Legislature(1999 - 2000)

04/15/2000 09:11 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
MINUTES                                                                                                                         
SENATE FINANCE COMMITTEE                                                                                                        
April 15, 2000                                                                                                                  
9:11 AM                                                                                                                         
                                                                                                                                
TAPES                                                                                                                           
                                                                                                                                
SFC-00 # 91, Side A and Side B                                                                                                  
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair John Torgerson convened the meeting at                                                                                 
approximately 9:11 AM                                                                                                           
                                                                                                                                
PRESENT Co-Chair John Torgerson, Senator Al Adams, Senator                                                                      
Dave Donley, Senator Lyda Green, Senator Loren Leman,                                                                           
Senator Gary Wilken                                                                                                             
                                                                                                                                
Also Attending: TAMERA COOK, Director, Division of Legal                                                                        
and Research Services; DEVEN MITCHELL, Debt Manager,                                                                            
Treasury Division, Department of Revenue; JIM BALDWIN,                                                                          
Assistant Attorney General, Governmental Affairs Section,                                                                       
Civil Division, Department of Law; KAREN REHFELD, Director,                                                                     
Education Support Services, Department of Education and                                                                         
Early Development; ANNALEE MCCONNELL, Director, Office of                                                                       
Management and Budget;                                                                                                          
                                                                                                                                
Attending via Teleconference: From Anchorage: BARBARA                                                                           
MIKLOS, Director, Division of Child Support Enforcement,                                                                        
Department of Revenue                                                                                                           
                                                                                                                                
SUMMARY INFORMATION                                                                                                             
                                                                                                                                
SB 207-MEDICAL SUPPORT ORDERS FOR CHILDREN                                                                                      
                                                                                                                                
The Committee heard from the Division of Child Support                                                                          
Enforcement. The bill was reported out of Committee.                                                                            
                                                                                                                                
SB 310-G.O.BONDS: SCHOOLS & UNIVERSITY                                                                                          
                                                                                                                                
The Committee heard from the Division of Legal and Research                                                                     
Services, the Department of Law, the Department of Revenue                                                                      
and the Office of Management and Budget. Three amendments                                                                       
were considered but none were adopted and the bill was held                                                                     
in Committee.                                                                                                                   
                                                                                                                                
SENATE BILL NO. 207                                                                                                             
"An Act relating to the establishment and enforcement                                                                           
of medical support orders for children; and providing                                                                           
for an effective date."                                                                                                         
                                                                                                                                
This was the first hearing for this bill in the Senate                                                                          
Finance Committee.                                                                                                              
                                                                                                                                
BARBARA MIKLOS, Director, Division of Child Support                                                                             
Enforcement, Department of Revenue, testified via                                                                               
teleconference from Anchorage to tell the Committee that                                                                        
the division believed that it would help all parties,                                                                           
including those who are paid child support, those who pay                                                                       
child support and the agency. She stated that the bill                                                                          
would eliminate confusion.                                                                                                      
                                                                                                                                
Ms. Miklos explained that under existing statutes, an order                                                                     
for medical support could only be established in                                                                                
conjunction with a financial support order. This bill, she                                                                      
stated changes the provision so that a medical support                                                                          
order might be established on its own. She stressed that                                                                        
this is important in the case of Medicaid recipients                                                                            
because the division is required to submit an order of                                                                          
medical support anytime a client goes on Medicaid. Current                                                                      
statue, she noted ties medical support together with                                                                            
financial support, thus requiring the division to submit                                                                        
the financial support order even if the parents did not                                                                         
want it. She elaborated that in these instances, the                                                                            
financial order is issued, but not enforced. However, she                                                                       
pointed out, the debt continues to accumulate and if the                                                                        
parent goes on public assistance, the division begins to                                                                        
collect on that debt. Under this bill, she said the debt                                                                        
would not accumulate.                                                                                                           
                                                                                                                                
Ms. Miklos continued that the bill establishes a medical                                                                        
support statute to provide that either parent, not simply                                                                       
the obligor parent, may be required to provide health                                                                           
coverage. Currently, she detailed Alaska statute only                                                                           
places that responsibility on the obligor parent, although                                                                      
the courts have ruled in Civil Rule 90.3 that either parent                                                                     
could be responsible. She pointed out that this legislation                                                                     
makes the statute and the court order consistent. She noted                                                                     
that the division follows the civil rule and requires that                                                                      
either parent may have to provide health insurance.                                                                             
                                                                                                                                
Ms. Miklos stated that the bill also amends the law to                                                                          
require that a medical support order be issued regardless                                                                       
of whether health care coverage is currently available. She                                                                     
explained this is a clarification to make the statute clear                                                                     
that the division can issue the order to require health                                                                         
care coverage be provided to the child if it becomes                                                                            
available to either parent. She said this is in place of                                                                        
waiting until the health care coverage is available before                                                                      
pursuing the matter.                                                                                                            
                                                                                                                                
Senator Phillips asked what other states have this                                                                              
provision.                                                                                                                      
                                                                                                                                
Ms. Miklos answered that the division did a survey of all                                                                       
states and had 24 responses. Of those responses, she said                                                                       
16 states could issue separate medical and financial orders                                                                     
and three states could not. In the five remaining states                                                                        
that responded, she said the court issues all these orders.                                                                     
                                                                                                                                
Senator Phillips asked why the practice of only allowing                                                                        
the courts to issue medical and financial orders was not                                                                        
implemented in this legislation.                                                                                                
                                                                                                                                
Ms. Miklos responded that it is a simpler process and less                                                                      
costly for the division to establish child support orders.                                                                      
She pointed out that if the court issued the order, every                                                                       
change would require the parties to return to court. She                                                                        
added that most states allow the divisions to issue the                                                                         
orders.                                                                                                                         
                                                                                                                                
Senator Phillips remarked that the child support                                                                                
enforcement office was not the most popular of state                                                                            
agencies.                                                                                                                       
                                                                                                                                
Senator Green asked how the Denali KidCare program fit into                                                                     
this legislation.                                                                                                               
                                                                                                                                
Ms. Miklos replied Denali KidCare is a Medicaid program and                                                                     
therefore requires a medical support order.                                                                                     
                                                                                                                                
Senator Phillips asked which states require the court to                                                                        
issue the orders.                                                                                                               
                                                                                                                                
Ms. Miklos listed Washington D.C., Massachusetts,                                                                               
Louisiana, Virginia and Maryland. Most of the West Coast                                                                        
states, she noted have a provision to allow the agency to                                                                       
issue the orders                                                                                                                
                                                                                                                                
Co-Chair Torgerson asked about the mechanics of the                                                                             
language contained on page 5 lines 5 through 8, "The                                                                            
hearing officer shall allocate equally the cost of the                                                                          
health care coverage between the parents unless the hearing                                                                     
officer finds good cause to order a different allocation of                                                                     
these costs."                                                                                                                   
                                                                                                                                
Ms. Miklos explained the appeals process, which begins with                                                                     
an administrative review by the division and then a review                                                                      
conducted by a hearing officer outside the division but                                                                         
within the Department of Revenue. She said the rulings are                                                                      
made based on which parent has health insurance available                                                                       
at a reasonable cost.                                                                                                           
                                                                                                                                
Co-Chair Torgerson asked if currently, the courts normally                                                                      
determine which parent is the obligor for the health                                                                            
insurance coverage.                                                                                                             
                                                                                                                                
Ms. Miklos replied that it depended upon who established                                                                        
the order. If the courts issued the order, she said the                                                                         
court would use the same procedure to make the                                                                                  
determination. She qualified that the hearing officer is                                                                        
involved only when the order was issued by the agency.  In                                                                      
both cases, she stressed appeals could be made to the                                                                           
court.                                                                                                                          
                                                                                                                                
Co-Chair Torgerson then wanted to know how the financial                                                                        
obligor was established.                                                                                                        
                                                                                                                                
Ms. Miklos answered that it usually depended upon which                                                                         
parent has custody of the child, or in cases of joint                                                                           
custody, which parent has the greater income. She stated                                                                        
that the obligator is usually determined strictly by                                                                            
financial circumstances. By allowing the division to issue                                                                      
medical support orders separately from financial support                                                                        
orders, the decision of medical obligator could be                                                                              
determined based on which parent has reasonable health care                                                                     
coverage.                                                                                                                       
                                                                                                                                
Ms. Miklos stressed that the state benefits from the                                                                            
children having independent health care insurance, because                                                                      
there is less need for public assistance.                                                                                       
                                                                                                                                
Senator Adams offered a motion to report from Committee, SB
207 with accompanying zero fiscal note from the Department                                                                      
of Revenue.                                                                                                                     
                                                                                                                                
Senator Phillips objected. He stated that he would rather                                                                       
the courts made the decision on the support orders.                                                                             
                                                                                                                                
Senator Green asked if there were any instances where both                                                                      
parents are required to carry health care insurance on a                                                                        
child.                                                                                                                          
                                                                                                                                
Ms. Miklos responded the parents are not being required to                                                                      
have health care coverage unless it is available at a                                                                           
reasonable cost. She added that in some cases, insurance                                                                        
may not be available at all.                                                                                                    
                                                                                                                                
Ms. Miklos then commented on Senator Phillips's concerns                                                                        
saying that this legislation does not change how the courts                                                                     
or the division determines the support orders other than to                                                                     
separate the two orders. This bill, she stressed does not                                                                       
give any more power to the child support enforcement                                                                            
agency.                                                                                                                         
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Green, Senator Donley, Senator Leman,                                                                         
Senator Adams, Senator Wilken, Senator P. Kelly, Co-Chair                                                                       
Parnell and Co-Chair Torgerson                                                                                                  
                                                                                                                                
OPPOSED: Senator Phillips                                                                                                       
                                                                                                                                
The motion PASSED (8-1)                                                                                                         
                                                                                                                                
The bill MOVED from Committee.                                                                                                  
                                                                                                                                
AT EASE 9:25 AM / 9:37 AM                                                                                                       
                                                                                                                                
SENATE BILL NO. 310                                                                                                             
"An Act providing for and relating to the issuance of                                                                           
general obligation bonds for the purpose of paying the                                                                          
state cost of school, University of Alaska, and port                                                                            
and harbor capital projects; and providing for an                                                                               
effective date."                                                                                                                
                                                                                                                                
                                                                                                                                
TAMERA COOK, Director, Division of Legal and Research                                                                           
Services, testified that this legislation consists of                                                                           
typical language for a general obligation (GO) bond bill.                                                                       
She shared that GO bonds have the full faith and credit of                                                                      
the State Of Alaska and that the state constitution                                                                             
requires approval by the voters. She noted that the bonding                                                                     
language was devised by Bond Council with assistance for                                                                        
the Attorney General and the (previously named) Division of                                                                     
Legal Services, and has remained virtually unchanged for 30                                                                     
years. She stressed that the language is rigid and that                                                                         
Bond Council requires a GO bond bill must be drafted in                                                                         
this precise format. This legislation, she pointed out has                                                                      
no deviation from the established format.                                                                                       
                                                                                                                                
Mr. Cook relayed earlier conversations between Co-Chair                                                                         
Torgerson, Jim Baldwin of the Department of Law and herself                                                                     
related to the "single subject" question. She opined that                                                                       
proposing the issuance of bonds for schools, roads and                                                                          
other capital projects within one bill follows the                                                                              
provisions of the single-subject rule. She stressed that                                                                        
although the courts have made "mumblings" to the contrary,                                                                      
no ruling has ever been issued against this. She noted that                                                                     
most of the comments made stating that different types of                                                                       
projects in the same bill do not meet the single subject                                                                        
rule, are issued in the form of dissenting opinions.                                                                            
                                                                                                                                
Ms. Cook told the Committee that Mr. Baldwin recommends                                                                         
dividing the capital projects into two separate bills, one                                                                      
for education projects and the other for transportation                                                                         
projects, to avoid the problem. She also stated that most                                                                       
attorneys feel that it is a matter of time before the court                                                                     
finally issues an adverse ruling on the single subject                                                                          
question and that Mr. Baldwin did not want that to happen                                                                       
on a GO bond bill. She added that Mr. Baldwin also thought                                                                      
that Bond Council might decide that the risk of litigation                                                                      
might hamper the marketability of the bonds. She qualified                                                                      
that she was not in a position to weigh this matter,                                                                            
although she recognized the arguments on both sides.                                                                            
                                                                                                                                
Senator Adams asked what change could made to the bill's                                                                        
title that would insure against a single subject rule                                                                           
challenge.                                                                                                                      
                                                                                                                                
Ms. Cook responded that no title change for this bill would                                                                     
avoid the single-subject challenge, because the title                                                                           
requirement and the single subject requirement are                                                                              
completely separate constitution issues. The title                                                                              
requirement, she explained relates to notice of what is                                                                         
contained in the bill. She noted that this bill gives                                                                           
appropriate notice that the bill includes school projects,                                                                      
university projects and port and harbor projects. The                                                                           
issue, she said is whether the bond proposal could be                                                                           
placed before the voters as a package, requiring them to                                                                        
"take it or leave it" on all the projects. She attested                                                                         
that although the bill complies with the single subject                                                                         
rule as established in the past, the courts are waiting for                                                                     
a vehicle to issue an adverse ruling to change the                                                                              
requirements.                                                                                                                   
                                                                                                                                
Ms. Cook stressed that just the potential litigation on the                                                                     
question of the single subject rule may be enough to                                                                            
drastically delay the issuance of the bonds and the                                                                             
subsequent funding for the projects.                                                                                            
                                                                                                                                
Senator Adams asked about the impact on the ability for                                                                         
municipal participation in the school capital projects.                                                                         
                                                                                                                                
Ms. Cook replied that municipalities could not participate                                                                      
in the issuance of GO bonds with the full state backing.                                                                        
However, she noted that additional school-related capital                                                                       
projects could be added to the bonds.                                                                                           
                                                                                                                                
Senator Phillips asked of the bonds that previously passed,                                                                     
if any maintenance and operations were included or if all                                                                       
the projects were for capital improvements.                                                                                     
                                                                                                                                
Ms. Cook was unsure and would research the question. She                                                                        
did stress that bonds could not be issued for operation                                                                         
functions according to the state constitution. She                                                                              
qualified that if a maintenance project was substantial,                                                                        
such as a building addition or a new roof, it would qualify                                                                     
as a capital project. Day to day or year to year                                                                                
maintenance, she said would not qualify.                                                                                        
                                                                                                                                
Ms. Cook continued that the court has looked at the issue                                                                       
of what qualifies as a capital project for bond purposes as                                                                     
well and found a capital project is something that has                                                                          
historically been financed with GO bonds. Secondly, she                                                                         
said the courts also consider whether the improvement will                                                                      
have a substantial life span of at least as long as the                                                                         
bond repayment.                                                                                                                 
                                                                                                                                
Senator Phillips listed some of the proposed projects as                                                                        
heating ventilation, gym floor replacement, heating coil                                                                        
replacement, fire alarms, carpeting, district-wide major                                                                        
maintenance for the Anchorage School Board, and deferred                                                                        
maintenance for the University of Alaska. He wanted to know                                                                     
it these projects qualify as capital improvements under the                                                                     
GO bond criterion.                                                                                                              
                                                                                                                                
Ms. Cook did not know what those maintenance items would                                                                        
be, but noted that the shorter the life span of the                                                                             
project, the more problematic the question of whether GO                                                                        
bonds can be used to fund them. She added that she knew of                                                                      
some municipalities that have issued GO bonds for such                                                                          
items as computer equipment, which she thought has a                                                                            
relatively short life span. She said those types of uses of                                                                     
the bonds have not yet been challenged, so there is not a                                                                       
specific court ruling on the matter.                                                                                            
                                                                                                                                
Senator Phillips indicated that he would research the                                                                           
included projects in the GO packages approved between the                                                                       
late 1960s through 1980.                                                                                                        
                                                                                                                                
DEVEN MITCHELL, Debt Manager, Treasury Division, Department                                                                     
of Revenue added his assessment to the debate of whether                                                                        
the proposed projects qualify for GO bonds and whether the                                                                      
package fits the single subject. He agreed with Ms. Cook                                                                        
that there is room for interpretation and that the                                                                              
potential is there for problems.                                                                                                
                                                                                                                                
Mr. Mitchell addressed the concern that marketing the bonds                                                                     
would be difficult because of the perception of the                                                                             
litigation risk. He stated that buyers would still want to                                                                      
purchase bonds, but that there could be higher interest                                                                         
rates. He noted that if litigation were introduced prior to                                                                     
the issuance of bonds the department would not want to                                                                          
proceed with a market effort until the matter was decided.                                                                      
                                                                                                                                
Senator Phillips asked if deferred maintenance items                                                                            
legally qualify for GO bond funding.                                                                                            
                                                                                                                                
Mr. Mitchell deferred to the Department of Law but                                                                              
qualified that previous municipal bonds that he has dealt                                                                       
with have included maintenance projects.                                                                                        
                                                                                                                                
JIM BALDWIN, Assistant Attorney General, Governmental                                                                           
Affairs Section, Civil Division, Department of Law                                                                              
responded to the same question saying he needed to do                                                                           
research before giving an opinion. He did point out that                                                                        
the constitution states, "capital improvements" and noted                                                                       
that the Attorney General's Office has issued past opinions                                                                     
where the term is strictly construed. He interpreted the                                                                        
meaning of capital improvement to include "concrete and                                                                         
steel and not repair". He stated that major roof repair                                                                         
would probably be considered for GO bonds.                                                                                      
                                                                                                                                
Co-Chair Torgerson had understood the criterion to include                                                                      
a project that extends the life of the building regardless                                                                      
of the size of project. However, he thought the witness was                                                                     
saying something different. He requested the witness                                                                            
research the matter.                                                                                                            
                                                                                                                                
Senator Adams remarked that he wanted to make the title as                                                                      
broad as possible to avoid this problem. He suggested, "An                                                                      
Act providing for and related to the issuance of general                                                                        
obligation bonds for the purpose of capital improvement                                                                         
projects in the State Of Alaska."                                                                                               
                                                                                                                                
Mr. Baldwin cautioned of the need to take care not to                                                                           
confuse the descriptive rule, dictating how the title must                                                                      
accurately describe the contents of the legislation, with                                                                       
the single subject rule.                                                                                                        
                                                                                                                                
Co-Chair Torgerson commented that the title isn't really                                                                        
the problem. He stated that the only connection between the                                                                     
school projects and the ports and harbor projects is the                                                                        
bond package and the provisions stipulating how those bonds                                                                     
would be issued and managed. The projects themselves are                                                                        
not interrelated, he remarked.                                                                                                  
                                                                                                                                
Mr. Baldwin shared that the court has ruled that a bill has                                                                     
to follow a general theme.                                                                                                      
                                                                                                                                
Senator Adams asked if the witness felt it would be better                                                                      
to separate the bonding into two bills, one for education                                                                       
projects and the other for ports and harbors. He voiced a                                                                       
concern about garnering public support for either one.                                                                          
                                                                                                                                
Mr. Baldwin thought it would be better to have separate                                                                         
bills for legal reasons. He could not speak on the                                                                              
political reasons for having one or two bills.                                                                                  
                                                                                                                                
Co-Chair Torgerson asked if the bond package approved in                                                                        
1978 was one bill or if it was split.                                                                                           
                                                                                                                                
Mr. Baldwin believed the projects were separated.                                                                               
                                                                                                                                
Co-Chair Torgerson asked if the witness thought the                                                                             
relationship between the university and schools was close                                                                       
enough to remain together on one bill.                                                                                          
                                                                                                                                
Mr. Baldwin recalled a similar instance involving the                                                                           
university and schools. He did not remember the outcome but                                                                     
believed the court would not find a great distinction                                                                           
between primary, secondary or post-secondary type schools.                                                                      
                                                                                                                                
Mr. Baldwin stated that he could research the question and                                                                      
return an opinion to the Committee later in the day.                                                                            
                                                                                                                                
Co-Chair Torgerson asked the witness to review the                                                                              
relationship between the university and schools and comment                                                                     
on the appropriateness of bonding major maintenance items.                                                                      
                                                                                                                                
AT EASE 10:00 AM / 10:19 AM                                                                                                     
                                                                                                                                
Amendment #1: This amendment inserts a new item on page 4,                                                                      
after line 6.                                                                                                                   
                                                                                                                                
University of Alaska -      7,642,600                                                                                           
Southeast Egan Building                                                                                                         
Classroom Addition                                                                                                              
                                                                                                                                
Senator Adams moved for adoption. Co-Chair Torgerson                                                                            
objected.                                                                                                                       
                                                                                                                                
Senator Adams explained that design was completed in 1995                                                                       
for this project, but no funding has been provided to cover                                                                     
construction costs. He detailed the plan for 16 new                                                                             
classroom spaces, including a lecture hall that would seat                                                                      
150 students.                                                                                                                   
                                                                                                                                
Senator Adams expressed that the applications for first-                                                                        
time students are up 39 percent this year and the campus                                                                        
lacks adequate classroom space. This inhibits the growth of                                                                     
the student bases, which he stressed is needed to become a                                                                      
financially sound, self-supporting institution.                                                                                 
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Adams                                                                                                         
                                                                                                                                
OPPOSED: Senator Leman, Senator Wilken, Senator Green, Co-                                                                      
Chair Parnell and Co-Chair Torgerson                                                                                            
                                                                                                                                
ABSENT: Senator Phillips, Senator Donley and Senator P.                                                                         
Kelly                                                                                                                           
                                                                                                                                
The motion FAILED (1-5-3)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #2: This amendment inserts new bill sections on                                                                       
page 5, line 10 to read:                                                                                                        
                                                                                                                                
Sec. 4. AS 14.11.100(a) is amended by adding a new                                                                              
paragraph to read:                                                                                                              
(10) subject to (h), (i), (j), and (p) of                                                                                       
this section and after projects financed by the                                                                                 
bonds, notes, or other indebtedness have been                                                                                   
approved by the commissioner, 70 percent of                                                                                     
payments made by a municipality during the fiscal                                                                               
year for the retirement of principal and interest                                                                               
on outstanding bonds, notes, or other                                                                                           
indebtedness authorized by the qualified voters                                                                                 
of the municipality on or after July 1, 1997, to                                                                                
pay the costs that exceed $200,000 of school                                                                                    
construction projects and major maintenance                                                                                     
projects that are approved under AS                                                                                             
14.07.020(a)(11).                                                                                                               
                                                                                                                                
Sec. 5. AS 14.11.100 is amended by adding a new                                                                                 
subsection to read:                                                                                                             
(p) The total amount of public school                                                                                           
construction projects approved for reimbursement                                                                                
by the department under (a)(10) of this section                                                                                 
may not exceed $150,000,000.                                                                                                    
                                                                                                                                
Senator Adams moved for adoption. Co-Chair Torgerson and                                                                        
Senator Green objected.                                                                                                         
                                                                                                                                
Senator Adams stated this language would assist school                                                                          
districts in funding their capital projects, including                                                                          
major maintenance items. He explained that the state would                                                                      
reimburse municipalities to retire 70 percent of the                                                                            
bonding debt incurred for specific school capital projects.                                                                     
He stressed that it is important to adopt this amendment so                                                                     
that schools that do not have projects included in the                                                                          
state's bond package would have the ability to issue their                                                                      
own bonds to pay for the necessary projects.                                                                                    
                                                                                                                                
Senator Green remarked that she would have to support this                                                                      
amendment.                                                                                                                      
                                                                                                                                
Co-Chair Torgerson pointed out that the amendment adds $150                                                                     
million to the bond total.                                                                                                      
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Adams and Senator Green                                                                                       
                                                                                                                                
OPPOSED: Senator Leman, Senator Wilken, Senator Donley, Co-                                                                     
Chair Parnell and Co-Chair Torgerson                                                                                            
                                                                                                                                
ABSENT: Senator P. Kelly, Senator Phillips,                                                                                     
                                                                                                                                
The motion FAILED (2-5-2)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #3: This amendment makes the following changes to                                                                     
the bill.                                                                                                                       
                                                                                                                                
Page 1, line 9, page 2, line 10, page 4, line 3, and                                                                            
page 5,line 9:                                                                                                                  
change the numbers to reflect the additional                                                                                    
schools                                                                                                                         
                                                                                                                                
Page 3, after line 27, add the following project:                                                                               
Noorvik K- 12 Improvements  17,528,378                                                                                          
                                                                                                                                
Page 3, line 30, following "Elim":                                                                                              
insert:                                                                                                                         
"Bering Strait"                                                                                                                 
                                                                                                                                
Page 3, after line 30 add:                                                                                                      
Bering Strait-Golovin School   9,609,516                                                                                        
Phase Ill                                                                                                                       
Bering Strait-Koyuk K-12 School 14,059,664                                                                                      
                                                                                                                                
Page 4 after line 1 add the following project:                                                                                  
Togiak School Replacement   25,027,049                                                                                          
Yupiit Schools (ED 39)                                                                                                          
Akiachak Elementary Replacement 14,370,287                                                                                      
& Secondary Renovation                                                                                                          
                                                                                                                                
Senator Adams moved for adoption. Co-Chair Torgerson and                                                                        
Senator Donley objected.                                                                                                        
                                                                                                                                
Senator Adams explained the purpose for this amendment is                                                                       
to include the projects identified by the Department of                                                                         
Education and Early Development as the ten most necessary.                                                                      
He feared that by not repairing the schools in greatest                                                                         
need, the entire bond package is jeopardized by threatened                                                                      
lawsuits against the state claiming that rural students are                                                                     
not treated equally. He said that although forty schools                                                                        
are identified as needing improvements, he suggested at                                                                         
least including the first ten.                                                                                                  
                                                                                                                                
Co-Chair Torgerson pointed that this amendment adds over                                                                        
$80 million to the total bond package.                                                                                          
                                                                                                                                
Senator Adams reiterated that by approving the additional                                                                       
projects, the risk to the remainder of the project is                                                                           
minimized.                                                                                                                      
                                                                                                                                
Senator Wilken remarked that his support of the bond                                                                            
package has nothing to do with the Kasayulie vs. State Of                                                                       
Alaska case. This case, he emphasized, would be decided in                                                                      
court.                                                                                                                          
                                                                                                                                
Senator Wilken referred to the process to determine the                                                                         
priority of school capital projects. He stated that the                                                                         
department issues a list each year in December, the latest                                                                      
of which, he said was consulted when drafting this bill.                                                                        
However, he noted, another list was published in March 2000                                                                     
that had different figures. He wanted the department to                                                                         
answer to the changes.                                                                                                          
                                                                                                                                
KAREN REHFELD, Director, Education Support Services,                                                                            
Department of Education and Early Development explained the                                                                     
list generated in March is the list that the Board of                                                                           
Education uses to take final action based on the                                                                                
department's negotiated agreements. This latter list she                                                                        
explained contains the final results of any appeals. Other                                                                      
differences, she continued reflected projects initially                                                                         
recommended for phased funding that have since been                                                                             
approved for full construction funding.                                                                                         
                                                                                                                                
Senator Adams noted one of the projects has a ten-percent                                                                       
match.                                                                                                                          
                                                                                                                                
Senator Wilken asked if a second project list is issued                                                                         
every year or if the December list is usually the only one                                                                      
generated.                                                                                                                      
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #91, Side B    10:28 AM                                                                                          
                                                                                                                                
                                                                                                                                
Ms. Rehfeld replied that a final agency list is issued                                                                          
following the appeals that are settled during a March or                                                                        
April board meeting.                                                                                                            
                                                                                                                                
There was conversation between the witness and Senator                                                                          
Wilken establishing the changes and appeals for the Togiak                                                                      
and the Koyuk school projects.                                                                                                  
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Adams                                                                                                         
                                                                                                                                
OPPOSED: Senator Donley, Senator Leman, Senator Wilken,                                                                         
Senator P. Kelly, Senator Green, Senator Phillips, Co-Chair                                                                     
Parnell and Co-Chair Torgerson                                                                                                  
                                                                                                                                
The motion FAILED (1-8)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment #4: This amendment makes the following changes to                                                                     
the bill.                                                                                                                       
                                                                                                                                
Page 1, line 9, page 2, line 10, page 4, line 3, and                                                                            
page 5,line 9:                                                                                                                  
change the numbers to reflect the additional                                                                                    
schools                                                                                                                         
                                                                                                                                
On page 4 after line 1, add the following project:                                                                              
Akiachak Elementary Replacement  14,370,287                                                                                     
& Secondary Renovation                                                                                                          
Yupiit Schools (ED 39)                                                                                                          
                                                                                                                                
                                                                                                                                
Senator Adams moved for adoption. Co-Chair Torgerson                                                                            
objected.                                                                                                                       
                                                                                                                                
Senator Adams noted this project was the tenth highest                                                                          
priority on the department's issued list of critical                                                                            
projects. He said he submitted the request on behalf of the                                                                     
Senator from Bethel.                                                                                                            
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Adams                                                                                                         
                                                                                                                                
OPPOSED: Senator Phillips, Senator Donley, Senator Leman,                                                                       
Senator Wilken, Senator P. Kelly, Senator Green, Co-Chair                                                                       
Parnell and Co-Chair Torgerson                                                                                                  
                                                                                                                                
The motion FAILED (1-8)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
ANNALEE MCCONNELL, Director, Office of Management and                                                                           
Budget gave Administration's position on the bill, saying                                                                       
she was pleased the effort for the bond package for highest                                                                     
priority items was beginning.                                                                                                   
                                                                                                                                
Ms. McConnell asserted that the overall amount for the                                                                          
school projects should address more schools than are                                                                            
included in the current proposed bond package. She spoke of                                                                     
considerable needs that have accumulated and the school                                                                         
that have been waiting for attention for several years. She                                                                     
said these projects should be undertaken, not because of                                                                        
the pending litigation, but because it is "the right thing                                                                      
to do."                                                                                                                         
                                                                                                                                
Ms. McConnell had concerns with how the included projects                                                                       
were selected. She stressed that the integrity of the                                                                           
system requires the projects be included down the list in                                                                       
the priority order established through the process in state                                                                     
law and then approved by the Board of Education.                                                                                
                                                                                                                                
Ms. McConnell allowed the first five projects on the                                                                            
priority list are included in the bond package, but that                                                                        
the approved projects skip down to number 24 on the list.                                                                       
                                                                                                                                
Ms. McConnell recommended the legislation avoid the gray                                                                        
area of whether major maintenance projects can be funded                                                                        
under GO bonds by using the financing plan proposed by the                                                                      
Administration. She explained this plan would take care of                                                                      
the problem because other funding methods are not under the                                                                     
same constraints as GO bonds. She told the Committee the                                                                        
plan proposes using Alaska Housing Finance Corporation                                                                          
(AHFC) bonds or tobacco settlement bonds.                                                                                       
                                                                                                                                
Ms. McConnell stated the state would have the opportunity                                                                       
to address the insecurity of year-to-year amount or the                                                                         
total payment from the tobacco companies by shifting the                                                                        
risk from the state to the bondholders.                                                                                         
                                                                                                                                
Co-Chair Torgerson noted the education projects and the                                                                         
ports and harbors projects would be separated into two new                                                                      
bills that would be introduced at the upcoming Senate floor                                                                     
session.                                                                                                                        
                                                                                                                                
Senator Donley commented that the Administration's position                                                                     
"is all well and good but first of all, begs the question                                                                       
of whether we even bother to have a legislature. If we're                                                                       
going to turn over to a bunch of bureaucrats in Juneau, the                                                                     
authority to appropriate money, the constitution doesn't                                                                        
need to exist. We might as well not have a legislative                                                                          
branch of government to make sure that the people elected                                                                       
to represent the people [indiscernible] some sort of                                                                            
statewide parody when we do things."                                                                                            
                                                                                                                                
Senator Donley continued that no mention was made about                                                                         
budget reductions in the Administration's fiscal plan.  "We                                                                     
need to continue to reduce state spending to try to close                                                                       
the fiscal gap," he asserted.                                                                                                   
                                                                                                                                
Senator Adams rebutted that no bureaucrat has stated the                                                                        
Administration is taking away the legislature's                                                                                 
appropriation powers. The administration only makes                                                                             
suggestions, he stressed. He expounded that it is hard for                                                                      
the public to understand the fiscal gap when there is $2.6                                                                      
billion in the Constitutional Budget Reserve that could                                                                         
address problem areas.                                                                                                          
                                                                                                                                
Co-Chair Torgerson ordered the bill HELD in Committee.                                                                          
ADJOURNED                                                                                                                       
                                                                                                                                
Senator Torgerson adjourned the meeting at 10:37 AM.                                                                            
SFC-00 (16) 04/15/00                                                                                                            

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