing so.  He does not  believe the legislature  can "tax  its way                                                              
out of  this," and  that if a  land endowment  is logical  for the                                                              
University,  the  railroad and  the  mental health  community,  it                                                              
certainly  is  logical  for  K-12 education.  He  then  asked  Mr.                                                              
Hargraves about the status of the land grant he referred to.                                                                    
MR.  HARGRAVES replied,  "I think  that thing  is a  real ball  of                                                              
worms for you.  This state someday  may pay the price for  that. I                                                              
don't know  what you  know -  I don't  know what's happening,  but                                                              
aren't there some lawsuits out there  that are either taking shape                                                              
SENATOR  WARD stated  the  lawsuits have  dropped  to the  wayside                                                              
because agreements were negotiated.                                                                                             
MR. HARGRAVES  said it is  his impression,  "...that if you  got a                                                              
decision similar to  that mental health lands  trust in connection                                                              
with this one, I think it would practically destroy the state."                                                                 
SENATOR  WARD commented  that Senator Taylor  believes giving  the                                                              
full  5  million acres  to  the  land endowment  would  solve  the                                                              
MR.  HARGRAVES   said   the  statehood   charter  issue   is  very                                                              
complicated   and   would   have    tremendous   and   devastating                                                              
implications for the state.                                                                                                     
SENATOR  WARD clarified  that he  brought  the proposed  committee                                                              
substitute for SB  188 to members' attention because  he wanted to                                                              
inform them  of the board  make-up. He said  he would like  to pit                                                              
the development community and the  education community against the                                                              
extreme environmentalists.                                                                                                      
VICE-CHAIR DONLEY  announced the committee  would take up  HB 362.                                                              
He asked Ms. O'Regan to testify.                                                                                                
Upon  reconvening  the  meeting,  SENATOR  COWDERY  moved  CS  SJR
25(JUD) from committee with individual recommendations.                                                                         
VICE-CHAIR  DONLEY  noted  that   without  objection,  the  motion                                                              

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