04/20/2006 09:00 AM House RULES
| Audio | Topic |
|---|---|
| Start | |
| HB278 | |
| HB13 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| = | HB 13 | ||
| = | HB 278 | ||
ALASKA STATE LEGISLATURE
HOUSE RULES STANDING COMMITTEE
April 20, 2006
9:04 a.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chair
Representative John Coghill
Representative John Harris
Representative Lesil McGuire
Representative Ethan Berkowitz
Representative David Guttenberg
MEMBERS ABSENT
Representative Vic Kohring
COMMITTEE CALENDAR
HOUSE BILL NO. 278
"An Act relating to the Alaska Municipal Bond Bank Authority;
permitting the Alaska Municipal Bond Bank Authority or a
subsidiary of the authority to assist state and municipal
governmental employers by issuing bonds and other commercial
paper to enable the governmental employers to prepay all or a
portion of the governmental employers' shares of the unfunded
accrued actuarial liabilities of retirement systems and
authorizing governmental employers to contract with and to issue
bonds, notes, or commercial paper to the authority or its
subsidiary corporation for that purpose; and providing for an
effective date."
- MOVED CSHB 278(RLS) OUT OF COMMITTEE
HOUSE BILL NO. 13
"An Act relating to reimbursement of municipal bonds for school
construction; and providing for an effective date."
- MOVED CSHB 13(RLS) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 278
SHORT TITLE: RETIREMENT SYSTEM BONDS
SPONSOR(s): REPRESENTATIVE(s) HAWKER
04/19/05 (H) READ THE FIRST TIME - REFERRALS
04/19/05 (H) STA, FIN
01/12/06 (H) STA AT 8:00 AM CAPITOL 106
01/12/06 (H) Heard & Held
01/12/06 (H) MINUTE(STA)
01/17/06 (H) STA AT 8:00 AM CAPITOL 106
01/17/06 (H) Heard & Held
01/17/06 (H) MINUTE(STA)
01/19/06 (H) STA AT 8:00 AM CAPITOL 106
01/19/06 (H) Heard & Held
01/19/06 (H) MINUTE(STA)
01/24/06 (H) STA AT 8:00 AM CAPITOL 106
01/24/06 (H) Heard & Held
01/24/06 (H) MINUTE(STA)
01/26/06 (H) STA AT 8:00 AM CAPITOL 106
01/26/06 (H) Moved Out of Committee
01/26/06 (H) MINUTE(STA)
01/27/06 (H) STA RPT 2DP 5NR
01/27/06 (H) DP: GARDNER, GRUENBERG;
01/27/06 (H) NR: LYNN, ELKINS, RAMRAS, GATTO, SEATON
03/08/06 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/08/06 (H) Heard & Held
03/08/06 (H) MINUTE(FIN)
03/24/06 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/24/06 (H) Moved CSHB 278(FIN) Out of Committee
03/24/06 (H) MINUTE(FIN)
03/27/06 (H) FIN RPT CS(FIN) NT 4DP 3NR
03/27/06 (H) DP: HAWKER, WEYHRAUCH, FOSTER, MEYER;
03/27/06 (H) NR: KELLY, KERTTULA, STOLTZE
04/13/06 (H) RLS AT 1:30 PM CAPITOL 106
04/13/06 (H) -- Meeting Canceled --
04/20/06 (H) RLS AT 9:00 AM CAPITOL 17
BILL: HB 13
SHORT TITLE: SCHOOL CONSTRUCTION BOND REIMBURSEMENT
SPONSOR(s): REPRESENTATIVE(s) GATTO, GRUENBERG
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) EDU, HES, FIN
01/25/05 (H) EDU AT 11:00 AM CAPITOL 106
01/25/05 (H) -- Meeting Canceled --
02/01/05 (H) EDU AT 11:00 AM CAPITOL 106
02/01/05 (H) Heard & Held
02/01/05 (H) MINUTE(EDU)
02/22/05 (H) EDU AT 11:00 AM CAPITOL 106
02/22/05 (H) -- Meeting Canceled --
03/03/05 (H) EDU AT 11:00 AM CAPITOL 106
03/03/05 (H) Moved Out of Committee
03/03/05 (H) MINUTE(EDU)
03/04/05 (H) EDU RPT 5DP
03/04/05 (H) DP: GARA, GATTO, WILSON, THOMAS, NEUMAN
03/15/05 (H) HES AT 3:00 PM CAPITOL 106
03/15/05 (H) Scheduled But Not Heard
03/22/05 (H) HES AT 3:00 PM CAPITOL 106
03/22/05 (H) <subcommittee meeting>
03/29/05 (H) HES AT 3:00 PM CAPITOL 106
03/29/05 (H) Heard & Held
03/29/05 (H) MINUTE(HES)
04/05/05 (H) HES AT 3:00 PM CAPITOL 106
04/05/05 (H) Heard & Held
04/05/05 (H) MINUTE(HES)
04/07/05 (H) HES AT 3:30 PM CAPITOL 106
04/07/05 (H) <Bill Hearing Postponed>
04/14/05 (H) HES AT 3:00 PM CAPITOL 106
04/14/05 (H) Moved CSHB 13(HES) Out of Committee
04/14/05 (H) MINUTE(HES)
04/15/05 (H) HES RPT CS(HES) NT 4DP 1NR
04/15/05 (H) DP: CISSNA, GARDNER, KOHRING, WILSON;
04/15/05 (H) NR: SEATON
04/20/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/20/05 (H) -- Meeting Canceled --
04/21/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/21/05 (H) Heard & Held
04/21/05 (H) MINUTE(FIN)
04/23/05 (H) FIN AT 10:00 AM HOUSE FINANCE 519
04/23/05 (H) Scheduled But Not Heard
04/26/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/26/05 (H) Heard & Held
04/26/05 (H) MINUTE(FIN)
04/27/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/27/05 (H) Moved CSHB 13(FIN) Out of Committee
04/27/05 (H) MINUTE(FIN)
05/02/05 (H) FIN RPT CS(FIN) NT 6DP 4NR
05/02/05 (H) DP: JOULE, WEYHRAUCH, CROFT, MOSES,
FOSTER, CHENAULT;
05/02/05 (H) NR: HAWKER, HOLM, KELLY, MEYER
04/13/06 (H) RLS AT 1:30 PM CAPITOL 106
04/13/06 (H) -- Meeting Canceled --
04/20/06 (H) RLS AT 9:00 AM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 278.
REPRESENTATIVE CARL GATTO
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as one of the co-prime sponsors of HB
13.
CODY RICE, Staff
to Representative Carl Gatto
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions during hearing on HB 13
on behalf of Representative Gatto, co- prime ponsor.
ACTION NARRATIVE
CHAIR NORMAN ROKEBERG called the House Rules Standing Committee
meeting to order at 9:04:12 AM. Representatives Berkowitz,
Guttenberg, Harris, Coghill, and Rokeberg were present at the
call to order. Representative McGuire arrived as the meeting
was in progress.
HB 278-RETIREMENT SYSTEM BONDS
9:04:36 AM
CHAIR ROKEBERG announced that the first order of business would
be HOUSE BILL NO. 278, "An Act relating to the Alaska Municipal
Bond Bank Authority; permitting the Alaska Municipal Bond Bank
Authority or a subsidiary of the authority to assist state and
municipal governmental employers by issuing bonds and other
commercial paper to enable the governmental employers to prepay
all or a portion of the governmental employers' shares of the
unfunded accrued actuarial liabilities of retirement systems and
authorizing governmental employers to contract with and to issue
bonds, notes, or commercial paper to the authority or its
subsidiary corporation for that purpose; and providing for an
effective date."
9:04:51 AM
REPRESENTATIVE HARRIS moved to adopt CSHB 278, Version 24-
LS0883\Y, Cook, 4/11/06, as the working document. There being
no objection, Version Y was before the committee.
9:05:12 AM
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, sponsor,
explained that HB 278 authorizes government workers in Alaska to
engage in "Pension Obligation Bond" (POB) transactions. He said
that in a POB transaction money is borrowed at a lower rate of
interest than the money earns when invested within pension
funds. He stated that the governmental employer profits from
the difference, adding that this is a "legal arbitrage
mechanism."
REPRESENTATIVE HAWKER went on to say that he would go through
the sectional analysis of the bill and explain changes made in
Version Y. Section 1 applies to the Teachers' Retirement System
(TRS), adding a new section which allows employers to pay all or
a portion of unfunded pension obligations. He said that Section
2 contains the majority of changes from the House Finance
Committee Substitute. He said that this section improved
readability by replacing "bonds, notes, commercial paper, or
other obligations" with "obligations," and added a definition of
"obligations" which includes these instruments. In addition,
Version Y removes language that would be covered in the funds
diversion agreement.
REPRESENTATIVE HAWKER said that Sections 3 and 4 add
facilitating language to the accounting statutes for the Public
Employees' Retirement System (PERS). Section 5 parallels
Section 1 of the bill and applies to PERS. He explained that
Section 6 adds to the statutory policies established for the
Municipal Bond Bank Authority. He pointed out that the bond
bank should provide the lowest rates possible without
subsidizing the employers beyond their means. Moving on to
Section 7, he said that this section applies to the powers of
the bond bank, and allows the bond bank to create a subsidiary
organization for the purpose of facilitating municipal POB
transactions, if appropriate.
REPRESENTATIVE HAWKER continued with Section 8 that adds a new
statute defining the powers of the Municipal Bond Bank Authority
when handling POB transactions. This includes guidelines such
as: providing assistance to employers, performing duties which
are necessary, and authorizing the issuance of debt and
obligations for these purposes. He said that POBs are
substituting a "hard debt" for a "soft debt," and expressed
disagreement with this term. He stated that pension obligations
are contractual obligations, and are considered a debt. He said
that if the debt is transferred to the Municipal Bond Bank,
there are limitations on the amount of debt the bond bank may
issue. Section 9 exempts POBs from the current limit for
revenue bonds. He explained that Section 10 authorizes the
Municipal Bond Bank to issue POBs, while Section 11 "raises the
cap" on debt other than revenue bonds.
REPRESENTATIVE HAWKER said that Section 12 adds a definition for
"government employer." He noted that the House State Affairs
Committee and the House Finance Committee both held several
hearings on the bill. Most of the changes in Version Y, he
said, are to make the bill readable.
9:12:21 AM
REPRESENTATIVE BERKOWITZ referred to line 1 of the title, which
reads "An Act relating to accrued actuarial liabilities of
government systems;" and asked Representative Hawker if he would
object to removing it.
REPRESENTATIVE HAWKER said that he would be amenable to that
deletion.
CHAIR ROKEBERG opined that a little "wordsmithing" may improve
this, as the bill specifically applies to POBs and is not "re-
writing the entire pension system."
REPRESENTATIVE HAWKER said that the aforementioned section of
the title is not "a necessary component."
9:13:44 AM
The committee took an at-ease from 9:13 a.m. to 9:14 a.m.
REPRESENTATIVE BERKOWITZ moved Conceptual Amendment 1, as
follows:
Page 1, line 1:
Delete "relating to accrued actuarial liabilities of
government retirement systems;"
REPRESENTATIVE HARRIS objected for discussion purposes. He
stated that this language applies to PERS and TERS and reflects
the purpose of the bill.
REPRESENTATIVE BERKOWITZ replied that page 1, line 6 contains
the appropriate information. He said that leaving in the
language which he wanted to delete would leave the title open-
ended.
9:15:20 AM
REPRESENTATIVE HAWKER stated that he concurs with Representative
Berkowitz's conclusion. He pointed out that HB 278 specifically
authorizes [POB] transactions. Referring to lines 7-10 of the
title, he stated that "authorizing a governmental employer to
issue obligations to prepay" and "enter into a lease or other
contractual agreement with a trustee or the Alaska Municipal
Bond Bank Authority or a subsidiary" is the "meat of the bill."
He said, "Although [HB 278] is a means to address the accrued
actuarial liabilities of government retirement systems, the bill
itself really does not relate to those liabilities; it really
relates to the ability and power of governments to address the
liabilities."
REPRESENTATIVE HARRIS withdrew his objection.
REPRESENTATIVE ROKEBERG noted that there was no further
objection to Conceptual Amendment 1, and therefore Conceptual
Amendment 1 was adopted.
9:16:13 AM
CHAIR ROKEBERG, in regard to the current limit on revenue bonds,
asked if the establishment of a subsidiary avoids the "cap," or
if avoiding the "cap" is necessary to establish a subsidiary.
REPRESENTATIVE HAWKER replied that the subsidiary is part of the
Bond Bank Authority, and its debt is within the Bond Bank
Authority's overriding "caps." He said "The intent here was
[that] the ... Pension Obligation Bond issues ... would not be
charged against the current cap of the ability of the bond bank
to service community needs."
CHAIR ROKEBERG asked what political subdivisions are authorized
to do this.
REPRESENTATIVE HAWKER said this is defined on page 11, under
Section 12 of Version Y, which reads:
(8) "governmental employer" means the State of
Alaska or a municipality or other state or municipal
governmental entity within the state, including an
agency, instrumentality, district, school district,
public corporation, department, division, or other
subdivision of the state or of a municipality, in its
capacity as an employer.
REPRESENTATIVE HAWKER relayed that the intent in drafting this
was to be as broad as possible in order to encompass all
governmental employers participating in either the PERS or TRS
systems. Earlier versions, he explained, had included the
University of Alaska in that definition as per the university's
request. He remarked that this inclusion was removed, however,
per the request of Representative Weyhrauch and through the vote
of the House Finance Committee. In response to Chair Rokeberg,
he said he could not recall the rationale behind this.
CHAIR ROKEBERG sought confirmation that the Alaska State
Constitution prohibits the state, as a governmental entity, from
issuing POBs.
REPRESENTATIVE HAWKER related his understanding that the Alaska
State Constitution specifically prohibits the issuance of
general obligation bonds for any purpose other than capital
projects, which still requires a vote of the people. However,
he explained that even the people cannot vote on a general
obligation bond proposition for the purpose of satisfying the
pension obligations. He highlighted that this is fairly typical
across the country in different state constitutions. However,
the capital markets, he said, have created many other mechanisms
that allow [states] to "sidestep" their constitutions on the
issuance of debt in the state: certificates of participation,
contracts, leases, and other creative financing mechanisms. He
informed the committee that the current state administration
opposes the use of pension obligation bonds and opposes this
bill. He opined that "... just because the administration
opposes something, is no reason for us to adopt their policy
decision. There has been overwhelming proof that this is a
responsible, functional mechanism that can be utilized." This
bill, he explained, has been brought forward at the request of
municipal employers who want the opportunity to review the
options. Additionally, he relayed that the Alaska State
Constitution also prohibits municipal entities from issuing
general obligation bonds for anything other than capital
projects. These entities, he explained, "would have to
structure their transactions using one of these alternative debt
mechanisms that 'sidesteps' the general obligation bond
proposition."
REPRESENTATIVE BERKOWITZ asked whether it is Representative
Hawker's position that the pension obligation bond isn't
"contemplated in the constitution."
REPRESENTATIVE HAWKER noted that the concept of POBs was not in
existence when the Alaska State Constitution was drafted.
REPRESENTATIVE HARRIS opined that regardless of the means used
[to pay down the unfunded liability], "the full faith and credit
of the State of Alaska has to fall behind the debt that we owe
to the employees ... to pay to them at their times of retirement
and for healthcare."
9:21:53 AM
REPRESENTATIVE HAWKER, upon stating his agreement with
Representative Harris, said that the state has a contractual
obligation to its employees and that "one way or the other, we
owe money to the pension fund." He then clarified that this
bill only empowers municipal employers or governmental employers
to "pursue transactions" and does not authorize or commit a
transaction. Furthermore, he said, there is no consequence to
the bill unless a municipal entity "would choose to avail itself
of additional clarification of their authorities."
9:23:05 AM
CHAIR ROKEBERG closed public testimony of HB 278.
9:23:16 AM
REPRESENTATIVE HARRIS asked Representative Hawker if there was
opposition to the bill in the House Finance Committee that
required it be pared down or simply that more information had
been learned to merit a change.
REPRESENTATIVE HAWKER clarified that the bill passed out
unanimously from the House Finance Committee and recalled that
there were several "do passes" from that committee. He then
referred to the title change and said that given "municipal
governments already have the implied authority to perform these
transactions by themselves," it was decided to make a change to
"allow a municipality with its own [means to] pursue them on its
own."
9:25:15 AM
REPRESENTATIVE HARRIS asked whether there was anyone present
from the bond bank to testify and, if so, were they opposed.
REPRESENTATIVE HAWKER relayed that in the initial conversations
with the bond banks he concluded that "they do what they're
told." He explained that they were told that the administration
would be opposed to [POBs], but never expressed any problems
with the way the bill is structured.
REPRESENTATIVE GUTTENBERG addressed one of the topics in the
bill which is the unfunded liability in addition to the rising
health care costs. He opined that addressing these is a
significant part of the problem as well as controlling rising
costs.
REPRESENTATIVE HARRIS expressed his belief that this bill has
nothing to do with the rising cost of health care or that it
will ever affect it. He said that different legislation as well
as the cooperative efforts from the medical community, insurance
community, and other entities will need to work together to
address this.
CHAIR ROKEBERG recommended the committee read the new [Alaska
Retirement Management Board's] recommendations to overcome the
$6.9 billion obligation.
9:27:40 AM
REPRESENTATIVE BERKOWITZ surmised that if they hadn't taken out
the first line of the bill's title, they could be speaking about
health care costs as a driving component of the accrued
actuarial liabilities of the government retirement system; "We
could have been talking about all the drivers, here." He added
that he likes the bill and although he thinks that they need to
address the other components, doing so at this time could create
difficulties [in passing the bill]. Thus, he said he would
prefer to keep the bill as focused as much as possible.
REPRESENTATIVE HARRIS offered his understanding that they have
attempted to address this issue, though it has not been easy,
and that it is an issue that the whole country has to address as
well.
REPRESENTATIVE HAWKER remarked that this bill is intended to
address just one aspect of the bigger issue, and expressed
appreciation that the committee is not seeking to overload the
bill. "Universal tools are never really good at doing any
single job, we need to have good, point-specific tools, and this
is one of them," he opined.
9:29:23 AM
REPRESENTATIVE GUTTENBERG noted that he has seven pieces of
legislation dealing with prescription drug costs and yet none of
those of those bills has had a hearing. He went on to say: "We
need to start dialoging, it needs to be happening; it's not only
for the unfunded liability but for the citizens of the state of
Alaska - it's just something that we're remiss [in] if we're not
addressing it whatever the political pressure of it ...."
9:29:52 AM
REPRESENTATIVE HARRIS moved to report CSHB 278, Version 24-
LS0883\Y, Cook, 4/11/06, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 278(RLS) was reported from the
House Rules Standing Committee.
HB 13-SCHOOL CONSTRUCTION BOND REIMBURSEMENT
[Contains discussion of SB 36 and HB 493.]
9:30:04 AM
CHAIR ROKEBERG announced that the final order of business would
be HOUSE BILL NO. 13, "An Act relating to reimbursement of
municipal bonds for school construction; and providing for an
effective date." [Before the committee was CSHB 13(FIN).]
9:31:02 AM
REPRESENTATIVE HARRIS moved to adopt the proposed committee
substitute (CS) for HB 13, Version 24-LS0062\R, Mischel,
4/11/06, as the working document.
REPRESENTATIVE BERKOWITZ objected for discussion purposes. He
stated his understanding that Version R removes the area cost
differential component of the title, and he said he wishes the
committee would not take that action. He related:
Normally I like tightening titles, but I think that
this is a conversation that the legislature has to
have. And if we have a vehicle that's going to give
us the ability to continue that conversation, I think
we ought to keep that in play. And as for the ...
subsequent component of area cost differential, that's
a tactical consideration...
REPRESENTATIVE HARRIS interjected to withdraw his motion [to
adopt Version R as a work draft; therefore CSHB 13(FIN) was once
again before the committee].
CHAIR ROKEBERG asked the co-sponsor of the bill to speak to the
original bill.
9:32:28
REPRESENTATIVE GATTO, Alaska State Legislature, as co-prime
sponsor of HB 13, said he would like to speak to Representative
Berkowitz's objection to adopting Version R as a work draft. He
reported that the studies referring to the cost differential and
how it affects the state are so significant that "it ought to be
a stand-alone piece of legislation, if that's what we want to
do." He said, "It would be like taking this bill and attaching
SB 36 and calling that an amendment to a simple bill, and making
the amendment 35 pages." He said the area cost differential is
going to affect all 53 school districts in the state, and "we
will have winners and losers." He classified the Anchorage,
Fairbanks, and Matanuska-Susitna school districts as losers.
REPRESENTATIVE HARRIS asked Representative Gatto to explain how
those school [districts] are losers.
REPRESENTATIVE GATTO responded:
Because what the area cost differential does is it
takes the existing money we appropriate for education,
according to a formula in SB 36, and changes the
formula. That means if the money remains a constant,
then we have to deduct money from some districts in
order to increase the amount of money that's forwarded
to other districts. So, it becomes the kind of thing
that is a play of individuals against individuals,
districts against districts. And so, what I'd like to
say is I think it would be more appropriate to make
that a separate issue and go ahead and adopt the CS so
that we can talk about this one issue of school bond
debt reimbursement and not get, at this point, into an
issue that is so significant that it would require a
significant amount.
9:34:12 AM
CODY RICE, Staff to Representative Carl Gatto, Alaska State
Legislature, on behalf of Representative Gatto, co-prime sponsor
of HB 13, suggested that the simplest way of looking at the cost
differential is in terms of market share. He mentioned the
fiscal note, which shows the percent change in market share by
district.
REPRESENTATIVE HARRIS interjected that he understands when "the
amount of money you have is the same and you're to split it up
differently." However, he said he thinks the reality is that
the money is not going to remain the same. He stated, "So, I
think ... the intent is to divide a larger pot of money up a
slightly bit different."
MR. RICE replied that that is possible. He said there has been
talk of a "hold harmless." He said it's important to note that
the hold harmless would need to be permanent - not a one-time
fix - because there would be a permanent change of market share
for different districts. He projected that the [school]
districts of every member of the committee would lose market
share.
9:35:37 AM
REPRESENTATIVE MCGUIRE asked Representative Gatto to explain the
steps that brought the cost factors into the title of the bill.
REPRESENTATIVE GATTO offered his understanding that in the House
Finance Committee an amendment was offered by Representative
Chenault to add the study, but was then withdrawn.
MR. RICE detailed that what had happened is that Representative
Chenault had "added in a phase-in form of the cost factor
study," which he noted is shown on pages 7-9 of CSHB 13(FIN).
He pointed out that Version R would extend the bond debt
reimbursement date through November 30, 2008, whereas the bill
before the committee does not do that. Furthermore, regarding
the cost factor study, Mr. Rice said Representative Chenault's
previously mentioned amendment involved a hold harmless [clause]
based on "last year's base student allocation." He said, "So,
if it is the will of the committee to keep something like that
in there, I would strongly recommend increasing that number to
be a true hold harmless."
9:37:28 AM
MR. RICE, in response to a request from Representative Harris,
directed attention to language in the bill on page 9, [line 21],
which read, "base student allocation of $4,919 per student". He
said that amount "would not be sufficient for a hold harmless."
9:37:52 AM
CHAIR ROKEBERG said, "Part of the intent of having ... [Version
R] before us was to reorder the numbers that have caused some of
the confusion." He offered his understanding that CSHB 13(FIN)
has been in the hands of the committee for a year.
MR. RICE confirmed that [the committee has had CSHB 13(FIN) for
a year].
CHAIR ROKEBERG concluded, "That was my intention as the
chairman, and that was more structural than substantive. Just
so people understand that it might help [to know] why that is."
9:38:18 AM
REPRESENTATIVE MCGUIRE noted that Representative Gatto had begun
to say that an amendment was offered by Representative Chenault
that had been withdrawn; however, on pages 7-9 of the bill, she
observed that reference is made to district cost factors, and a
reflection of that shows in the title. She said, "So, somehow
that concept was incorporated, whether it was that amendment or
another." She clarified, "I'm trying to understand how that
conversation went, whether you were accepting of it at that
time, [and,] if so, what made you change your mind now." She
said she would also like to know if Representative Gatto has had
conversations with Representative Chenault "about the removal of
this."
REPRESENTATIVE GATTO responded that he has never been in favor
of the cost factor study or the "American Institute for Research
(AIR)" study. He said the AIR study was flawed and the flaws
could be identified "in all the areas that we actually knew the
numbers." He continued:
So, the [Institute of Social and Economic Research
(ISER)] study became a substitute study. The ISER
study brought forward somewhat similar ... results.
And my understanding is, from reading the results,
what the ISER study will do is reapportion a pie.
Now, my biggest concern is that if you take brand new
money - let's say $90 million - and distribute it
somewhat differently, remember ... the $90 million is
in addition to close to a billion. If the ISER study
were to apply only to the new money, that would be one
issue, but if it ... is retroactive and starts to
include close to a billion dollars, now we're
reappropriating money in huge, huge gulps.
So, I would ... have expected that the introduction of
the ISER study would have said, "Take this new money
and reapportion this new money" -- we would
essentially have two formulas. I don't believe I'm
seeing that happen. And to further complicate it,
there is also half ISER, quarter ISER, bring it in
over two years or four years; it becomes somewhat of a
complicated issue. And if we want to address that
complicated issue at this late date, we're going to
take a lot more committee time in all likelihood to
come back to the school district and the finance ...
director and talk about how the money would be
distributed.
But we did get a study done, and the study goes across
and says under the old formula here's how each school
district will fare [and] under the new formula here's
how each school district would fare. We came up with
the percent movement, as well as the percent
difference. And ... then I had it run a couple of
different ways, and that is from the worst to the best
... and also alphabetically so you could find your
personal district. And on the ... Anchorage district,
if indeed we were working under the ISER study, and
not under SB 36, they would have an 8 percent -
according to this page - 8 percent reduction in the
amount of money they were receiving from the state ...
in the share of the entire pie. In order to bring
them back up to zero, so they do not lose, we would
need substantially more money.
9:42:01 AM
REPRESENTATIVE MCGUIRE said she understands that part but wants
an answer as to how it is that the reference to the cost factors
- which she said she understands Representative Gatto does not
support - got into the bill. She asked whether it is his intent
to remove the [cost factor references] now and whether he had
conversations with, for example, Representative Chenault who put
that reference in the bill.
REPRESENTATIVE GATTO responded that he was not present during
the House Finance Committee meeting and only later learned from
Representative Meyer that Representative Chenault had "offered
the ISER and then withdrew it." He said he did not see that
language in Version R, and he explained his understanding was
that it would be offered on the House floor. He said he would
be okay with battling the issue out on the House floor, because
it's an issue that should be discussed among a group larger than
one committee.
9:43:17 AM
MR. RICE recollected that Representative Chenault's words
regarding "this amendment" were, "I hate to hijack a bill, but
in this case I'm going to have to."
CHAIR ROKEBERG said, "Was not ... HB 493 the vehicle that they
used and released from committee and I have it in the [House
Rules Standing Committee] now? Isn't that part of [Version R]?"
MR. RICE answered that's correct. He said HB 13 has been in the
House Rules Standing Committee for a year and, as such, he said
"some of the dates are, I guess you could say, stale - they're
no longer particularly relevant." He said the House Finance
Committee, after adding the cost factor study to HB 13, came out
with its own bond debt reimbursement bill, HB 493, which is
substantially similar - minus the cost factor study. Mr. Rice
explained that essentially what is being done is changing HB 13
to update the dates "and to the percentage of HB 493." He
stated, "This is a materially similar bill to HB 493."
MR. RICE said another substantial change is that the percentages
have decreased. He explained, "Previously it was a 70 percent
reimbursement for EED-approved schools [and] 60 percent for non-
EED-approved schools; that's gone to 60/40, which is exactly the
same as HB 493." Mr. Rice continued:
So, it's a policy call, but essentially this is a
lower bill number on the same topic that had an
amendment added to it in [the House Finance
Committee]. [The House Finance Committee] decided to
push their own bill on the same topic, minus the
amendment that the original sponsor objected to.
We're trying to rectify that.
9:45:06 AM
REPRESENTATIVE HARRIS asked how HB 13 got a title amendment in
the House Finance Committee if it was in the House Rules
Standing Committee for a year.
CHAIR ROKEBERG replied, "That was when it was moved a year ago.
That was actually taken in the last session." In response to a
follow-up question from Representative Harris, he confirmed that
CSHB 13(FIN) has been in the House Rules Standing Committee for
a year. He stated, "As I mentioned, my intention here was to
observe the lower number regime and that was all."
9:45:52 AM
REPRESENTATIVE MCGUIRE moved to adopt the proposed committee
substitute (CS) for HB 13, Version 24-LS0062\R, Mischel,
4/11/06, as the working document. There being no objection,
Version R was before the committee.
9:46:42 AM
REPRESENTATIVE BERKOWITZ moved to adopt Amendment 1, which read
as follows [original punctuation provided]:
Add a new section:
Sec. _____AS14.11.100 (q) is amended to read:
(p)The total amount of school construction
projects approved for reimbursement by the department
under (a)(13) and (a)(14) of this section
(1) may not exceed $179,256,000 ($177,256,000)
(2) after June 30, 1999, and until October 31, 2006,
shall be allocated as follows:
(A) $61,925,000 to projects in a municipality with
a public school enrollment of 45,000 or more students
in fiscal year 2005, as determined under AS 14.17.500;
(B) $40,570,000 to projects in a municipality with
a public school enrollment of at least 14,500 but less
than 20,000 students in fiscal year 2005, as
determined under AS 14.17.500;
(C) $20,000,000 to projects in a municipality with
a public school enrollment of at least 10,000 but less
than 14,600 students in fiscal year 2005, as
determined under AS 14.17.500;
(D) $2,588,000 to projects in a municipality with
a public school enrollment of at least 7,500 but less
than 10,000 students in fiscal year 2005, as
determined under AS 14.17.500;
(E) $5,995,000 to projects in a municipality with
a public school enrollment of at least 4,000 but less
than 6,000 students in fiscal year 2005, as determined
under AS 14.17.500;
(F) $1,237,000 to projects in a municipality with
a public school enrollment of at least 2,400 but less
than 2,800 students in fiscal year 2005, as determined
under AS 14.17.500;
(G) $1,100,000 to projects in a municipality with
a public school enrollment of at least 2,200 but less
than 2,400 students in fiscal year 2005, as determined
under AS 14.17.500;
(H) $2,000,000 to projects in a municipality with
a public school enrollment of at least 1,501 but less
than 1,800 students in fiscal year 2005, as determined
under AS 14.17.500;
(I) (H) $7,164,000 to projects in a municipality with
a public school enrollment of at least 1,300 but less
than 1,500 students in fiscal year 2005, as determined
under AS 14.17.500;
(J) (I) $1,260,000 to projects in a municipality with
a public school enrollment of at least 740 but less
than 757 students in fiscal year 2005, as determined
under AS 14.17.500;
(K) (J) $608,000 to projects in a municipality with a
public school enrollment of at least 650 but less than
757 students in fiscal year 2005, as determined under
AS 14.17.500;
(L) (K) $32,000,000 to projects in a municipality with
a public school enrollment of at least 500 but less
than 600 students in fiscal year 2005, as determined
under AS 14.17.500;
(M) (L) $2,809,000 to projects in a municipality with
a public school enrollment of at least 370 but less
than 390 students in fiscal year 2005, as determined
under AS 14.17.500;
CHAIR ROKEBERG [objected] for discussion purposes.
REPRESENTATIVE BERKOWITZ noted that Amendment 1 originates from
Representative Joule's office. He stated his understanding that
during the hustle and bustle of last session, some mistakes were
made and Amendment 1 would correct them.
CHAIR ROKEBERG indicated that the oversight had to do with a
previous exclusion of an area that was within a student
population.
REPRESENTATIVE BERKOWITZ stated his understanding that "everyone
acknowledges that these numbers should have been what they are,
and so we're trying to put them back in."
REPRESENTATIVE ROKEBERG asked if there was any further
discussion of Amendment 1. He announced that there being no
further [objection], Amendment 1 was adopted. [Representative
Rokeberg's previous objection to Amendment 1 was treated as
withdrawn.]
REPRESENTATIVE GATTO expressed his support of Amendment 1.
9:47:45 AM
CHAIR ROKEBERG closed public testimony.
9:47:50 AM
REPRESENTATIVE MCGUIRE moved to report the proposed committee
substitute (CS) for HB 13, Version 24-LS0062\R, Mischel,
4/11/06, as amended, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 13(RLS) was reported from the House Rules
Standing Committee.
9:48:05 AM
ADJOURNMENT
There being no further business before the committee, the House
Rules Standing Committee meeting was adjourned at 9:48 a.m.
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