Legislature(2021 - 2022)SENATE FINANCE 532
02/22/2021 09:00 AM Senate FINANCE
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| Audio | Topic |
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| Start | |
| Presentation: Department of Education & Early Development - School Major Maintenance and Construction Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 22, 2021
9:04 a.m.
9:04:41 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:04 a.m.
MEMBERS PRESENT
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
Senator Click Bishop, Co-Chair
PRESENT VIA TELECONFERENCE
Heidi Teshner, Director, Finance and Support Services,
Department of Education and Early Development; Tim Mearig,
Facilities Manager, Department of Education and Early
Development.
SUMMARY
^PRESENTATION: DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT
- SCHOOL MAJOR MAINTENANCE AND CONSTRUCTION UPDATE
9:05:33 AM
HEIDI TESHNER, DIRECTOR, FINANCE AND SUPPORT SERVICES,
DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT (via
teleconference), relayed that she would provide an overview
of the School Construction and Major Maintenance Grant
Program and school debt reimbursement.
Ms. Teshner discussed the presentation "State-Aid for
School Capital Projects: Grant and Debt" (copy on file).
Ms. Teshner looked at slide 2, "Our Mission, Vision, and
Purpose":
OUR MISSION
An excellent education for every student every day.
OUR VISION
All students will succeed in their education and work,
shape worthwhile and satisfying lives for themselves,
exemplify the best values of society, and be effective
in improving the character and quality of the world
about them. Alaska Statute 14.03.015
OUR PURPOSE
DEED exists to provide information, resources, and
leadership to support an excellent education for every
student every day.
Ms. Teshner moved to slide 3, "Our Strategic Priorities:
Alaska's Education Challenge":
Five Shared Priorities:
1. Support all students to read at grade level by the
end of third grade
2. Increase career, technical, and culturally relevant
education to meet student and workforce needs
3. Close the achievement gap by ensuring equitable
educational rigor and resources
4. Prepare, attract, and retain effective education
professionals
5. Improve the safety and well-being of students
through school partnerships with families,
communities, and tribes
Ms. Teshner shared that over the previous four years,
parents, students, educators, policy makers, tribal
leaders, partner organizations, and local school boards had
worked to create a shared vision for public education which
was reflected in Alaska's Education Challenge and
priorities listed on the slide. She noted that the
priorities guided the department's daily work and every
program supported one or more of the priorities.
Ms. Teshner presented slide 4, "Historic School Capital
Funding":
1. Federal
2. State Funding Mechanisms (General Fund)
Grants (~1970)
General Obligation (G.O.) Bonds (2003, 2011)
AHFC Revenue Bonds (1999, 2001, 2002)
Debt Reimbursement (1971)
School Fund AS 43.50.140 (FY1999-present)
Others (i.e.: Insurance Fund AS 22.55.430)
3. Local Educational Agency (LEA)
Capital Reserves
Municipal Debt
Ms. Teshner relayed that slide 4 was to illustrate that
there had been a lot of school capital spending in the
state's history.
9:09:42 AM
Ms. Teshner reviewed slide 5, "Historic Funding All
Sources [c1975 2021]," which showed a modified pie chart
entitled '$6.2 Billion By Fund Type.' The graph gave a
historical look at the funding from all fund sources for
the School Construction Grant Fund (SCGF) and the Major
Maintenance Grant Fund (MMGF), the School Debt
Reimbursement Program, as well as other grants from FY 1975
through FY 2021. The slide illustrated the strong presence
of school capital projects and funding that had been part
of the state's process since 1975. She highlighted that
school debt reimbursement represented $3.1 billion or 51
percent of the total approximately $6.2 billion. She noted
that the capital investment of the project value was
represented on the graph.
Ms. Teshner continued to address the chart of slide 5. The
SCGF and MMGF were represented by the orange portion of the
chart, and signified approximately $2.4 billion or 39
percent of the total amount of state dollars appropriated
by the legislature for school projects. The green portion
of the chart titled 'Other Grants' was approximately $588
million or 10 percent of the total and represented grants
that had been provided to the state through other
departments such as the Department of Administration and
the Department of Transportation and Public Facilities. The
small red portion represented federal grants and signified
approximately $28 million or .5 percent of the total. The
main purpose of the slide was to illustrate that there were
different ways to fund schools, with school debt
reimbursement comprising about half, and about 40 percent
coming through the grant program.
Ms. Teshner spoke to slide 6, "Historic Funding All
Sources [c1975 2021]," which showed a modified pie chart
entitled ' $6.2 Billion By District Type.' The chart
provided a historical look of the funding over almost five
decades for all fund sources but by district type from 1975
to 2021. Of the $6.2 billion appropriated, city and borough
school districts were shown to have received 67 percent or
approximately $4.1 billion. She added that Regional
Educational Attendance Areas (REAAs) had received
approximately $2 billion or 33 percent, and there had been
multiple statewide appropriations of approximately $21.2
million, or .3 percent. She offered the example of
statewide appropriations for asbestos remediation
throughout the state, which funded projects in both
district types. She noted the REAAs were established in
1974 and were areas in which there was no local government
to take responsibility for education. She specified that
there were 19 REAA school districts in the state.
9:13:10 AM
TIM MEARIG, FACILITIES MANAGER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT (via teleconference), referenced slide 7,
"Recent Funding (SB 237 Report)":
SB 237 (Chapter 93 SLA 2010) AS 14.11.035
Annual report on school construction and major
maintenance funding
First report completed in February 2013
$1,432,830,000 in funding
Total project value for Debt projects
State share value for Grant projects
Supplementary handout
February 2021 AS 14.11.035 (SB 237) Report
?Project Funding by District (report Appendix A)
?Project Listing by District (report Appendix B)
Mr. Mearig noted that the current annual report on school
construction and major maintenance funding had been
submitted the previous week and represented the information
through the end of 2020. He explained that the most recent
report had been delivered to the offices of the governor,
the House, and the Senate. In the report, all of the
analysis and tables depended upon the detail listings in
Appendix A and Appendix B of the report, which showed
projects listed by district. He referenced Handout 1,
"School Capital Project Funding Under SB 237" (copy on
file).
Co-Chair Stedman thought the committee was very familiar
with the process that Mr. Mearig described.
Mr. Mearig discussed slide 8, "Current Funding Options":
1.School Construction Grant Fund (1990) AS 14.11.005
2.Major Maintenance Grant Fund (1993) AS 14.11.007
3.Regional Educational Attendance Area (REAA) and
Small Municipal School District School Fund (2010)
AS 14.11.030
Indexed Fund
DR Funding / % of C/B schools *.244 AS 14.11.025
4.School Debt Reimbursement (DR) Funding AS 14.11.102
Mr. Mearig advanced to slide 9, "Current Project Categories
(AS 14.11.013)":
(A)avert imminent danger or correct life-threatening
situations;
(B)house students who would otherwise be unhoused; for
purposes of this subparagraph, students are considered
unhoused if the students attend school in temporary
facilities;
(C)protect the structure of existing school
facilities;
(D)correct building code deficiencies that require
major repair or rehabilitation in order for the
facility to continue to be used for the educational
program;
(E)achieve an operating cost savings;
(F)modify or rehabilitate facilities for the purpose
of improving the instructional program;
(G)meet an educational need not specified in (A)(F)
of this paragraph, identified by the department
Mr. Mearig shared that in statute, projects were identified
in categories, and the purpose was to identify what kind of
investments the state was looking at making in school
capital. The following slides would show how the categories
would correspond to the different funds.
9:18:13 AM
Mr. Mearig looked at slide 10, "Current Project Categories
(AS 14.11.013)(School Construction)":
(A)avert imminent danger or correct life-threatening
situations;
(B)house students who would otherwise be unhoused; for
purposes of this subparagraph, students are considered
unhoused if the students attend school in temporary
facilities;
(C)protect the structure of existing school
facilities;
(D)correct building code deficiencies that require
major repair or rehabilitation in order for the
facility to continue to be used for the educational
program;
(E)achieve an operating cost savings;
(F)modify or rehabilitate facilities for the purpose
of improving the instructional program;
(G)meet an educational need not specified in (A) (F)
of this paragraph, identified by the department
Senator Hoffman asked about item (A) "avert imminent danger
or correct life-threatening situations." He had met with
the department the previous week regarding erosion issues
near the school in Napakiak. The district believed the
school was in imminent danger of falling into the Kuskokwim
River within two to three years. He asked if Mr. Mearig
would agree that the conditions in Napakiak fell under item
(A) or another category. He felt the problem needed to be
addressed as soon as possible. He stressed the importance
of continuity of education for the students of Napakiak. He
calculated that a lack of imminent planning would require
extreme solutions to achieve continuity of education such
as flying students to another location.
Mr. Mearig affirmed that the department was aware of the
erosion in Napakiak. He felt the situation would fall under
category A and would fall on the school construction list,
as did any school project that included rebuilding or
adding new space.
Senator Hoffman affirmed he would be working with the
administration to ensure that continuity of education
existed for the community of Napakiak. He thought the
department shared the same intent.
Mr. Mearig moved to slide 11, "Current Project Categories
(AS 14.11.013)(Major Maintenance)":
(A)avert imminent danger or correct life-threatening
situations;
(B)house students who would otherwise be unhoused; for
purposes of this subparagraph, students are considered
unhoused if the students attend school in temporary
facilities;
(C)protect the structure of existing school
facilities;
(D)correct building code deficiencies that require
major repair or rehabilitation in order for the
facility to continue to be used for the educational
program;
(E)achieve an operating cost savings;
(F)modify or rehabilitate facilities for the purpose
of improving the instructional program;
(G)meet an educational need not specified in (A) (F)
of this paragraph, identified by the department
Mr. Mearig noted that the slide highlighted items C, D, and
E; which were projects that would end up on the MMGF list
each year and were projects to preserve and protect
existing investment in schools and school function.
9:22:21 AM
Mr. Mearig presented slide 12, "Fund Category Entity
Relationships," which showed a table that depicted the
relationship between project types, entity types, and
funding categories. He considered project types and
referenced a school construction project that was eligible
for funding from the REAA Fund, as well as the SCGF and the
MMGF. He noted that debt reimbursement would also be able
to fund projects that were similar to school construction
projects in statute. He mentioned 70 percent state
reimbursement for qualifying projects as well as the
scenario of reduced funding at 60 percent. As an
illustration of major maintenance, he noted that a project
could have no new space. He noted that REAA districts were
not eligible to access debt reimbursement. He added that
four city boroughs and small municipalities qualified for a
"small municipal district" and had access to the REAA Fund
as well as the SCGF and the MMGF and could be eligible for
debt reimbursement.
Mr. Mearig continued to address slide 12. He discussed city
and borough districts, which were not eligible to fund
projects through the REAA Fund. The 30 districts were,
however, eligible to get on the SCMF/MMGF priority lists,
and had access to debt reimbursement funding when
available. He noted that 13 of the 30 eligible districts
had been approved for debt reimbursement funding.
Co-Chair Stedman noted that Senator von Imhof had joined
the meeting.
9:26:23 AM
Mr. Mearig reviewed slide 13, "Capital Improvement Project
(CIP) Eligibility":
1. Six-year capital improvement plan
2. Functioning fixed asset inventory system (FAIS)
3. Proof of required property insurance
4. Certified Preventive Maintenance and Facility
Management Program
5. Capital project and not maintenance
6. Participating Share
Mr. Mearig noted that the criteria listed on slide 13 were
developed in statute.
Mr. Mearig spoke to slide 14, "Grant Participation and
Eligibility":
1. Capital Improvement Project (CIP) Grant Application
Due from school districts on or before September
1 (annually)
CIP Application materials are posted on our
website(https://education.alaska.gov/facilities/f
acilitiescip)
2. Project Ranking
Ranked in Accordance with criteria in AS 14.11 and 4
AAC 31
3. Eligibility
Districts must have a six-year plan, a fixed asset
inventory system, adequate property loss insurance,
and a preventive maintenance and facility management
program certified by the department
4. CIP Priority Lists
Initial lists are released on November 5
Final lists are released after any appeals for
reconsideration are finalized
Mr. Mearig noted that there was a constant process to
review whether the grant application process was effective.
9:30:33 AM
Mr. Mearig referenced slide 15, "Grant Participation and
Eligibility FY2012 FY2022," which showed a bar graph
entitled 'TOTAL CIP GRANT APPLICATIONS.' The graph showed
the trends in participation from school districts. The
graph showed the number of applications that had been
received in each fiscal year. The downward trend line ran
into FY 20 and had picked up to pre-FY 20 levels. There had
been record application levels in the early 2000's, and
district participation had not been as high since. The past
year there had been 108 major maintenance projects and 17
school construction projects submitted to the department.
There had been zero ineligible projects.
Co-Chair Stedman asked Mr. Mearig to follow up with
additional numerics on the bar graph, including the dollar
amount for each of the grant applications.
Mr. Mearig agreed to provide the information. He thought
the next slide might show some of the information Co-Chair
Stedman was interested in.
Co-Chair Stedman thought the next slide showed awards
rather than requests.
Mr. Mearig noted that there was a table in the SB 237
report that showed the total value for projects and dollar
amounts.
Mr. Mearig showed slide 16, "Grant Awards FY2012 FY2021,'
which showed a bar graph depicting awards made in various
years. He noted that the three funds were shown. He
discussed a project that used some available balance in FY
21.
9:34:46 AM
Senator Hoffman commented that in FY 19 and FY 20, the
legislature funded grants to the REAAs, and the dollar
amounts were subsequently vetoed by the governor. He
thought it was important for the slide to note how much the
legislature had funded. He thought it was important to
recall that the legislature had kept up with its
committment to fund grants in the REAA fund.
Co-Chair Stedman asked Mr. Mearig to update the slide and
go back to FY 12 so there was a complete data set including
the submitted budget and the executed budget.
Mr. Mearig made note of Senator Hoffman's and Co-Chair
Stedman's requests.
Ms. Teshner advanced to slide 17, "Debt Reimbursement and
Eligibility":
1. Debt Reimbursement program is established in AS
14.11.100
2. Capital Improvement Project (CIP) Debt Application
a. May be received at any time the Debt
Reimbursement program is open.
b. CIP Application materials are posted on our
website(https://education.alaska.gov/facilities/f
acilitiescip)
3. Project Ranking
a. Projects are not ranked or evaluated for
prioritized need
4.Eligibility
a. All types of Cities, except 3rd Class
b. All types of Boroughs
c. Districts must have a six-year plan, a fixed
asset inventory system, adequate property loss
insurance, and a preventive maintenance and
facility management program certified by the
department
9:37:50 AM
Ms. Teshner spoke to slide 18, "Debt Reimbursement Trends":
?Percentage of Annual Debt Service
FY1971 FY1977 100%
FY1978 FY1983 90%
FY1984 FY1994 80%
FY1995 FY1999 70%
FY2000 FY2015 70% / 60%*
SB64 (Chapter 3 SLA 2015) implemented a
moratorium on additional debt reimbursement
through FY2020
HB106 (Chapter 6 SLA 2020) extended the
moratorium on additional debt reimbursement
through FY2025
FY2026 FY20xx 50% / 40%**
*Northwest Arctic Borough at 90% for bonds between
1990-2006
**Rates shown are reflective of current statute after
the mortarium is lifted
Ms. Teshner displayed slide 19, "Debt Reimbursement Trends
- Project Values by Percent Reimbursement," which showed a
bar graph entitled 'Historic Debt Funding by Reimbursement
Rate.' The slide depicted the value of projects that had
been reimbursed under each of the percentages, and the
majority had been at 70 percent reimbursement.
Ms. Teshner reviewed slide 20, "Debt Reimbursement Trends -
State Share of Outstanding Debt," which showed a bar graph
that provided a representation of all projected outstanding
debt reimbursement to be paid on approved projects, and how
the amount would reduce over time as it matured and was
paid off. The information assumed the program was funded at
100 percent. She explained that the graph represented the
amount the state would reimburse municipalities for
approved projects for the bond sale prior to the January 15
moratorium date. She continued that FY 39 was expected to
be the last date of state payment for the current program,
assuming no new debt was approved by voters. She referenced
Handout 2, "State Portion Reimbursement Principal and
Interest," (copy on file) which had the data behind the
graph on the slide. She cited that the handout had the
total by grantee, district/municipality, and fiscal year;
for FY 21 through FY 40. The total outstanding statewide
liability from FY 20 to FY 39 was $608.5 million if fully
appropriated.
Co-Chair Stedman asked Ms. Tesher to update the slide and
add the previous ten years' data. He asked for more
information on the state liability portion.
Ms. Teshner explained that if the program was fully funded,
the department would be paying the portion of financing
based on eligibility and pro-ration rates.
Co-Chair Stedman discussed liability. He asked if the state
was subject to claims based on short funding the last
several years.
Ms. Teshner explained that based on statute, if the funds
were appropriated the department would pay the funds out.
She understood that the state was liable to make the
payments to districts and municipalities when the funds
were appropriated.
Co-Chair Stedman thought the wording could be clearer.
9:42:29 AM
Senator von Imhof wanted to clarify that there was a state
statute referenced earlier that indicated the state had an
obligation to pay at varying percentages for school
outstanding debt. She asked if the state was not following
statute due to veto or other mechanisms.
Ms. Teshner referenced AS 14.11.100 (c), which indicated
that the funds "may be appropriated annually by the
legislature." She explained that if there was not
sufficient funding to pay for school debt reimbursement
through the appropriation, the department would reduce the
payments pro rata. If there was no appropriation provided,
the department would not pay for the obligations. She
interpreted that the language included the word "may" and
was not a requirement.
Co-Chair Stedman wanted to clarify that there was a
difference in what the legislature appropriated and what
the governor might sign on the executed budget. He thought
the legislature had a policy difference with the governor
as to how to deal with the debt reimbursement and the REAA
Fund.
Ms. Teshner referenced slide 21, "Debt Reimbursement Trends
- Reimbursement Shortfalls," which showed a data table
depicting how the School Debt Reimbursement Program had
been funded since 1976. She relayed that the program had
been fully funded 32 of the past 46 years, and there were
significant shortfalls in the 1980s, and some small
adjustments in the 1990s. There were veto adjustments in FY
17 and FY 20, and she reminded that the program was vetoed
at 100 percent in FY 21. She referenced Handout 3, "Debt
Retirement FY 1976 - FY 2020 with estimates for FY 2021"
(copy on file), which showed the numbers from the slide in
an easier format. She informed that the FY 22 governor's
proposed budget proposed funding the School Debt
Reimbursement Program at 50 percent.
Ms. Teshner continued to address slide 21. She referenced
Handout 4, "School Construction Debt Retirement AS
14.11.100 - FY 2022 Estimated State Aid" (copy on file).
The handout showed the breakdown of FY 22 anticipated debt
totals by municipality, funded at 100 percent as well as 50
percent as proposed by the governor. There were 18
municipalities projected to receive the funding in FY 22.
9:46:08 AM
Ms. Teshner discussed slide 22, "Debt Proceed and
Refundings":
?Initial Bond Sales
After bonds are sold, the department identifies
how much of approved projects are funded by the
new bond.
Establish any proration's for bonds based on
approved project reimbursement rate. (AS
14.11.100(a))
?Refunding of Bonds
Refunding of current bonds must follow the
requirements in AS 14.11.100(j)(2).
Department evaluates refundings by comparing the
annual debt service of the refunding package to
the original annual debt service of the bond(s)
that are refunded. The refunding must show an
annual savings.
Ms. Teshner relayed that any proceeds to the reimbursements
were based on the debt schedules and payments that were
provided to the department and subject to appropriation
through the operating budget. Any prorations on bonds were
based on approved project reimbursement rates in accordance
with statute. She continued that the department evaluated
refunds by comparing the annual debt service of the
refunding package to the original debt service of the bond
or bonds that were being refunded.
Ms. Teshner turned to slide 23, "Funding Comparison":
REAA/Small Muni - Available to REAA and 4 small
municipal districts
• Funds state share of actual project costs
• Projects are funded by priority from DEED lists
• Specific eligibility requirements:
1.No new space for MM
2.Only eligible space for SC
3.Priority to school construction
• Participating share:
REAAs 2%
Small Muni 10% - 20%
• State funding is tied to annual appropriation for
debt reimbursement
SC/MM Grant Funds - Available to all school districts
• Funds state share of actual project costs
• Projects are funded by priority from DEED lists
• Specific eligibility requirements:
1.No new space for MM
2.Only eligible space for SC
• Participating share required between2% and 35%
• State funding is by legislative appropriation to the
funds
Debt Reimbursement - Available to any municipality
that has the ability to bond
• Funds portion of annual municipal debt payments
• Local government sets own priorities
• Could fund projects that are not eligible for grants
those not eligible for space
• Participating share currently at:60% if not eligible
for space70% all others
• State funding is based on when the bond was passed
and subject to appropriation
9:50:47 AM
Ms. Teshner addressed slide 24, "Additional Handouts and
Resources":
?Supplementary handouts
FY2022 School Construction Grant Fund List
FY2022 School Construction Project Descriptions
FY2022 Major Maintenance Grant Fund ListFY2022 Major
Maintenance Project Descriptions
?DEED's Facilities website:
https://education.alaska.gov/facilitiesSchool
Facility Database
https://education.alaska.gov/doe_rolodex/schoolcalenda
r/facility
Preventive Maintenance & Facility Management Program
https://education.alaska.gov/facilities/PMCIP
Application and Support
https://education.alaska.gov/facilities/facilitiescip
CIP Grant Priority Lists
https://education.alaska.gov/facilities/facilitiespl
Ms. Teshner discussed the supplementary handouts listed on
the slide. She cited that the total state share of the 17
ranked school construction projects was $162.3 million, and
the total state share of the 108 ranked major maintenance
projects was $187.3 million. All of the handouts were
available on the department's website. She pointed out that
the school facility database was linked on the website and
could provide building data including gross square footage
and age for school facilities in the state. She added that
there was a listserv that could provide email notifications
regarding AS 14.11 program notices, facilities-related
regulations and publications, and bond reimbursement and
grant review committees.
Ms. Teshner noted that slide 25 showed departmental contact
information.
Co-Chair Stedman directed attention to Handout 5, "SY2022
Capital Improvement Projects - School Construction Grant
Fund" (copy on file). He asked Ms. Teshner to highlight why
some of the projects were listed and if the project were or
were not included in the budget.
Ms. Teshner explained that the only funding in the budget
was the REAA small municipal school transfer of about $17
million. None of the school construction projects were
currently funded through the budget. She noted there was a
general obligation bond bill that put $25 million towards
major maintenance. She asked for Mr. Mearig to address
projects on the school construction lists.
Co-Chair Stedman wanted to address both lists.
Mr. Mearig noted that Handout 6, "Capital Improvement
Projects (FY2022) - Project Descriptions/Construction,"
(copy on file) gave a list of project details including the
square footage, student populations, and costs. He
addressed Handout 5 and the school construction list. He
discussed the first project on the list, a school
construction project in Hollis. An REAA grant had provided
a planning grant for the project in FY 20.
9:55:27 AM
Co-Chair Stedman asked about Item 2.
Mr. Mearig spoke to Item 2 on Handout 5 and Handout 6,
which pertained to the Anna Tobeluk Memorial K-12 School in
the Lower Kuskokwim School District (LKSD). The project was
a renovation/addition and had scored high due to extreme
over-crowding. The project also had some development of
infrastructure needs. The renovation would be extensive.
Senator von Imhof observed five projects in LKSD. She asked
if students were attending in person in LKSD or attending
virtually due to the COVID-19 pandemic.
Mr. Mearig was not certain of the attendance status of each
school in LKSD. He noted that the district allowed each
school to make its own determination. He thought there were
23 communities in the district. He asked if Senator von
Imhof was particularly interested in the schools on the
project list.
Senator von Imhof felt that the COVID-19 pandemic had spun
education delivery on its head, and she wondered how school
districts around the state were coping with the situation.
She wondered about broadband deficits or needs in each
area. She wondered if it made sense to do large school
projects going forward. She had just had a finance
subcommittee meeting with a presentation from the
Department of Health and Social Services. The department
had indicated it was pairing down workers by having many
engage in telework, and lease space was considerably
different. She wondered if it made sense to do something
similar with the education system.
Co-Chair Stedman asked Mr. Mearig for information regarding
how many years each project had been on the list. He noted
that the projects were ranked by priority.
Mr. Mearig offered to provide the information at a later
time. He thought the information would be good to add to
the summary statement for each project.
Co-Chair Stedman thought some members had a concern that
the legislature was not fulfilling its obligation by not
providing full bond debt reimbursement, and that school
districts would not be able to build schools. He pondered
areas of the state with growing populations of children.
10:00:34 AM
Senator Wilson referenced Handout 5 and the project
descriptions. He noted that five of the projects had been
completed and asked about reimbursement and the FY 22
budget.
Mr. Mearig explained that statutes and regulations provided
for the opportunity for reimbursing a district that had to
make an investment due to urgency after not being able to
access state aid. The district could remain on the list for
consideration for reimbursement of expenditures made 36
months prior to the time that the project was placed on the
priority list.
Senator von Imhof asked who would be responsible if the
state did not come forward with funding.
Mr. Mearig stated that local funding that might be provided
(from any school district) would come from reserves that
had been committed. He reminded that municipalities and
boroughs had opportunity to invest from other funds. The
entity making the first investment would have made the
investment pending the opportunity for reimbursement.
10:03:05 AM
Co-Chair Stedman asked if there was a 36-month look-back
for reimbursement.
Mr. Mearig stated that expenditures that occurred 36 months
prior to the project being submitted to DEED were
considered. What the department accepted as eligible
expenditures could remain on the list until such time as
the project rose to the point of funding.
Senator Hoffman looked at Item 12 and referenced Senator
von Imhof's question about schools and the pandemic. He
informed that the Yukon-Kuskokwim Delta had the highest
rate of COVID-19 in the state. The item was an
appropriation request that pertained to water storage and
treatment in Kongiganuk. He thought it was clear that
student's ability to have fresh water was directly related
to the issue of addressing Covid-19. He wondered if the
department could look into funding the project with federal
COVID-19 funds. He thought there had been many
appropriations that were not even as clearly pandemic-
related as the request in Item 12.
Co-Chair Stedman asked Mr. Mearig to provide a comparison
of projects with funds that were already expended.
Co-Chair Stedman asked about a school outside of Fairbanks
that had a drinking water issue. He asked if Mr. Mearig was
aware of the situation.
10:05:52 AM
AT EASE
10:06:03 AM
RECONVENED
Mr. Mearig affirmed that he was familiar with the school
facilities and water issue in Chalkyitsik. He furthered
that the project need had been identified by the Yukon
Flats School District several years previously and had been
on the department's project list in the past. He relayed
that the school district had not met all the eligibility
requirements for participation in the capital improvement
project (CIP) grant list, but the department was working
with the district diligently to address the deficiency and
get the projects back on the list.
Co-Chair Stedman asked Mr. Mearig to help the committee
understand the deficiency issue and provide information on
the history of the project and what was needed to bring the
project to conclusion.
Mr. Mearig agreed to provide the information.
Co-Chair Stedman requested more information on potential
projects that had been dropped off the list as previously
discussed. He pondered the reasons for projects being
dropped from the CIP list. He wanted a more clear idea of
pent-up demand. He acknowledged that the information would
be an estimation.
Mr. Mearig agreed to work on getting the information. He
noted that the department's source of information was local
school districts and might be challenging.
Co-Chair Stedman thought the Department of Education and
Early Development might have records that could provide
some of the information as projects were on and off lists
over time.
Senator Olson asked how many of the projects on the current
major maintenance CIP list were in REAAs.
Co-Chair Stedman clarified that the committee was currently
looking at the school construction grant fund, after which
the committee would discuss major maintenance.
10:09:50 AM
Co-Chair Stedman addressed Handout 7, "FY 2022 Capital
Improvement Projects - Major Maintenance Grant Fund" (copy
on file). He reminded that just because an item was on the
list did not signify that it would get funded. He noted
that there was no funding proposed for the previous list.
He asked Mr. Mearig to address the list and speak to any
changes to the list over the previous two years.
Mr. Mearig stated that the list showed an eclectic list of
needs across the state. He noted that there was a
prioritization rubric as part of the application that
established the priority of need between projects. He
affirmed that the department engaged in diligent research
on the projects as part of scoring applications. He thought
the lists represented a fraction of statewide need, and
thought the lists were impacted by the voluntary process of
completing an application with detailed information
Mr. Mearing continued. He thought a greater number of
projects on the list might have had some partial or
complete funding already provided by the district as a way
of resolving the issue as quickly as possible. He noted
that Handout 8 "Capital Improvement Projects (FY2022) -
Project Descriptions/Maintenance" (copy on file) had prior
funding information included.
Co-Chair Stedman clarified that the department ranked the
projects, and the legislature did not change the ranking,
but rather went through the list in order when discussing.
He explained that the process had been established several
years ago to prevent political gerrymandering of the list.
He explained that the members debated how much of the total
amount to put into the capital budget, but not the ranking
of projects.
10:15:00 AM
Co-Chair Stedman asked Mr. Mearig to comment on the length
of the list. He recalled that several years previously the
legislature had fully funded the major maintenance list.,
and that the subsequent list had been even larger. He
thought there was a question about how large the school
district's needs were versus how many districts went
through the process and took the time to get on the list.
Mr. Mearig agreed that it was true that the program was
voluntary and there was much uncertainty as to whether or
not there was going to be funding available and whether a
district should take time to identify projects.
Mr. Mearig expressed that he had been excited at the
creation of the REAA Fund. He acknowledged that the fund
indexing had been disrupted at times but he considered that
the fund was a great benefit to the capital planning
process. He thought it would be helpful if there was
something similar for the major maintenance grant list as
well as generally speaking, the funding under the REAA Fund
was focused on school construction projects. He pointed out
that there was no way that a district could forecast
whether to anticipate reimbursement funding. He thought
there was some explanation as to why there was a larger
list the year following a fully funded list.
Co-Chair Stedman asked if the department had a
recommendation as to how far down on the list the committee
should be targeting.
Mr. Mearig had made a recommendation to the Office of
Management and Budget, but he did not have the information
readily available.
Co-Chair Stedman understood he was asking a loaded
question. He thought part of the projects were in the bond
package submitted by the governor.
Mr. Mearig deferred the question to Ms. Teshner, who had
been tracking the bill that provided a funding allocation
but not specific projects.
10:18:05 AM
Ms. Teshner affirmed that the General Obligation (GO) Bond
bill [SB 74, introduced in 2021] would put $25 million
towards the Major Maintenance Grant Fund. The department
would work down the FY 22 list to fulfill the funding.
Co-Chair Stedman thought the proposed amount would address
the first six projects on the list.
Ms. Teshner agreed.
Co-Chair Stedman stated the committee would discuss how to
fund capital projects, address the structural deficit, and
pay a dividend. He discussed the life of the bond versus
the life of what the bond proceeds were spent on. He
wondered if projects that had a life expectancy of over 20
years.
Mr. Mearig thought it was fair to say that the project
investments would result in something with a new time
period. He used the example of a fire alarm system, which
might be related to system code and often had a life of 15
years. He thought generally speaking the projects were
expected to renew systems to an expected full life.
Co-Chair Stedman asked Mr. Mearig to discuss Mt. Edgecumbe
High School (MEHS) and how it was different than other
districts around the state.
Ms. Teshner explained that because MEHS was a division of
DEED, it did not qualify for AS 14.11 funding. The school
provided a deferred maintenance list annually, which the
department worked through the statewide deferred
maintenance appropriation to try and get funding to work on
capital needs. In the proposed GO Bond package, there was
also an appropriation of $7.8 million for MEHS project
needs.
10:21:15 AM
Co-Chair Stedman asked for the MEHS list to be submitted to
the committee. He noted that there was a need for
additional classrooms.
Ms. Teshner relayed that there had been request that
included a classroom expansion wing. She offered to provide
the committee with a description and cost breakdown of the
project.
Co-Chair Stedman continued that another area of concern was
replacement of the boy's dorm, which was a former World War
II era barracks. He recalled that there were three to four
boys in one room with only one desk, and the students had
to take turns at the desk. He wanted the department to
check the status of the situation and get back to the
committee. He had a hard time grasping the idea of four
high school students sharing one desk.
Senator Hoffman asked Ms. Teshner about the percentage of
students at MEHS that were from REAA school districts. He
worried that concern for the school might change with a
change in composition of the committee. He asked if she saw
a need to change state law in order to allow for MEHS to
participate in the REAA School Construction Fund.
Ms. Teshner did not have the figure available but would get
back to the committee with the information. She stated the
department was always supportive of mechanisms to get MEHS
funding for capital needs, whether with a change in statute
or some other manner. She thoguht there was a policy call
to be made.
Senator Hoffman thought the committee should seriously
consider submitting legislation to allow MEHS to
participate in funding through the REAA Fund.
Co-Chair Stedman asked the department to provide data on
the subject. He would query the committee regarding the
idea of statute change. He thought it was important to get
a headcount of students and a breakdown of the student's
communities and school districts. He wondered if there was
excess capacity at the school as a result of the COVID-19
pandemic.
10:25:35 AM
Senator Olson asked if the department would be in favor of
legislation that allowed MEHS to be eligible for the REAA
Fund.
Ms. Teshner expressed that DEED would consider any piece of
legislation that was put forward, and that the department
was in support of any additional funding mechanisms that
would help support the capital needs at MEHS.
Senator Olson referenced his earlier question and queried
how many of the projects on the current major maintenance
CIP list were from REAA districts.
Ms. Teshner agreed to provide a list with the requested
information.
Senator Olson asked how many years the projects had been on
the major maintenance list.
Ms. Teshner agreed to provide the information.
Senator Olson asked if there was a cost for school
districts to prepare applications for projects to be on the
CIP list.
Ms. Teshner asked Mr. Mearig to address the question.
Mr. Mearig affirmed that the applications cost staff time,
but he was not certain about the total cost. He mentioned
advanced preparatory work such as design and estimates,
which could constitute an investment on behalf of the
district. The amount could range from a few thousand to a
hundred thousand dollars.
Senator Olson stated his office had been made aware that
the process cost school districts tens of thousands of
dollars per year to keep projects on the list.
10:28:58 AM
Senator Olson asked about projects coming off the list due
to being funded by another source.
Mr. Mearig informed that there could be a variety of
reasons a project had been on the list and dropped off. He
did not have information that addressed a trend in a
specific way. He thought the department had taken steps to
make the process more cost-effective for districts top
participate. He referenced a change to allow districts to
carry forward applications forward with for one additional
year if there were no significant changes. The department
had introduced changes in regulation to extend the ability
for bond reimbursement. He asserted that the department
worked with districts to streamline the process.
Senator Olson had additional questions that he would submit
in writing via Co-Chair Stedman's office.
Co-Chair Stedman asked if the department had any final
comments.
Ms. Teshner thanked the committee for the opportunity to
present to the committee. She affirmed that the department
would work on providing follow-up information and answers
to members' questions.
Co-Chair Stedman thought the earlier part of the
presentation was good for the public and new members of the
legislature. He thought the "meat" of the discussion
centered around how projects on the major maintenance list
were being handled with funding constraints while education
was a primary constitutional obligation. He relayed that
the committee was concerned about pent up demand and the
brick-and-mortar school structures.
Co-Chair Stedman discussed the agenda for the following
day.
ADJOURNMENT
10:32:43 AM
The meeting was adjourned at 10:32 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 022221 DEED Handout #6 - FY22ProjectDescriptionsConstruction.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #7 - FY22MaintenanceFinalList.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #8 - FY22ProjectDescriptionsMaintenance.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #5 - FY22ConstructionFinalList.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #4 - FY2022 Anticipated Debt 50% Reduction.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #3 - Debt Actual % 1976-2021.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #2 - Debt Totals by Grantee FY21-FY40 2.19.2021.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 022221 DEED Handout #1 - AS 14.11.035 Final 2021 Report.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| 2.22.21 (S)FIN DEED School Capital Funding Presentation.pdf |
SFIN 2/22/2021 9:00:00 AM |
DEED Major Maintenance |
| FY22 MEHS Capital Request Memo.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| FY2022 School District Six-Year-Plans.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| 2.22.2021 (S)FIN Hearing DEED Follow-Up.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| FY22 MEHS DM Memo.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| 2.22.2021 (S)FIN DEED School Capital Funding Slide 15 Updated.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| 2.22.2021 (S)FIN DEED School Capital Funding Slide 20 Updated.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| Chalkyitsik WaterTank CIP Fact Sheet_v2.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| FY22CIP FInal SC & MM Lists Add't Info 2.22.21.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| FY2021 MEHS Enrollment by City.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |
| School Debt Reimbursement FY2012-FY2021 Gov CC MP.pdf |
SFIN 2/22/2021 9:00:00 AM |
School construction and major maintenance |