Legislature(2013 - 2014)SENATE FINANCE 532

03/27/2013 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 17(FIN) Out of Committee
Moved CSSB 56(JUD) Out of Committee
Bills Previously Heard/Scheduled
Moved SB 62 Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 27, 2013                                                                                            
                         9:05 a.m.                                                                                              
9:05:53 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Meyer  called the Senate Finance  Committee meeting                                                                    
to order at 9:05 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Christine  Marasigan, Staff,  Senator  Kevin Meyer;  Patrick                                                                    
Pilai, Executive Director,  Special Education Service Agency                                                                    
(SESA),  Juneau; Senator  Fred Dyson;  Chuck Kopp,  Chief of                                                                    
Staff,  Senator   Fred  Dyson;  Anne   Carpeneti,  Assistant                                                                    
Attorney  General, Legal  Services Section-Juneau,  Criminal                                                                    
Division,   Department  of   Law;  Quinlan   Steiner  Public                                                                    
Defender,  State of  Alaska; Nancy  Meade, General  Counsel,                                                                    
Alaska  Court  System;  David Scott,  Staff,  Senator  Donny                                                                    
Olson; John Davies, Senior  Researcher, Cold Climate Housing                                                                    
Research  Center;  Elizabeth   Sweeney  Nudelman,  Director,                                                                    
School Finances and Facilities,  Department of Education and                                                                    
Early Development                                                                                                               
PRESENT VIA TELECONFERENCE                                                                                                    
Tom Begich,  Policy Director,  Citizens for  the Educational                                                                    
Advancement of  Alaska's Children, Anchorage;  Dave Herbert,                                                                    
Superintendent, St. Mary's School District                                                                                      
SB  17    EXTEND SPECIAL EDUCATION SERVICE AGENCY                                                                               
          SB 17  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and with  a new fiscal impact                                                                    
          note from  the Department  of Education  and Early                                                                    
SB  56    RECLASSIFYING CERTAIN DRUG OFFENSES                                                                                   
          SB 56  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and  with a new indeterminate                                                                    
          fiscal  note  from  the  Department  of  Law;  and                                                                    
          previously  zero  fiscal  notes:  FN7  (CRT),  FN5                                                                    
          (COR), FN4  (DPS), FN3 (DPS),  FN2 (ADM),  and FN1                                                                    
SB  62    SCHOOL CONST. GRANTS/SMALL MUNICIPALITIES                                                                             
          SB 62  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and with  a new fiscal impact                                                                    
          note from  the Department  of Education  and Early                                                                    
SENATE BILL NO. 17                                                                                                            
     "An Act extending the special education service                                                                            
     agency; and providing for an effective date."                                                                              
9:06:57 AM                                                                                                                    
Vice-Chair Fairclough MOVED to  ADOPT the proposed committee                                                                    
substitute  for  SB  17, Work  Draft  28-LS0289\P  (Mischel,                                                                    
3/20/13). There being NO OBJECTION, it was so ordered.                                                                          
CHRISTINE MARASIGAN,  STAFF, SENATOR KEVIN  MEYER, explained                                                                    
the two  changes in the proposed  committee substitute (CS).                                                                    
She reported that  on Section 1, Page 1, line  6, the amount                                                                    
of $15.75 was changed to $18.65.  In Section 2, Page 2, line                                                                    
3, the  sunset year was changed  from June 30, 2021  to June                                                                    
30, 2017.                                                                                                                       
Co-Chair Meyer  added that the Legislative  Budget and Audit                                                                    
recommended an eight year extension.  He believed the length                                                                    
of time was too long and cut the extension time in half.                                                                        
PATRICK   PILAI,  EXECUTIVE   DIRECTOR,  SPECIAL   EDUCATION                                                                    
SERVICE AGENCY (SESA), JUNEAU, supported  the changes in the                                                                    
legislation.  The reduction  in  the reauthorization  period                                                                    
coupled with  the increased funding  was beneficial  for the                                                                    
agency. The agency did not  receive a funding increase in 15                                                                    
years and a layoff of four employees was imminent.                                                                              
Senator  Dunleavy wondered  how  the bill  helped SESA.  Mr.                                                                    
Pilai responded  that the agency was  "diluting services" in                                                                    
order to operate with a  fund balance. The agency maintained                                                                    
an  average  fund  balance  of  $450  thousand.  The  agency                                                                    
received its funding four times  each year and 25 percent of                                                                    
its  grant  funding  up front,  which  required  expenditure                                                                    
after  reimbursement.  The agency  had  to  maintain a  $400                                                                    
thousand dollar balance to sustain  its cash flow. Without a                                                                    
funding  increase  the agency  was  going  to lay  off  four                                                                    
employees.  The increase  allowed the  agency to  retain two                                                                    
specialists. The board's  desire was to make  cuts to SESA'a                                                                    
administration  in  order  to maintain  services  to  school                                                                    
districts.  The agency  will lay  off one  administrator and                                                                    
one program assistant but retain the two specialists.                                                                           
9:13:20 AM                                                                                                                    
AT EASE                                                                                                                         
9:13:48 AM                                                                                                                    
9:13:57 AM                                                                                                                    
AT EASE                                                                                                                         
9:14:32 AM                                                                                                                    
Ms.  Marasigan   explained  that  a  new   fiscal  note  was                                                                    
forthcoming.  The  original  version   of  the  bill  simply                                                                    
extended the  sunset date. The  CS added half of  the amount                                                                    
of the increment  (36 percent) recommended by the  LBA for a                                                                    
total  of  $375  thousand  ($18.75  multiplied  by  the  ADM                                                                    
(average  daily membership))  added to  the existing  fiscal                                                                    
note total of $2,035.5 million.                                                                                                 
Vice-Chair Fairclough MOVED  to REPORT CSSB 17  (FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
SB  17  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation and  with a new  fiscal impact note  from the                                                                    
Department of Education and Early Development.                                                                                  
9:15:37 AM                                                                                                                    
AT EASE                                                                                                                         
9:21:10 AM                                                                                                                    
SENATE BILL NO. 56                                                                                                            
     "An Act relating to certain crimes involving                                                                               
     controlled substances; and providing for an effective                                                                      
SENATOR FRED  DYSON, stated that the  legislation was taking                                                                    
a "smart approach" to crime.  The approach had established a                                                                    
track record  of reducing recidivism  and lowering  the cost                                                                    
of  incarceration.  He  cited  a  memo  (copy  on  file)  he                                                                    
distributed  which  addressed  some  issues  raised  by  the                                                                    
Department of Law (DOL).                                                                                                        
CHUCK KOPP,  CHIEF OF STAFF, SENATOR  FRED DYSON, summarized                                                                    
the issues. He  noted that DOL raised six  areas of concern.                                                                    
He  identified the  issues: (1)  quantity limits  for felony                                                                    
threshold,  (2)  look  back   period  for  prior  conviction                                                                    
leading  to a  three  strikes felony  charge, (3)  potential                                                                    
negative  impact on  therapeutic  courts,  (4) treatment  of                                                                    
misdemeanants,  (5) impacts  on federal  grant funding,  (6)                                                                    
questioning seriousness of Class A misdemeanor charge.                                                                          
Mr.  Kopp  detailed  that SB  56  proposed  felony  quantity                                                                    
limits mirroring the  average of limits adopted  by 14 other                                                                    
jurisdictions  in other  states. The  limits in  SB 56  were                                                                    
"parallel"   to   limits   Wyoming  adopted.   The   fiscal,                                                                    
geographical, and political  characteristics of Wyoming were                                                                    
similar  to  Alaska.  As a  result,  Wyoming  experienced  a                                                                    
reduction in violent crime and "person" crime.                                                                                  
Mr. Kopp  pointed to the  look back period. He  relayed that                                                                    
the sponsors determined  the five year look  back period was                                                                    
adequate. The ten  year period was too  punitive for someone                                                                    
taking recovery seriously.                                                                                                      
Mr. Kopp reported that the  sponsors worked closely with the                                                                    
therapeutic  courts  and  no one  raised  concerns.  On  the                                                                    
contrary,  the therapeutic  courts  were  supportive of  the                                                                    
Mr.  Kopp explained  that currently  the  courts can  assign                                                                    
convicted  misdemeanants convicted  of  substance abuse  and                                                                    
other  drug offenses  to the  alcohol safety  action program                                                                    
along  with  a  probation  officer from  the  Department  of                                                                    
Health and Social Services. He  continued that there were no                                                                    
reductions in federal grant funding  due to the legislation.                                                                    
No  other state  that adopted  similar measures  experienced                                                                    
fiscal impacts. He stressed that  SB 56 did not legalize any                                                                    
Mr.  Kopp emphasized  that the  law condemned  possession of                                                                    
dangerous drugs.  He listed other serious  crimes classified                                                                    
as Class A  misdemeanors. He pointed out  that Fourth Degree                                                                    
assault  was  currently  a Class  A  misdemeanor.  A  second                                                                    
charge of  driving under the  influence (DUI) was a  Class A                                                                    
misdemeanor.  Endangering  the welfare  of  a  child in  the                                                                    
first degree or  vulnerable adult in the  second degree, and                                                                    
sexual abuse of a minor in  the fourth degree were all Class                                                                    
A misdemeanors. He  emphasized the serous nature  of Class A                                                                    
misdemeanor crimes. The  sentence carried up to  one year in                                                                    
prison and a $10 thousand  fine. The sentence was not merely                                                                    
a  "slap  on the  wrist."  The  sponsors believed  that  the                                                                    
charge  was appropriate  for a  small quantity,  non-violent                                                                    
drug offender.                                                                                                                  
Senator  Bishop  wanted  reassurance  that  the  legislation                                                                    
would not threaten the existence  of therapeutic courts. Mr.                                                                    
Kopp reassured  the Senator  that SB 56  did not  impact the                                                                    
therapeutic courts.                                                                                                             
9:29:42 AM                                                                                                                    
ANNE CARPENETI,  ASSISTANT ATTORNEY GENERAL,  LEGAL SERVICES                                                                    
SECTION-JUNEAU,  CRIMINAL   DIVISION,  DEPARTMENT   OF  LAW,                                                                    
conveyed  that the  Department of  Law (DOL)  would continue                                                                    
discussions with  the sponsor over the  interim to "consider                                                                    
more  information about  the  bill."  The department  shared                                                                    
some  of  the concerns  expressed  by  law enforcement.  The                                                                    
department wanted a safe reduction  in the prison population                                                                    
and   supported  the   premise  of   the  legislation.   The                                                                    
department  believed resolution  was  possible with  further                                                                    
scrutiny and working closely with the sponsor.                                                                                  
Co-Chair Meyer  commented that he  supported the  concept of                                                                    
"smart justice"  and thought  it was  a "good  approach." He                                                                    
appreciated  DOL's  attempt  to  work with  the  sponsor  to                                                                    
address concerns.                                                                                                               
Co-Chair  Kelly  asked  for a  detailed  discussion  on  the                                                                    
department's concerns regarding  the legislation's impact on                                                                    
the  therapeutic   courts.  Mr.  Kopp  explained   that  DOL                                                                    
cautioned that  reclassifying small  quantity offenses  to a                                                                    
misdemeanor prevented  sending an  offender who was  a felon                                                                    
to  therapeutic  court.  He countered  that  "there  was  no                                                                    
shortage  of  addicts  who  were  eligible  for  therapeutic                                                                    
court." Many  addicts become felons  and were  eligible even                                                                    
with a lesser  charge. He felt that the  concern was "simply                                                                    
not an issue."                                                                                                                  
QUINLAN   STEINER,  PUBLIC   DEFENDER,   STATE  OF   ALASKA,                                                                    
introduced himself for the record.                                                                                              
Senator  Bishop  asked   whether  the  legislation  affected                                                                    
eligibility for the therapeutic courts.                                                                                         
NANCY MEADE, GENERAL COUNSEL,  ALASKA COURT SYSTEM, answered                                                                    
that certain  individuals who were eligible  for felony drug                                                                    
court would not be eligible  if the crimes were declassified                                                                    
to misdemeanors;  the offenders  would no longer  be felons.                                                                    
She detailed that out of  twelve therapeutic courts only one                                                                    
was a felony drug court  with twelve participants. The court                                                                    
did  not anticipate  either a  shortage of  participants for                                                                    
the  felony  drug court  or  an  impact on  the  therapeutic                                                                    
courts if SB 56 became law.                                                                                                     
Vice-Chair Fairclough  reviewed the fiscal notes.  She noted                                                                    
FN1 (ADM), allocated  to the Office of  Public Advocacy with                                                                    
no  fiscal impact  and  a possible  reduction  in costs  for                                                                    
constitutionally  mandated defense  services. She  turned to                                                                    
FN2 (ADM)  allocated to the  Public Defender Agency  with no                                                                    
fiscal  impact and  a reduction  in the  cost of  processing                                                                    
individual cases  and reduced overall agency  budget growth.                                                                    
She cited  FN3 (COR) allocated  to the Alaska  State Trooper                                                                    
Detachments with no  fiscal impact due to no  impacts to the                                                                    
investigative process regarding the  offenses. She noted FN4                                                                    
(DPS)  allocated  for  Laboratory Services  with  no  fiscal                                                                    
impact. She  moved to FN5  (COR) allocated to the  Office of                                                                    
the  Commissioner  with  no fiscal  impact  but  the  actual                                                                    
impact of the legislation  was unknown. The department would                                                                    
monitor  the  potential  impacts  of  the  legislation.  She                                                                    
highlighted  the  new  indeterminate fiscal  note  from  the                                                                    
Department   of   Law   allocated   for   Criminal   Justice                                                                    
Litigation. The  department noted  that reducing  an offense                                                                    
from  a  felony to  a  misdemeanor  created a  savings,  but                                                                    
sometimes there  were unforeseen consequences.  She reviewed                                                                    
FN7  (CRT)  appropriated  to Trial  courts  with  no  fiscal                                                                    
9:39:47 AM                                                                                                                    
Vice-Chair  Fairclough   MOVED  to  REPORT  SB   56  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
SB  56  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and with  a  new  indeterminate fiscal  note                                                                    
from  the  Department of  Law;  and  previously zero  fiscal                                                                    
notes:  FN7 (CRT),  FN5  (COR), FN4  (DPS),  FN3 (DPS),  FN2                                                                    
(ADM), and FN1 (ADM).                                                                                                           
9:43:53 AM                                                                                                                    
AT EASE                                                                                                                         
9:47:38 AM                                                                                                                    
SENATE BILL NO. 62                                                                                                            
     "An Act relating to grants for school construction."                                                                       
Ms. Marasigan explained the new  fiscal note. The new fiscal                                                                    
note  facilitated  Fund  Transfers from  Designated  Savings                                                                    
(UGF) to the Regional  Education Attendance Area School Fund                                                                    
(REAA). She  consulted with the Department  of Education and                                                                    
Early  Development (DEED)  finance director  as well  as the                                                                    
Legislative    Finance   Division,    which   resulted    in                                                                    
restructuring  the  fiscal  note to  include  the  estimated                                                                    
capital  costs of  $618.3  thousand  instead of  incorrectly                                                                    
allocating  operating  funds  to  REAA since  the  fund  was                                                                    
already established.  The legislation added  five additional                                                                    
schools to the REAA funds.                                                                                                      
Vice-Chair Fairclough asked whether  the $618.3 thousand was                                                                    
appropriated from  the REAA fund. Ms.  Marasigan answered in                                                                    
the affirmative and responded that  the fiscal note analysis                                                                    
reported  that  the  $35.2 million  REAA  fund  was  already                                                                    
included in  the FY14 Governor's capital  budget: therefore,                                                                    
the allocation was removed from the fiscal note.                                                                                
Vice-Chair Fairclough  related that the $618.3  thousand was                                                                    
allocated from  the capitalization  of the REAA  fund versus                                                                    
the general fund. Ms. Marasigan affirmed.                                                                                       
Co-Chair Kelly  asked for a discussion  on the ramifications                                                                    
of the  Kasayulie case.  Senator Olson  detailed that  SB 62                                                                    
allowed small  municipal school districts to  participate in                                                                    
school  aid for  construction under  REAA. School  districts                                                                    
with 300  or less  students qualified under  the guidelines.                                                                    
Only  five  schools  were  eligible. Not  all  of  the  five                                                                    
schools were requesting funding at this time.                                                                                   
DAVID  SCOTT, STAFF,  SENATOR  DONNY  OLSON, explained  that                                                                    
school  construction  occurred  in  two  different  ways  in                                                                    
Alaska. One way was  through bonding and state reimbursement                                                                    
split; 70  percent state and 30  percent municipality. Small                                                                    
school districts without the economic  capacity to bond were                                                                    
able to obtain school  construction funding through the REAA                                                                    
fund.  The  fund  was  formula  driven.  Some  small  school                                                                    
districts did not  qualify for the REAA fund  but lacked the                                                                    
ability to bond. The legislation  closed the gap by allowing                                                                    
the five schools to obtain REAA funding.                                                                                        
Co-Chair  Kelly questioned  whether  the  five schools  were                                                                    
part of  the Kasayulie  Case. Mr.  Scott answered  that only                                                                    
one school was a part of the Kasayulie case.                                                                                    
9:56:18 AM                                                                                                                    
Senator Hoffman  confirmed that St.  Mary's was part  of the                                                                    
Kasayulie case.  He explained  that St.  Mary's was  a first                                                                    
class  city and  not an  REAA. As  a first  class city,  St.                                                                    
Mary's was  responsible for school replacement,  but did not                                                                    
have the  capacity to  bond. The  city was  left out  of the                                                                    
lawsuit,  which only  addressed REAA  schools. He  expounded                                                                    
that two options  existed to correct the  situation. One way                                                                    
changed   how   first    class   cities   addressed   school                                                                    
construction  funding   by  rescinding   responsibility  for                                                                    
school construction but still  required participation in its                                                                    
school funding. The  second option was the  provision in the                                                                    
Co-Chair  Kelly surmised  that the  construction money  came                                                                    
from the REAA fund.                                                                                                             
Vice-Chair Fairclough clarified that  the Kasayulie Case was                                                                    
a claim  against the state  that rural schools  were treated                                                                    
unfairly  and not  adequately funded.  The attorney  general                                                                    
negotiated  an   agreement  that   required  the   state  to                                                                    
contribute approximately  $36 million  each year,  capped at                                                                    
$70  million. The  legislation  mandated  an additional  $35                                                                    
million deposit  into the fund.  She stated her  support for                                                                    
the legislation  and wanted to  clarify for the  record that                                                                    
SB  62  expanded  the  statute  to  allow  more  schools  to                                                                    
Senator  Hoffman  interjected  and  cited  the  fiscal  note                                                                    
analysis, which  defined that  the current  formula included                                                                    
an  increase of  $35,818,300 and  the additional  funding of                                                                    
$618,300 was added to address the non-REAA schools.                                                                             
Vice-Chair  Fairclough  detailed  that  the  Kasayulie  Case                                                                    
agreement  generated  a  list  of  schools  to  receive  top                                                                    
priority  funding  from the  state.  The  legislation was  a                                                                    
remedy to address the list.                                                                                                     
Senator  Olson commented  that St.  Mary's  was an  original                                                                    
plaintiff  in the  case, but  was removed  during settlement                                                                    
negotiations. The  legislation added St. Mary's  school back                                                                    
as  a  priority.  The  $70  million cap  to  the  REAA  fund                                                                    
Co-Chair  Meyer added  that whenever  the 70  percent to  30                                                                    
percent split  was utilized for urban  school construction a                                                                    
specified  amount  from  formula was  appropriated  to  REAA                                                                    
schools up to the $70 million cap.                                                                                              
Senator   Olson  asked   whether  the   legislation  was   a                                                                    
"reputable"  solution to  close  the case.  He requested  an                                                                    
explanation  of  why the  first  class  cities, without  the                                                                    
capacity to bond, were removed from the case.                                                                                   
TOM BEGICH,  POLICY DIRECTOR,  CITIZENS FOR  THE EDUCATIONAL                                                                    
ADVANCEMENT   OF    ALASKA'S   CHILDREN,    ANCHORAGE   (via                                                                    
teleconference), responded that the  legislation [SB 237] to                                                                    
address  the Kasayulie  case in  2010, prior  to the  actual                                                                    
settlement,  authorized funding  through the  REAA fund  for                                                                    
simplicity's sake. The legislation  in 2010 helped drive the                                                                    
settlement.  When the  settlement occurred  in 2012,  it did                                                                    
not  include the  single site  school districts.  St. Mary's                                                                    
was originally  third on the list,  but not one of  the five                                                                    
included   in  the   negotiated  settlement.   However,  the                                                                    
settlement did not specifically  address REAA's; it spoke to                                                                    
rural versus  urban inequities  in rural  education funding.                                                                    
The  legislation legitimately  rectified  the oversight  and                                                                    
allowed  access   to  the  REAA  funds.   The  small  school                                                                    
districts,  even though  they were  first class  cities, did                                                                    
not  possess  the  economic  capability  to  finance  school                                                                    
construction. He noted the REAA  school districts support of                                                                    
the legislation.  He added that  SB 62 provided a  "fair and                                                                    
equitable" mechanism  to fund rural schools  consistent with                                                                    
the Kasayulie decision.                                                                                                         
10:06:33 AM                                                                                                                   
Senator  Olson  asked  what the  advantage  was  to  receive                                                                    
funding  now through  the  legislation  rather than  waiting                                                                    
several more years.                                                                                                             
DAVE  HERBERT, SUPERINTENDENT,  ST.  MARY'S SCHOOL  DISTRICT                                                                    
(via    teleconference),    commented    that    the    five                                                                    
municipalities listed in the bill  did not have the capacity                                                                    
to bond for  school construction and were  not REAA schools.                                                                    
The legislation  provided a funding source  through the REAA                                                                    
funds  to the  five schools.  He  urged for  support of  the                                                                    
Co-Chair   Kelly  communicated   that  he   would  offer   a                                                                    
conceptual amendment to the title of the bill.                                                                                  
JOHN  DAVIES,   SENIOR  RESEARCHER,  COLD   CLIMATE  HOUSING                                                                    
RESEARCH  CENTER, explained  the amendment.  He stated  that                                                                    
Ryan Junior  High School in  Fairbanks was in  disrepair and                                                                    
renovation  due to  structural issues  cost $46  million; $9                                                                    
million more than new construction.  The problem lied in the                                                                    
bonding  used  to  finance school  renovation  construction,                                                                    
which called for  a 60 percent/40 percent  split between the                                                                    
state and  municipality. He believed the  split made passage                                                                    
of the bond problematic. The  school was deemed unsafe and a                                                                    
delay in  construction was unadvisable; the  bonding measure                                                                    
needed to pass  as soon as possible. He  delineated that the                                                                    
proposed  amendment  specified  that only  in  circumstances                                                                    
when  new construction  was less  expensive than  renovation                                                                    
the  project  became  eligible  for  70  percent/30  percent                                                                    
bonding instead of 60 percent/40 percent.                                                                                       
Co-Chair Kelly explained  that the reason he  chose to amend                                                                    
the title as  the mechanism to address the  issue was timing                                                                    
for the  bond. He did not  want to slow passage  of the bill                                                                    
and would change  the title in the Senate and  work with the                                                                    
house to add the specific language.                                                                                             
Co-Chair  Meyer thought  that if  new construction  was more                                                                    
cost  effective  than  renovation, more  flexibility  should                                                                    
already exist in statute.                                                                                                       
ELIZABETH  SWEENEY NUDELMAN,  DIRECTOR, SCHOOL  FINANCES AND                                                                    
FACILITIES, DEPARTMENT  OF EDUCATION AND  EARLY DEVELOPMENT,                                                                    
explained  that the  statute addressed  the amount  of space                                                                    
that  the  State  of  Alaska  wanted  to  devote  to  school                                                                    
construction, based  on a  calculation using  membership and                                                                    
square footage.  The two methods  accessible for  new school                                                                    
construction  were grant  lists  and the  debt program.  The                                                                    
grant list  allowed for repair  and remodel under  the major                                                                    
maintenance list. Eligibility for  the construction list was                                                                    
based  on  space  criteria.  The  Ryan  School  project  was                                                                    
submitted under  the major maintenance  list because  it did                                                                    
not meet  the space  requirements for new  construction. The                                                                    
grant program  did not provide options  for replacement. The                                                                    
second option  available to Fairbanks was  the debt program.                                                                    
The  70  percent  reimbursement   was  based  on  the  space                                                                    
criteria; if  not met the 60  percent reimbursement applied.                                                                    
She concluded that  the 70 percent option  was not available                                                                    
to Fairbanks for the Ryan project.                                                                                              
10:16:21 AM                                                                                                                   
Vice-Chair  Fairclough  wondered   if  the  proposed  square                                                                    
footage  of  the Ryan  project  added  capacity. Mr.  Davies                                                                    
responded that  the replacement structure  was approximately                                                                    
100 square  feet larger, but  the intent of the  project was                                                                    
replacement  of  the  existing   building  and  not  to  add                                                                    
capacity.  He reiterated  that the  cost to  rebuild was  $9                                                                    
million cheaper than to renovate.                                                                                               
Ms. Nudelman  restated that  the current  program prohibited                                                                    
new  school  construction  in this  instance.  The  existing                                                                    
school's  space  was  counted towards  total  space  in  the                                                                    
Vice-Chair  Fairclough   questioned  whether   the  existing                                                                    
structure could  be condemned or  not counted.  Ms. Nudelman                                                                    
replied that  space could be  removed from  the calculation,                                                                    
and the  school could be  removed from the  Fairbanks School                                                                    
District's space allocation under certain conditions.                                                                           
Vice-Chair Fairclough  wondered who determined  what schools                                                                    
were removed from  the list. Ms. Nudelman  answered that the                                                                    
school would have  to provide evidence to  the department as                                                                    
to why the school was no longer in use.                                                                                         
Vice-Chair  Fairclough  wondered  whether the  issue  was  a                                                                    
regulation  rather than  a state  statute. Ms.  Nudelman did                                                                    
not know, but agreed to provide further information.                                                                            
Senator  Hoffman guessed  that eliminating  the space  would                                                                    
not solve  the problem. He  thought that once  eliminated it                                                                    
cannot  be  replaced.  Ms. Nudelman  agreed  and  wanted  to                                                                    
review the space allocation for Fairbanks.                                                                                      
Co-Chair Kelly surmised  that the building would  have to be                                                                    
made available  for another  purpose to  qualify for  the 70                                                                    
percent reimbursement.  Ms. Nudelman replied that  the space                                                                    
would have  to be  removed but was  unsure if  removal would                                                                    
solve the problem.                                                                                                              
Mr.  Davies  reported  that  the  other  criterion  for  new                                                                    
construction besides space was  increased enrollment and the                                                                    
school did not qualify under that criterion.                                                                                    
Vice-Chair Fairclough wondered if  the existing school would                                                                    
be  demolished. Mr.  Davies  responded  that demolition  was                                                                    
included in the cost.                                                                                                           
Co-Chair Kelly  described the seismic issue.  The school had                                                                    
seismic "issues"  and the roof was  constructed of concrete.                                                                    
An  earthquake   would  cause   serious  harm.   Mr.  Davies                                                                    
responded  in  the  affirmative.  He  added  that  the  city                                                                    
building official  notified that  the district "not  use the                                                                    
Senator  Hoffman   asked  if   condemning  the   school  and                                                                    
requiring  new  construction  built  with  additional  space                                                                    
solved  the problem.  Ms. Nudelman  intended to  examine the                                                                    
issue  and discuss  it  further. She  could  not answer  the                                                                    
question without additional review.                                                                                             
10:26:13 AM                                                                                                                   
Senator Dunleavy  commented that  the legislation  might not                                                                    
be  the best  way to  solve the  problem, especially  if the                                                                    
issue was  regulatory and not statute  driven. The Fairbanks                                                                    
issue was very different than what SB 62 addressed.                                                                             
10:27:04 AM                                                                                                                   
AT EASE                                                                                                                         
10:28:43 AM                                                                                                                   
Co-Chair  Meyer  felt  that  the  situation  was  unique  to                                                                    
Fairbanks and did not feel SB  62 was the correct vehicle to                                                                    
address the situation.                                                                                                          
Vice-Chair  Fairclough   MOVED  to  REPORT  SB   62  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
SB  62  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation and  with a new  fiscal impact note  from the                                                                    
Department of Education and Early Development.                                                                                  
10:30:58 AM                                                                                                                   
The meeting was adjourned at 10:30 a.m.                                                                                         

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