Legislature(1995 - 1996)
01/31/1995 03:02 PM House HES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
January 31, 1995
3:02 p.m.
MEMBERS PRESENT
Representative Cynthia Toohey, Co-Chair
Representative Con Bunde, Co-Chair
Representative Al Vezey
Representative Gary Davis
Representative Norman Rokeberg
Representative Caren Robinson
Representative Tom Brice
MEMBERS ABSENT
None
OTHER HOUSE MEMBERS PRESENT
Representative Kim Elton
COMMITTEE CALENDAR
Update by the School Bond and Reimbursement Committee
Overview of the Alaska Postsecondary Education Commission
Overview of the University of Alaska
WITNESS REGISTER
DON GILMAN, Mayor, Kenai Peninsula Borough and
Chairman, Bond Reimbursement and Grant Review Committee
144 N. Birkley
Soldotna, AK 99669
Telephone: (907) 262-4441
POSITION STATEMENT: Provided overview information on Bond
Reimbursement and Grant Review
LEN MACKLER, Director, Physical Plant
Fairbanks North Star Borough School District and
Member, Bond Reimbursement and Grant Review Committee
P.O. Box 1250
Fairbanks, AK 99712
Telephone: (907) 452-4401
POSITION STATEMENT: Provided overview information on Bond
Reimbursement and Grant Review.
JOE L. McCORMICK, Executive Director
Alaska Commission on Postsecondary Education
Department of Education
3030 Vintage Boulevard
Juneau, AK 99801-7109
Telephone: (907) 465-6740
POSITION STATEMENT: Provided overview information on the
Alaska Commission on Postsecondary Education.
JERRY LEWIS, Executive Director
Governor's Council on Vocational Education
211 Fourth Street, Suite 101
Juneau, AK 99801
Telephone: (907) 586-1736
POSITION STATEMENT: Provided overview information on the
Alaska Commission on Postsecondary Education.
ALISON ELGEE, Director
Statewide Budget Office
University of Alaska
227 4th Street
Juneau, AK 99801
Telephone: (907) 463-3086
POSITION STATEMENT: Provided an overview of the University
of Alaska
ACTION NARRATIVE
TAPE 95-3, SIDE A
Number 000
CO-CHAIR CON BUNDE called the meeting of the House Health,
Education and Social Services (HESS) Committee to order at 3:02
p.m. Committee members present at that time were Representatives
Con Bunde, Cynthia Toohey, Gary Davis and Caren Robinson. Co-Chair
Bunde stated that a quorum was present to conduct business.
Number 080
CO-CHAIR BUNDE announced that at 3:04 p.m. Representative Norman
Rokeberg arrived.
OVERVIEW OF THE BOND REIMBURSEMENT AND GRANT REVIEW COMMITTEE
Number 097
DON GILMAN, Mayor, Kenai Peninsula Borough, and Chairman, Bond
Reimbursement and Grant Review Committee, introduced other members
of the committee which were present: Mike Franks, Facility Project
Engineer, Anchorage School District; Duane Guiley, School Finance
Director, Department of Education; Harley Hightower, Architect;
Frank Hill, Superintendent, Lake and Peninsula Borough School
District; Len Mackler, Director, Physical Plant for the Fairbanks
North Star School District; and Dee Hubbard, an interested parent
from Eagle River.
Number 219
MR. GILMAN gave committee members a handout which listed the
committee's statutory responsibilities, committee accomplishments
and committee goals.
Number 302
CO-CHAIR BUNDE announced, for the edification of the committee,
that prior to the establishment of the Bond Reimbursement and Grant
Review Committee, schools were funded by political clout and money
was given to whomever complained the loudest. He explained that
the committee is an attempt to fund schools in a manner which is
more consistent and fair. The committee is developing a list of
criteria which must be met in order for a school to receive
funding. This is a difficult task, considering the number of
different schools in the state.
Number 302
MR. GILMAN also handed out a copy of a letter of recommendations,
sent to the commissioner and the State Board of Education,
concerning capital needs the committee had perceived after
receiving the first round of applications under the new system. He
explained that the letter states the committee has projected a need
for about $600 million over the next six or seven years. A large
portion of the funding is needed for maintenance, as opposed to new
construction. The committee recommended that the board request
$100 million every year, over the next six years, to meet those
needs, and that in the first year they request that 70 percent of
that money be set aside for major maintenance.
Number 442
MR. GILMAN clarified that there are two funds, a construction fund
and a maintenance fund. He said that there has not been any money
in those funds since 1994, because in 1993, such a large amount of
money went into school construction and, in 1994, there was no
money left.
Number 490
MR. GILMAN stated that the committee feels whatever amount of money
the legislature decides to provide, most of the money should be put
into the maintenance fund. The committee received about 350
applications for projects in 1994. Each project was ranked either
in construction or maintenance. The committee tried to establish
an objective method for ranking, and out of the 350 applications,
only four ended up in appeal and are being heard either on February
1 or 2, with a hearing officer.
Number 557
MR. GILMAN said that the committee has experienced difficulty
meeting obligations, as set by the statute, which established the
committee. Much of this difficulty is due to delays in getting
information to school districts and new applications. Mr. Gilman
felt this caused some ill will in some school districts. The
committee is trying to rectify those problems by providing all
information to the school superintendents by the first day in
April. This allows superintendents some time, before school is out
for the summer, to complete the application forms. There will also
be changes in the forms to make them simpler.
Number 675
CO-CHAIR BUNDE pointed out for the HESS Committee members that the
challenges facing the Bond Reimbursement Committee include
developing a ranking system. In addition, many school districts
chose, either consciously or unconsciously, not to provide all the
information necessary to the Bond Reimbursement Committee.
Therefore, the Bond Reimbursement Committee is not only trying to
construct a workable system, but also it must educate school
districts on the importance of the system. Depending on which
district a person represents, he or she may or may not be happy
with the rating system if his or her school ranks high or low.
Number 726
CO-CHAIR BUNDE recommended that the Bond Reimbursement Committee
make a presentation to the education subcommittee chairman of the
Finance Committee because the capital budget appears to be about
$100 million, and the Bond Reimbursement Committee needs $100
million. It is important for the Finance Committee to know what is
occurring.
Number 761
MR. GILMAN replied that when the bonds where approved, there was a
cap of $250 million. Anchorage and Fairbanks were allotted $200
million and $50 million was given to the rest of the state. The
needs of the rest of the state were in excess of $50 million,
therefore, the committee has recommended to the board that the
level be raised a certain amount, per year, for the next four or
five years in order for districts to go to the bond market should
they desire to do so.
Number 803
MR. GILMAN said that right now there are no more bonds left. The
entire $50 million authorized to the remaining parts of the state
have been authorized and sold except for perhaps one or two small
issues.
Number 821
CO-CHAIR BUNDE noted, for the record, that Representative Tom Brice
joined the meeting at 3:14 p.m.
Number 857
REPRESENTATIVE GARY DAVIS asked Mr. Gilman whether the remaining
$200 million was also used for Anchorage. Mr. Gilman said he
believed that $133 million was earmarked for Anchorage, and $67
million was allotted for Fairbanks. Fairbanks has not passed one
bond issue. Mr. Gilman wondered what would happen to the
authorization if Fairbanks does not use it within a certain amount
of time.
Number 909
CO-CHAIR BUNDE stated that REPRESENTATIVE AL VEZEY joined the
meeting at 3:15 p.m.
MR. GILMAN stated that Anchorage has already authorized and/or sold
almost all of their bonds.
Number 939
REPRESENTATIVE CAREN ROBINSON asked Mr. Gilman if he had a chance
to look at a bill sponsored by Representative Jeannette James.
This bill aims to set a program for the maintenance of all existing
facilities, including education facilities. She surmised that such
a bill would affect Mr. Gilman's program.
Number 973
MR. GILMAN said that the bill was briefly discussed but his
committee did not have a copy of it. Representative Robinson said
that Representative James plans on having all affected groups look
at the bill and moving it slowly so all interested parties can
assist in the process.
MR. GILMAN stated that an effective maintenance program is one of
the major criteria his committee evaluates when ranking schools.
Many school districts have maintenance programs, and there are many
interpretations of that term. Many maintenance programs include
only cleaning, and others include painting and simple construction.
It is difficult for the committee to decide how they give credit to
a school that has had a good maintenance program, and suddenly the
school has major maintenance needs through no fault of their
maintenance program. Such a school should be given extra points
which brings them to the top of a priority list, instead of being
penalized for having a good maintenance program.
Number 1066
CO-CHAIR BUNDE asked for a brief synopsis of the
checklist/application which a school would have to fill out. Mr.
Gilman said that the checklist had been used once already as the
major evaluation instrument. He then called upon another member of
his committee to explain the checklist.
Number 1115
LEN MACKLER, Director Physical Plant of the Fairbanks North Star
Borough School District, explained that the application form has
already been used in the process to gather requests on September 1,
1994. Co-Chair Bunde asked if the application went to all school
districts in the state and Mr. Mackler said yes, in the most timely
fashion possible.
Number 1140
MR. MACKLER felt the application provided more information than the
previous form, which is used to tally scores. The current
application has 43 items on it, some of which are quite detailed.
It begins by asking what category of funding the request is for,
such as school construction or major maintenance. The applicant
must designate the purpose of the project, provide a description of
the project, provide a cost estimate, provide a building site
definition and state whether the project will use new land. The
applicant must also provide condition surveys, confirm that they
have a functional fixed asset inventory system according to
statute, and confirm they have a functional preventative
maintenance program, which is also part of the statute.
Number 1200
MR. MACKLER continued that part of the problem with those criteria
is verification of data received on the application, and the
effectiveness of the programs reportedly in place. A third problem
is the rating of programs on a numerical scale as to effectiveness.
Further criteria is that applicants must verify they have
insurance. They must provide information as to what facilities the
insurance covers and provide the age of the facility. More scoring
points are given to older facilities. Information is required on
the application concerning student populations in the current
facilities, the number of students housed in all facilities within
the attendance area that serve those ages of children, and also
student number projections for two years, five years and seven
years into the future.
Number 1262
MR. MACKLER stated that some school districts are very good at
predicting future enrollments, and others are not either able to
predict or do not predict accurately. When speaking about school
construction, the projected population is a very difficult issue to
decide upon. Current requests often look five to seven years in
the future and population needs must be projected accurately.
Applicants must also provide information, to the committee, about
the current replacement value of their existing facilities, and
average annual maintenance expenditures. This information is
necessary to determine the maintenance effort expended by the
applicant in the past. This is also a difficult issue to quantify
for ranking purposes. The committee recognizes that just because
maintenance expenditures are high does not mean that maintenance
has been effective. This is a major point of contention between
the committee, the legislature and the school districts. The
legislature has said that the greatest credit should be given to
those who have done the best with their operating funds to maintain
their facilities in the long-term best interest of the state.
MR. MACKLER added that the least amount of capital money should be
provided to those who have done a poor job maintaining their
facility and have chosen to spend their money elsewhere.
Number 1350
MR. MACKLER concluded the application overview by saying that the
applicant is asked questions on how local matching funds are to be
achieved, what the applicant wishes to build, and whether existing
facilities exist which could do the job.
MR. MACKLER stated that the committee has listened to a number of
people, in the field through conferences, and is concentrating on
correcting and updating the form. The committee is also working on
updating the scoring system to increase fairness and getting the
revised information out to interested parties in order to receive
more input. He expects the final form will be out by April 1.
Requests for next year are due by September 1.
Number 1408
CO-CHAIR BUNDE asked if it would be a fair summary to say that the
Bond Reimbursement Committee is attempting to create a document
which takes as much objectivity as possible out of funding the
maintenance and building of schools, and that the purpose of the
committee is to provide this instrument to the Department of
Education which will use the application to fund future maintenance
in schools.
MR. MACKLER replied that Co-Chair Bunde was correct. The
Department of Education will use the application to prioritize
which school districts get scarce funding resources.
Number 1437
CO-CHAIR TOOHEY commented that the task was difficult. She
rhetorically asked how the Bond Reimbursement Committee can make it
easier for school districts to be honest with the legislature
concerning their maintenance practices, and how one would convince
the districts to be more fastidious with maintenance duties.
MR. MACKLER agreed that Co-Chair Toohey asked a tough question, but
it is a question that needs to be dealt with. Another concept that
must be considered is that of the "sins of the fathers," in which
people working in districts now should not have to pay for poor
maintenance which occurred in the past.
Number 1468
CO-CHAIR BUNDE stated that to not deal with such a problem put the
funding process back to the beginning, in which the legislator with
the most seniority, or the legislator on the Finance Committee,
received funding for his or her school district.
Number 1478
REPRESENTATIVE NORMAN ROKEBERG asked Mr. Mackler what percentage of
the Fairbanks School District budget goes toward maintenance. Mr.
Mackler replied that 14 percent of the operating budget goes into
maintenance. That 14 percent covers custodial, utilities and
further maintenance. Representative Rokeberg asked for statistics
on other school districts. Mr. Mackler replied that Juneau uses
about 11 to 12 percent of their budget for maintenance, Anchorage
allots about 15 percent, and the Kenai area allots about 17 percent
for maintenance.
REPRESENTATIVE ROKEBERG asked if Mr. Mackler knew what percentage
of the budget would go for maintenance if janitorial and utility
costs were not included.
Number 1530
MR. MACKLER answered that was a hard question, because many
districts have different definitions of what a custodian's duties
are. In Mr. Mackler's district, they require that custodians spend
about 25-30 percent of their time on maintenance duties such as
painting, wall repair, carpet repairs, cleaning vents, filter
replacement, etc. Other districts may have custodians who perform
only cleaning duties. That is another issue the Bond Reimbursement
Committee is dealing with.
Number 1570
REPRESENTATIVE ROKEBERG asked if there was a national standard as
to the percentage of a school district budget allotted to
maintenance. Mr. Mackler had not seen such a national standard,
but he felt that a national rule of thumb is that 2 percent of the
replacement cost of a building should go to maintaining it every
year.
REPRESENTATIVE ROKEBERG asked if a 50 year, straight line
depreciation schedule was adequate for a public facility. Mr.
Mackler replied that would assume the building had been built in
the first place to last for 50 years, and that the environment
allowed the building to live for 50 years. Representative Rokeberg
felt that the private sector would not accept a 50-year
depreciation schedule.
Number 1612
CO-CHAIR BUNDE asked Mr. Mackler for the highest and lowest
percentages allotted for maintenance in Alaska. Mr. Mackler
thought that Juneau's allotment was low, but he didn't know of what
their maintenance program consists of. He continued that other
school districts may have allotments over 25 percent. He reminded
the HESS Committee that utilities are included in such an account,
and the cost of utilities varies from area to area.
Number 1642
REPRESENTATIVE ROKEBERG asked Mr. Mackler if his systems used any
type of component part depreciation schedule to analyze the life
span of particular components in a facility. Mr. Mackler responded
that he has an extremely comprehensive preventative maintenance
program in place for his school district which has won national
awards. In that program, he has a computerized analysis of major
components and they use predictive replacement. For example, a fan
motor with 17,000 hours on it is replaced at that time because the
prediction is that it will fail at about 20,000 hours.
Number 1683
REPRESENTATIVE ROKEBERG commended Mr. Mackler and asked how much
money the Fairbanks School District used for maintenance on a
bonded basis or a capital improvement basis in the last five years
as a result of Mr. Mackler's preventive maintenance program. Mr.
Mackler did not know the answer to that question, but he said that
in the last five years not a single classroom or instructional day
was lost due to a system failure.
REPRESENTATIVE ROKEBERG asked if funds from state bonding or state
capital appropriations have been used for maintenance items in Mr.
Mackler's district. Mr. Mackler replied that very little funding
has been coming through the state, and no funds had been received
through bonding. Some money for roof repair, fire alarm
improvements and upgrades have been provided by the state. More
funding has come from the local borough, approximately $20,000 to
$70,000 has been given for systems items or major maintenance on
systems.
Number 1737
CO-CHAIR BUNDE clarified that one of the goals of the Bond
Reimbursement Committee is to encourage people to spend more money,
on maintenance, throughout the state. Mr. Mackler added that 70
percent of the first year's revenue stream allotted for school
construction issues is to be used for maintenance, not for new
construction.
REPRESENTATIVE AL VEZEY commented that he remembered the Fairbanks
School District received somewhat less than $2 million in, fiscal
year 1994, for life safety upgrades and roof repairs.
REPRESENTATIVE TOM BRICE added that the $2 million was mostly
discretionary money.
Number 1777
REPRESENTATIVE ROKEBERG expressed concern that if the committee
recommends that 70 percent of state capital money be authorized for
maintenance, what would a school district, such as Fairbanks, stand
to gain from this appropriation? Mr. Mackler replied that he had
uses for such money, such as roof replacements. No matter how
excellent of a program he has in place, sooner or later buildings
begin to deteriorate.
REPRESENTATIVE ROKEBERG said that such a problem speaks to the
dilemma that those who perform excellent maintenance duties should
not be penalized through lack of funding.
Number 1840
REPRESENTATIVE ROKEBERG recalled testimony concerning a survey done
in the Anchorage School District which indicated there was deferred
maintenance, from several years ago, which would cost several
hundred million dollars to repair. This was a major concern of
Representative Rokeberg's. He felt that perhaps many of the school
districts, in the state, have been relying too much on capital
grants and bonding monies rather than allocating a sufficient
portion of their operating budgets to the maintenance and operation
of their facilities.
Number 1889
CO-CHAIR BUNDE thanked Mr. Gilman and Mr. Mackler for the overview
and introduced the speaker for the Postsecondary Education
Committee.
OVERVIEW ON POSTSECONDARY EDUCATION
Number 1942
DR. JOE McCORMICK, Executive Director, Alaska Commission on
Postsecondary Education (ACPE), Department of Education, provided
the HESS committee with information on the activities of his
commission and the Alaska Student Loan Program.
DR. McCORMICK began by listing the general duties of the ACPE.
They include:
1)Consumer protection, which consists of handling customer
complaints, insuring refunds when schools close, and
providing factual information about the postsecondary
educational opportunities available.
Number 1978
2)Institutional Authorization, which involves a biennial
review and reauthorization of approximately 100
postsecondary institutions. The commission also
regulates program and degree offerings and approves
institutions for Alaska student loans and Veterans
Affairs Programs.
3)The commission provides state student financial aid
programs for full and half-time students: Teacher
scholarships, family education loans, state and federal
grants to low income students, the Western Interstate
Commission for Higher Education (WICHE) Professional
Exchange and the Washington, Alaska, Montana, Idaho
(WAMI) Medical Education Program, as well as the Alaska
Student Loan Program.
Number 2009
4)The commission administers the state postsecondary review
entity (SPRE) to insure continuing availability of
federal Title IV funding to eligible Alaskan
institutions.
5)Finally, the commission provides administrative support
to the Governor's Council on Vocational Education.
DR. McCORMICK announced that Jerry Lewis, Representative,
Governor's Council on Vocational Education, was present at the
overview.
Number 2037
DR. McCORMICK continued that the Alaska Student Loan Corporation
also has a number of duties separate from the commission's
activities. They include:
1)Borrowing funds to carry out the purpose of the
corporation and issue obligations as evidence of this
borrowing. The corporation issues tax exempt bonds to
finance the availability of loan capital.
2)Investing and reinvesting money held by the corporation.
3)Providing for appropriate servicing of the Alaska Student
Loan Portfolio.
Number 2048
DR. McCORMICK continued by saying it was important to point out
that the bond debt issued by the corporation is not pledged to the
state of Alaska, but is backed by the assets of the Alaska Student
Loan Fund.
Number 2071
DR. McCORMICK updated the HESS Committee on the changes that have
been made since he joined the commission in December, 1993, and
provided a brief overview of the duties and responsibilities of the
Commission on Postsecondary Education and the Alaska Student Loan
Corporation.
DR. McCORMICK continued that when he first met with the legislature
last year he was new to the commission. At that time, the loan
program was suffering major inadequacies in customer service and
financial stability. Over the past year significant changes have
been made. Customer service was suffering from six or more months
of backlogs in correspondence, excessive telephone hold time, and
an eight-week turnaround time for student loan application
processing. Today, backlogs have been virtually eliminated. It is
a performance standard for the staff not to have backlogs. The
telephones are answered within three seconds and loan processing
has been reduced to 72 hours. He would like to reduce it further
to 72 minutes.
Number 2129
DR. McCORMICK stated that since joining the commission, he made
every effort to promote the financial security of the Alaska
Student Loan Program. When he met with the legislature last year,
the corporation had just issued bonds that were uninsured. This
past July, the $50 million in bonds that were issued were not only
fully insured, but the stable financial position enabled the
commission to negotiate one of the lowest rates in the commission's
history. This increased financial stability will allow the program
to be a continued source of financial support for Alaska's students
in years to come.
DR. McCORMICK added that over the past two years, in addition to
improving customer service, the commission has made progress toward
improving overall program administration. The staff has been
restructured so it is a more horizontal, functional organization.
Procedures have been overhauled so that the organization is more
efficient. Changes to cumbersome regulations have been pursued to
help streamline operations and reduce administrative costs, always
stressing customer service, constant innovation, and engaging
technology to the fullest.
Number 2177
DR. McCORMICK stated that currently, the operational objectives of
the commission are maintaining a high level of customer service and
enhancing the long-term financial stability of the Alaska Student
Loan Program. As previously mentioned, some dramatic improvements
in both of these areas have been made over the past year. However,
due to the fact that the loan program is funded solely by corporate
receipts, losses had to be absorbed due to statutory provisions
such as the requirement to honor forgiveness for loans made prior
to 1987, non-accrual of interest during in-school and deferment
periods, and the losses due to uncollectible student loans.
Number 2204
DR. McCORMICK added the organization is a "stand-alone" loan
program. No reimbursement or refinancing is received for those
losses. The losses come directly from the fund.
The most serious concern for the commission in the coming year is
the loan system software. For a number of years the loan system
suffered serious problems because of the outdated, very manual loan
servicing system. After audit deficiencies were identified in
1993, as a result of the current software, the ACPE took dramatic
steps to resolve the loan system difficulties.
DR. McCORMICK continued that an intensive study was conducted by
the firm of Peat Marwick and it was concluded that a new software
system was necessary to effectively award and service student
loans. The new software system would greatly enhance customer
service by a fully automated system. It would also dramatically
decrease operating costs by reducing manual tasks. In December,
1994, the Legislative Budget and Audit Committee approved $250,000
in funding for the first phase of the project, to identify the
software needed. The ACPE will be working with the Office of
Management and Budget to propose to the legislature the additional
funding needed to fully implement this proposal.
Number 2265
DR. McCORMICK stressed that no general fund dollars are being asked
for in this appropriation. These come from corporate receipts of
the loan fund itself.
DR. McCORMICK stated that another important objective for this
session is the passage of a transition bill which would enable the
ACPE to establish an interest rate for the upcoming school year.
This is a technical change which was inadvertently omitted from HB
506, which was passed last year. HB 506 failed to contain
necessary transition language to allow the commission to draft
appropriate regulations to set the interest rates for loans to be
disbursed on July 1.
Number 2294
DR. McCORMICK said they plan to continue efforts to improve
customer service and financial soundness. To further this goal,
the ACPE hopes to make the borrower be more responsible for their
loans and to pay interest during the deferment periods and other
periods where interest does not accrue, to increase funding for
graduate students, to extend the number of years for repayment, and
to increase the number of months before a loan goes into default.
TAPE 95-3, SIDE B
Number 000
DR. McCORMICK closed by saying that the goal of the commission is
to move the Alaska Student Loan Program toward a completely self-
sustaining, financially sound future. Proposed legislation has
been submitted to the Governor's Office, for their review, that
will accomplish these goals. The ACPE will continue these
progressive changes, and continue to focus efforts on the needs of
Alaska students because the commission is committed to helping
Alaska invest in its most valuable resource, its people.
Number 0074
CO-CHAIR TOOHEY asked Dr. McCormick if his plan had progressed as
he had hoped. DR. MCCORMICK replied that the commission is ahead
of where he thought they would be at this time last year. The
legislature was very supportive last year and they are right on
schedule. If this progress continues, and the legislature gives
the commission the authority to continue the program
implementation, the commission will soon be in very good shape for
the first time in many years.
Number 160
CO-CHAIR TOOHEY asked if the $250,000 approved by the Legislative
Budget and Audit Committee was just for the study or for software
acquisitions as well. Dr. McCormick answered that the money was
only for the identification of software, to issue specifications
for the software and search for the correct software. The ACPE
would get acquisition funds from the capital budget request that
the commission is working on with the Governor's Office and the
Office of Management and Budget. The actual funding of the
implementation phase of the process will come from the FY96 capital
budget request.
Number 219
DR. McCORMICK again stressed that the commission was not asking for
funding per se, but asking for permission to spend corporate
receipts which are already in the student loan fund for this
purpose.
Number 234
CO-CHAIR TOOHEY inquired about the amount of loans given prior to
1987. Dr. McCormick answered that amount in total was about $200
million. If students met certain conditions, a portion of their
loans could be forgiven.
Number 275
REPRESENTATIVE GARY DAVIS asked Dr. McCormick about the student
loan process to establish the Alaska residency of a student. Some
students do not qualify for the permanent fund dividend and yet
they receive student loans. Representative Davis expressed
frustration over these inconsistencies. College students, in
general, really need the permanent fund dividend and he was not
happy with some of the permanent fund regulations which disqualify
the students as residents.
Number 419
CO-CHAIR BUNDE noted for the information of the HESS Committee
members that bills were pending concerning the Postsecondary
Education Commission. Dr. McCormick deferred from briefing the
HESS members on those bills until he had a chance to brief and
receive the support of the Governor's Office.
Number 431
REPRESENTATIVE ROKEBERG asked about loan limits for students. Dr.
McCormick answered that the annual loan limits are $5,500, per
year. There is no distinction between graduate and undergraduate
student amounts. Current interest rates are at 8 percent simple
interest. This interest rate was set by statute, however, this was
changed last year to allow the commission to set the rate based on
the cost of bonds and the cost of administering the loan program.
Unfortunately the transition language that authorizes the
commission to write regulations to change the rate was omitted from
HB 506. Dr. McCormick asked to have the bill which rectifies that
problem sped through the system, so the commission can legally
issue regulations and can legally disburse loans at an interest
rate to students by July 1.
Number 519
CO-CHAIR BUNDE announced that the bill of which Dr. McCormick spoke
of will be noticed Thursday, and will be heard probably Tuesday,
February 7.
Number 552
JERRY LEWIS, Executive Director, Governor's Council on Vocational
Education, testified before the HESS Committee. He informed the
committee members that his council is autonomous and independent.
Therefore, they must select their own financial agent. They have
a memorandum of agreement with the ACPE to act as the council's
financial agent. The council is strictly funded by federal funds,
receiving a grant of $150,000 per year. All personnel and
financial arrangements are taken care of by the ACPE.
Number 594
MR. LEWIS continued that Marie Becker, a member of the council, is
also on the ACPE as per requirement.
Number 618
CO-CHAIR TOOHEY asked Mr. Lewis if the commission received any
compensation for serving as the council's financial agent. MR.
LEWIS answered that the commission gets $5,000 annually, which
comes from the grant.
CO-CHAIR BUNDE thanked Dr. McCormick and Mr. Lewis for the overview
and commended their work.
OVERVIEW OF THE UNIVERSITY OF ALASKA
Number 740
ALISON ELGEE, Director, Statewide Budget Office, University of
Alaska, passed out a brief profile of the University of Alaska
system. She explained that the system has three major
administrative units, the University of Alaska Fairbanks, the
University of Alaska Anchorage and the University of Alaska
Southeast/Juneau. Rural campuses are all attached to one of the
major campuses for administrative purposes.
Number 773
MS. ELGEE updated the list of regents by noting that regents Susan
Stitham and Mark Helmericks just completed their terms, and the
Governor's Office would be making appointments soon. The term of
student regent Scott Otterbacher will also be ending in the spring.
Number 800
MS. ELGEE began the overview by saying that the university has been
involved, over the course of the last year, with a program
assessment. Over the last several years, the university has not
obtained sufficient funding either from the state, or from efforts
to generate additional income through research activities and
tuition increases to cover all the fixed costs of the university.
Number 831
MS. ELGEE continued that the people within the system felt that
some effort must be made to identify priority programs and those
programs which needed either additional enhancement to be effective
or those which possibly needed to be eliminated. The program
assessment process involved people at all campus levels. In
September, actual target figures were issued for the purposes of
assessment. The plan was designed to be a three year plan,
recognizing that change takes time. The plan was to take them to
FY98, with action to be taken over the next three years.
Number 889
MS. ELGEE stated that the program had built in assumptions. The
first is that over the course of the next three years, a 3 percent
increase would be realized in terms of state general fund support.
The program also had built in revenue assumptions relative to
tuition and fees. It has been proposed to the Board of Regents
that the consolidated fee cap, which allows students to pay for 13
credits and take subsequent credits for free, be eliminated. In
addition, tuition increases over the next three years are proposed
as 4 percent over the 1995-1996 academic year, 5 percent the
following year and 6 percent after that.
Number 952
MS. ELGEE explained that revenue and expenditure assumptions were
made, also taking into account an assumption of a 3 percent
inflation rate over the next three years. Recognizing that all
things are not equal, the 3 percent inflation rate was multiplied
by 75 percent to try to cover 75 percent of what inflation could do
to costs. This data was used to develop a 2 percent allocation for
program enhancement. In the program enhancement category, the
board dictated that the building maintenance portion of the
building maintenance and renewal and replacement formulas be
completely covered by the end of FY98. This was so adequate money
would be in the operating budget for building maintenance.
Number 975
MS. ELGEE continued that the recommendations developed by the
campuses were heard in a number of public hearings throughout the
state. The university president reviewed the recommendations, held
additional public hearings, and then took the proposed plan to the
Board of Regents in December. The board adopted the program
assessment plan with very minor changes.
Number 1000
MS. ELGEE said that the plan does a variety of things. One was to
look for cost savings and efficiencies in administrative support
and academic administration. Some of the proposed outcomes are the
consolidation of some schools and colleges. The program also
looked to lowering per student costs, particularly in the rural
areas. Per student costs were much higher in the rural areas. The
majority of those campuses are under the University of Alaska,
Fairbanks. The effort was to equalize the per student cost at all
schools, to reduce administration at rural campuses and realize
efficiencies through consolidation with the cooperative extension
program.
Number 1084
MS. ELGEE said that the program also has built in assumptions for
higher faculty and staff productivity. The plan allowed the
program assessment team to identify campus and system priorities
which will help them designate areas for potential cross-campus
collaboration in terms of instruction.
Number 1084
MS. ELGEE said that her colleagues are looking at a continued
higher proportion of non-general fund support with the tuition
assumptions and through increased research activity, and
alternatives for privatizing some operations of the university
system are being reviewed.
Number 1104
MS. ELGEE continued that there were several things the program
assessment did not accomplish. Program assessment will not allow
them to correct some very significant problems, such as the
accreditation review for the University of Alaska, Anchorage,
meaning the high ratio of adjunct to full time faculty on that
campus. There also exists a serious problem in Anchorage
concerning the provision of adequate library support services to
students. Finally, throughout the system is deteriorating
equipment. An annual allocation for equipment got lost during the
university restructuring in the mid-1980s. The results can be seen
in the sensitive equipment in the science laboratories.
Number 1162
MS. ELGEE stated that a capital request is in for the natural
sciences building in Fairbanks. The bulk of the request is for
equipment and furnishings for that building.
Number 1176
MS. ELGEE continued that they were anticipating a study of K-12
enrollments, and they are expecting an increase, in terms of demand
and student enrollment, at campuses. Enrollment has been flat for
the past two years, but a study of the K-12 enrollment will provide
an idea of what is coming up. Some of this increased demand will
be effectively dealt with through increased faculty productivity.
This is on the president's agenda and improvement is being seen.
However, it is difficult to anticipate whether sufficient resources
will be available to deal with future demand.
Number 1212
MS. ELGEE said that the university continues to struggle with
deferred maintenance problems. While they are looking at
reallocating money to cover building maintenance and annual renewal
and replacement maintenance costs through program assessment, it
will continue to be under funded. Annual renewal and replacement
lends itself more to capital funding, but with the low capital
budgets over the last several years, the money has not been
available.
Number 1239
MS. ELGEE also said that the university still struggles with a $150
million backlog of deferred maintenance. Financing possibilities
are being explored. She hoped to be able to present those
possibilities to the HESS Committee members shortly.
Number 1260
CO-CHAIR BUNDE acknowledged the presence of Representative Kim
Elton, and invited him to sit at the committee table. He declined.
Number 1269
CO-CHAIR TOOHEY asked for a rough estimate on what it would cost to
finish the science building of which Ms. Elgee spoke. Ms. Elgee
answered that the capital request is for $4.5 million. Co-Chair
Toohey asked if this would be used for the interior of the
building, and Ms. Elgee replied that $3.5 million would go for
furnishing the building, and the rest would be used for the parking
lot, landscaping, etc.
CO-CHAIR TOOHEY asked if the building was being used at the present
time, and MS. ELGEE replied a few classrooms are open this semester
due to an appropriation of $1 million received last year. This
money was used to equip those classrooms and provide facility
parking. She added that the facility is certainly not being used
as it was intended at this time.
Number 1315
REPRESENTATIVE BRICE mentioned that the building was indeed a
world-class facility and would attract more research dollars to the
state and develop the economy. He asked about the university's
other legislative priorities, outside of receiving funding. Ms.
Elgee answered that money was their main priority but, in addition,
the board continues to support the additional land grant bill that
has been reintroduced this year by Senator Steve Frank. The
university is also looking at a transfer of its investment
authority for the land grant trust fund from the Department of
Revenue to the university. All of last year's legislation died in
the process.
REPRESENTATIVE BRICE commented that he hadn't heard about the
reintroduction of the bill concerning investment authority being
transferred from the Department of Revenue to the university. Ms.
Elgee announced that she expected that bill to be reintroduced
shortly.
Number 1390
MS. ELGEE announced that there were some other issues that do not
directly relate to the legislature. The president and vice
president of the university were currently visiting Washington,
D.C. to discuss, with a federal delegation, the possibility of an
additional land grant through the federal government. This is an
area where the university has been short-changed in the past.
Number 1424
REPRESENTATIVE BRICE asked Ms. Elgee about the replacement of the
Alpha Helix, a university ocean-going research vessel used by the
school of fisheries.
MS. ELGEE's understanding was that discussions are ongoing about
the replacement of the vessel.
Number 1475
REPRESENTATIVE BRICE stated that he had a great interest in the
cooperative extension aspects of the school, considering it is a
land grant institution and its primary goals are to have a lot of
community outreach. Associated with that are mining extension
programs up in Fairbanks. He asked Ms. Elgee if she had
information concerning this issue.
MS. ELGEE responded that an outcome of the program assessment was
a recommendation to consolidate the College of Natural Sciences,
the College of Engineering and the School of Mines at the Fairbanks
campus. There was a lot of industry participation in that decision
and it has been well received. It is felt that all three programs
will be strengthened and a focus for the mining and engineering
programs will be provided. In terms of cooperative extension, the
combination of that with the rural colleges will make them both
more effective. There will be no reduction in the cooperative
extension agents. There will be savings on the administrative
side, however. A closer collaboration with the rural campuses will
make that unit more effective.
Number 1566
REPRESENTATIVE GARY DAVIS asked Ms. Elgee about the revenue
potential of the land and future development opportunities. She
answered that over the last several years, the university has
received between $3 million to $5 million dollars on an annual
basis from the land grant trust fund. Last year was an exceptional
year, primarily as a result of timber sales and other projects
which came to fruition. This provided about $10 million. This is
not likely to reoccur anytime soon. The majority of the land grant
trust fund goes back into either the corpus through inflation
proofing or the activities of the Land Management Office.
Number 1625
REPRESENTATIVE DAVIS said he believed Marine Fisheries was ready to
commission a fairly large ship, and there was potential that the
Alpha Helix would be replaced with that ship. A nationwide bid
took place, and he wondered how that process ended.
MS. ELGEE replied that she was not aware of the bid outcome,
however she stated that a replacement dock was needed in Seward in
order to accommodate a replacement.
Number 1670
REPRESENTATIVE DAVIS inquired about whether the completion of the
science building represented opportunities for additional students
or would the building accommodate already existing student and
faculty, perhaps taking them from another facility that needs
repairs.
MS. ELGEE replied that the building would be used primarily for
people moved from already existing space. Remodeling the existing
buildings would then be investigated.
Number 1709
CO-CHAIR TOOHEY said that when the land grant bill was heard in the
HESS Committee last year, most members were very supportive of the
bill, as it helps defer the costs of the university. She asked if
there was a push to develop the land to the best of its economic
potential.
MS. ELGEE responded that Vice President Wendy Redmond, has had a
brief conversation with the Governor's Office about the bill, and
the impression Ms. Elgee received from the vice president was one
of ambivalence.
Number 1756
REPRESENTATIVE ROKEBERG stated that from news reports and
discussions with University Chancellor Gorsuch, in Anchorage, it
was his understanding that University of Alaska Anchorage was
looking forward to decreased state funding and making some program
assessment adjustments in anticipation of decreased state funding.
He thought this was in contention with Ms. Elgee's statement that
state funding would increase as well as tuition. Representative
Rokeberg calculated this was due to a 3 percent inflation factor
yielding 2.25 percent plus a 2 percent program enhancement for a
4.25 percent increase on an annual basis. He asked Ms. Elgee if
that was correct.
MS. ELGEE replied that the Program Assessment plan is a
reallocation plan. It takes existing resources, makes some revenue
assumptions and looks at best utilizing those resources to keep
programs operating efficiently. The current operating budget year,
FY95, did realize a $2.7 million reduction in terms of general fund
support. Ms. Elgee believed that Representative Rokeberg may have
been confusing the two issues. The two campuses had to search for
areas which could absorb reductions.
Number 1819
REPRESENTATIVE ROKEBERG asked if the Anchorage campus was going
through that search at this time, and Ms. Elgee said that all
campuses have been going through that process, and most have plans
for the current year. The 3 percent growth in general funds which
is built into the program assessment plan comes with the assumption
that it will occur over the course of the next three years.
Number 1865
CO-CHAIR BUNDE thanked Ms. Elgee for her overview.
ADJOURNMENT
CO-CHAIR BUNDE adjourned the meeting at 4:25 p.m.
| Document Name | Date/Time | Subjects |
|---|