Legislature(2021 - 2022)SENATE FINANCE 532

04/21/2022 09:00 AM Senate FINANCE

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                 SENATE FINANCE COMMITTEE                                                                                       
                      April 21, 2022                                                                                            
                         9:04 a.m.                                                                                              
9:04:29 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Bishop called the  Senate Finance Committee meeting                                                                    
to order at 9:04 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative   Kreiss-Tomkins,  Sponsor;   Brandon  Locke,                                                                    
Director, World Languages  and Immersion Programs, Anchorage                                                                    
School  District; Anne  Rittgers,  Staff for  Representative                                                                    
LeBon; Deven Mitchell,  Executive Director, Alaska Municipal                                                                    
Bond Bank Authority, Department of Revenue.                                                                                     
PRESENT VIA TELECONFERENCE                                                                                                    
Sondra  Meredith, Administrator  for Teacher  Certification,                                                                    
Department  of   Education  and  Early   Development;  Peggy                                                                    
Rankin,  Senior   Director,  Talent   Management,  Anchorage                                                                    
School District;  Representative Bart LeBon,  Sponsor; Myron                                                                    
Dosch,  Chief Finance  Officer, University  of Alaska;  Luke                                                                    
Welles, Chairman, Alaska Municipal Bond Bank.                                                                                   
CSHB 19(EDC)                                                                                                                    
     LIMITED TEACHER CERTIFICATES; LANGUAGES                                                                                    
          CSHB 19(EDC) was HEARD and HELD in committee for                                                                      
          further consideration.                                                                                                
HB 127    MUNI BOND BANK: UA, LOAN AND BOND LIMITS                                                                              
          HB 127 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
CS FOR HOUSE BILL NO. 19(EDC)                                                                                                 
     "An Act relating to instruction in a language other                                                                        
     than English; and establishing limited language                                                                            
     immersion teacher certificates."                                                                                           
9:05:26 AM                                                                                                                    
REPRESENTATIVE KREISS-TOMKINS, SPONSOR,  relayed that it was                                                                    
the third  legislature to  hear the  bill. He  asserted that                                                                    
the bill  spoke to  a growing  demand for  emergent language                                                                    
programs  in Alaska  schools, both  in  world languages  and                                                                    
Alaska Native languages. He cited  that the Anchorage School                                                                    
District  (ASD)  and  the Matanuska-Susitna  Borough  School                                                                    
District  had  extremely  popular and  successful  immersion                                                                    
language programs  that had  been nationally  recognized. He                                                                    
commented  on  the  growing   interest  in  Native  language                                                                    
immersion programs all over the state.                                                                                          
Representative  Kreiss-Tomkins   shared  that  one   of  the                                                                    
limiting  factors to  starting  immersion language  programs                                                                    
had been the inability to  attract and recruit teachers that                                                                    
were fluent  in the  target language.  He summarized  that a                                                                    
language  immersion  program   was  an  elementary  language                                                                    
program that immersed students while  teachers taught in the                                                                    
target  language for  a majority  of the  day. The  students                                                                    
advanced in the language year  by year and the ratio between                                                                    
the target language and English  was reduced and by the time                                                                    
the student left the program they would be fully fluent.                                                                        
Representative  Kreiss-Tomkins  spoke  to the  challenge  of                                                                    
finding teachers.  He shared that programs  had been seeking                                                                    
greater  flexibility to  attract  teachers,  and that  there                                                                    
were many  unique circumstances that arose  around immersion                                                                    
language programs.  He noted  that world  language immersion                                                                    
programs often sought to recruit  a teacher from the country                                                                    
of the  target language.  He used the  example of  a teacher                                                                    
from Japan that  taught in Anchorage in  contrast with fully                                                                    
fluent Alaska Native language speakers from rural Alaska.                                                                       
9:08:42 AM                                                                                                                    
Representative  Kreiss-Tomkins  continued  his  remarks.  He                                                                    
characterized the bill  as a calibrated approach  to try and                                                                    
provide flexibility  to school  districts seeking  to create                                                                    
the immersion programs.  The goal was to  provide more tools                                                                    
to  attract  and  retain  teachers   to  make  the  programs                                                                    
reality, while still having state  and local sideboards that                                                                    
approved teachers and  promulgated regulations. He mentioned                                                                    
conversations  with the  Department of  Education and  Early                                                                    
Development  (DEED). He  specified  that it  was the  bills                                                                     
intent   that   the   department   interpret   dual-language                                                                    
education programs  in the  Lower Kuskokwim  School District                                                                    
(LKSD) be included in the language of the bill.                                                                                 
Senator Hoffman asked where LKSD was located.                                                                                   
Representative  Kreiss-Tomkins understood  that LKSD  was an                                                                    
exemplar of Alaskan education.                                                                                                  
Senator  Hoffman  relayed  that  LKSD stood  for  the  Lower                                                                    
Kuskokwim School District.                                                                                                      
9:10:37 AM                                                                                                                    
Senator Olson asked if the  fiscal note was all-inclusive or                                                                    
if there would be liability to the school districts.                                                                            
Representative  Kreiss-Tomkins  informed   that  the  $6,000                                                                    
fiscal note covered only the  cost of regulation writing for                                                                    
the  department. Any  costs associated  with  setting up  an                                                                    
immersion language program would be borne by the district.                                                                      
Senator Olson  asked if school districts  were supportive of                                                                    
the bill.                                                                                                                       
Representative  Kreiss-Tomkins thought  there was  universal                                                                    
support  for the  bill from  the  K-12 education  community,                                                                    
including urban  and rural districts from  across the state.                                                                    
He  could   not  recall  exactly  which   organizations  had                                                                    
supported the  different iterations of the  legislation, but                                                                    
he thought  the Association  of Alaska School  Boards (AASB)                                                                    
and   the    Superintendents   Association    had   positive                                                                    
orientations toward the legislation.                                                                                            
Senator Olson  asked if he  had support letters  from school                                                                    
districts even  thought they were  financial liable  for the                                                                    
Representative  Kreiss-Tomkins answered  in the  affirmative                                                                    
and offered  to produce  the list  of school  districts that                                                                    
had  taken   a  formal  position  on   the  legislation.  He                                                                    
addressed the  liability question. He stated  that there was                                                                    
not  any extraordinary  liability that  would be  assumed by                                                                    
school districts, and many  were already operating immersion                                                                    
language programs as they would  any other program. The bill                                                                    
did not  change anything  or create any  additional exposure                                                                    
or liability for school districts.                                                                                              
Co-Chair  Bishop  asked  Representative  Kreiss-Tompkins  to                                                                    
repeat the latter part of his answer.                                                                                           
Representative  Kreiss-Tompkins  reiterated that  there  was                                                                    
nothing  in  the  bill  that   would  create  new  exposure,                                                                    
liability,   responsibility,   or    mandates   for   school                                                                    
districts. The  bill just  gave districts  a new  option for                                                                    
teacher recruitment.                                                                                                            
Senator Wilson  asked if teachers  would still have  to meet                                                                    
all other requirements for teaching  under the provisions of                                                                    
the bill.  He mentioned  the requirements for  Alaska Native                                                                    
cultural education and domestic  violence training that were                                                                    
established for certificated teachers.                                                                                          
Representative Kreiss-Tompkins deferred  the question to the                                                                    
Department of Education and  Early Development (DEED)m which                                                                    
was authorized  to write the  regulations to figure  out the                                                                    
9:14:30 AM                                                                                                                    
SONDRA  MEREDITH, ADMINISTRATOR  FOR TEACHER  CERTIFICATION,                                                                    
DEPARTMENT   OF  EDUCATION   AND   EARLY  DEVELOPMENT   (via                                                                    
teleconference),   asked  Senator   Wilson  to   repeat  his                                                                    
Senator  Wilson  asked  if  the   new  type  of  certificate                                                                    
proposed in  the bill  would require  the same  training and                                                                    
professional  development  courses   currently  required  of                                                                    
Ms.   Meredith  stated   that  there   would  be   the  same                                                                    
requirements  around mandatory  training that  all educators                                                                    
were required  to do.  The bill  allowed for  other criteria                                                                    
besides  a   bachelor's  degree  and   testing  requirements                                                                    
currently  required for  regularly  certified teachers.  The                                                                    
board would have to regulate  the alternative. She discussed                                                                    
the Type  M certificate,  which allowed for  requirements to                                                                    
be substituted with various factors.                                                                                            
Co-Chair Bishop  asked if the  state school  board supported                                                                    
the bill.                                                                                                                       
Representative  Kreiss-Tompkins did  not believe  the Alaska                                                                    
Board of Education had taken a position on the bill.                                                                            
Co-Chair Bishop  clarified that he  asked because  the board                                                                    
would have to  meet and approve the new  type of certificate                                                                    
proposed in the bill.                                                                                                           
Representative    Kreiss-Tompkins    relayed    that    DEED                                                                    
Commissioner  Michael Johnson  had  spoken in  favor of  the                                                                    
legislation  in  prior  hearings.  He  recognized  that  the                                                                    
commissioner  was not  a board  member,  although he  worked                                                                    
with the board.                                                                                                                 
Co-Chair Bishop asked how long  it would take the department                                                                    
to  make  changes  if  the   board  were  to  make  the  new                                                                    
certificate proposed din the bill.                                                                                              
Ms.  Meredith  stated   that  considering  the  department's                                                                    
regulatory  process, it  would  take between  six to  twelve                                                                    
months to regulate the certificate.                                                                                             
9:18:48 AM                                                                                                                    
PEGGY RANKIN, SENIOR  DIRECTOR, TALENT MANAGEMENT, ANCHORAGE                                                                    
SCHOOL DISTRICT  (via teleconference),  spoke in  support of                                                                    
the  bill.  She  noted  that ASD  Superintendent  Dr.  Deena                                                                    
Bishop  had submitted  a letter  in support  of the  bill on                                                                    
April 22,  2021, and had  also testified on the  matter. She                                                                    
commented  that education  had changed  in  the past  twenty                                                                    
years   and  the   bill  proposed   to  provide   additional                                                                    
opportunities for  students. She thought the  bill supported                                                                    
immersion programs.                                                                                                             
9:19:57 AM                                                                                                                    
BRANDON  LOCKE,  DIRECTOR,  WORLD  LANGUAGES  AND  IMMERSION                                                                    
PROGRAMS,  ANCHORAGE SCHOOL  DISTRICT, spoke  in support  of                                                                    
the bill.  He echoed Ms. Rankins   comments. He acknowledged                                                                    
a nationwide  teacher shortage and asserted  that there were                                                                    
even greater challenges in Alaska.  He cited that there were                                                                    
about  8,000  students  in a  world  language  or  immersion                                                                    
program in  ASD. Specifically, there were  2,600 students in                                                                    
K-12  immersion, including  Spanish, Japanese,  Russian, and                                                                    
Mr. Locke  cited there  were three  ASD high  school seniors                                                                    
currently employed  by the National Security  Agency working                                                                    
on  Joint   Base  Elmendorf-Richardson  (JBER)   working  as                                                                    
linguist interns.  He mentioned growing programs  in French,                                                                    
Mandarin, and Yupik. He noted  that finding teachers for the                                                                    
programs was next to impossible,  and the district often had                                                                    
to  hire  from  outside   the  country  where  certification                                                                    
processes  were  very  different.  He  cited  challenges  in                                                                    
hiring   foreign  teachers.   He  emphasized   working  with                                                                    
international   teachers  and   supporting   them  to   fill                                                                    
difficult-to-fill  positions in  immersion programs.  He did                                                                    
not see  the bill  as a  way to   open the  floodgates,  but                                                                    
rather  it  would be  up  to  each school  districts   human                                                                    
resources process to hire the  most qualified people for the                                                                    
9:23:05 AM                                                                                                                    
Co-Chair Bishop OPENED public testimony.                                                                                        
9:23:21 AM                                                                                                                    
Co-Chair Bishop CLOSED public testimony.                                                                                        
Co-Chair Bishop set the bill aside.                                                                                             
HB  19  was   HEARD  and  HELD  in   committee  for  further                                                                    
HOUSE BILL NO. 127                                                                                                            
     "An Act relating to the Alaska Municipal Bond Bank                                                                         
9:23:36 AM                                                                                                                    
Co-Chair Bishop relayed that it was the first hearing of HB
9:24:03 AM                                                                                                                    
AT EASE                                                                                                                         
9:24:26 AM                                                                                                                    
Co-Chair Bishop relayed that it was the committee's                                                                             
intention to hear a bill introduction for HB 127 and take                                                                       
invited and public testimony.                                                                                                   
9:24:59 AM                                                                                                                    
REPRESENTATIVE BART LEBON, SPONSOR (via teleconference),                                                                        
read from a Sponsor Statement:                                                                                                  
     This  bill   expands  the   authority  of   the  Alaska                                                                    
     Municipal   Bond  Bank   Authority  regarding   bonding                                                                    
     capacity  to  the  University of  Alaska  and  regional                                                                    
     health organizations.                                                                                                      
     Regarding  the  University  of Alaska  (UA),  the  bill                                                                    
     proposes two changes:                                                                                                      
          ? Removes the project scope limiting Alaska                                                                           
          Municipal Bond Bank Authority participation to                                                                        
          only heating or energy projects                                                                                       
          ? Raises the UA project participation cap from                                                                        
          $87,500,000 to $500,000,000                                                                                           
     Previously  the  University  used Municipal  Bond  Bank                                                                    
     participation  for funding  of  the  combined heat  and                                                                    
     power  plant at  the  University  of Alaska  Fairbanks.                                                                    
     This change is intended  to provide the University with                                                                    
     expanded tools  for financing or  refinancing, allowing                                                                    
     the  University to  leverage the  bond  ratings of  the                                                                    
     Alaska Municipal  Bond Bank Authority  if advantageous.                                                                    
     This additional financing tool is  not intended to be a                                                                    
     substitute  for  capital   appropriations  through  the                                                                    
     Regarding  regional  health   organizations,  the  bill                                                                    
     proposes these changes:                                                                                                    
          ? Removes the 49% Alaska Municipal Bond Bank                                                                          
          Authority single-project participation cap                                                                            
          ? Raises the cap for all regional health                                                                              
          organization   projects   from   $205,000,000   to                                                                    
     This  change is  intended to  expand opportunities  for                                                                    
     regional  health   organizations  to  use   the  Alaska                                                                    
     Municipal  Bond  Bank  Authority.  In  accordance  with                                                                    
     existing statute  AS 44.85.010, the Bond  Bank provides                                                                    
     capital   funds  through   loans  to   regional  health                                                                    
     organizations  "when  the  commissioner of  health  and                                                                    
     human  services anticipates  a state  financial benefit                                                                    
     and  an  increase in  regional  quality  of care."  The                                                                    
     financial  benefit   is  realized   by  the   state  by                                                                    
     capturing  additional  Federal Medicaid  reimbursement,                                                                    
     assisting the State in reducing Medicaid expenditures.                                                                     
     I   would   appreciate   your  support   in   expanding                                                                    
     opportunities   for  the   University  of   Alaska  and                                                                    
     Alaska's regional  health organizations to  utilize the                                                                    
     Alaska Municipal Bond Bank Authority.                                                                                      
Senator Wilson thought  Representative LeBon was referencing                                                                    
the regional  health corporations in Seward  and Sitka being                                                                    
able to benefit from the program.                                                                                               
9:28:45 AM                                                                                                                    
ANNE RITTGERS,  STAFF FOR REPRESENTATIVE LEBON,  answered in                                                                    
the affirmative.                                                                                                                
Co-Chair  Stedman  referenced  federal loans  asked  if  the                                                                    
expansion   of   the   Southeast  Alaska   Regional   Health                                                                    
Consortium (SEARHC)  Hospital in  Sitka was involved  in the                                                                    
bill or if SEARHC had requested expansion of the cap.                                                                           
9:29:46 AM                                                                                                                    
DEVEN  MITCHELL, EXECUTIVE  DIRECTOR, ALASKA  MUNICIPAL BOND                                                                    
BANK AUTHORITY,  DEPARTMENT OF  REVENUE, explained  that the                                                                    
facility in  Sitka had  already been  financed. There  was a                                                                    
bond secured by the revenues of  SEARHC that were able to be                                                                    
pledged. He had  discussions with staff of  SEARHC about the                                                                    
protentional  of   the  bond   bank  participating   in  the                                                                    
financing. Some  of the limitations  that would  be remedied                                                                    
in the  bill had held  SEARHC back. He noted  that currently                                                                    
an entity  must have two  financings to fund  an improvement                                                                    
to utilize the bond  bank. He discussed project limitations.                                                                    
He   recalled   that   SEARHC  had   found   that   it   was                                                                    
administratively  easier  to   one  transaction  instead  of                                                                    
multiple transactions.                                                                                                          
Mr.  Mitchell  continued  that regional  health  authorities                                                                    
were added  to the list  of allowed borrowers from  the bond                                                                    
bank,  and it  was not  possible to  obtain investment-grade                                                                    
credit  ratings  form  the  market.  There  was  a  lack  of                                                                    
understanding  in  the  public marketplace  about  the  real                                                                    
credit  strength of  the  regional  health corporations.  He                                                                    
mentioned  special programs  for specific  improvements such                                                                    
as  the  Sitka   Hospital.  Now  SEARHC  was   able  to  get                                                                    
investment grade  ratings and obtain a  relatively favorable                                                                    
rate absent bond bank participation.                                                                                            
Co-Chair Stedman summarized that  SEARHC was not involved in                                                                    
the  bill   in  regards   to  financing  the   hospital.  He                                                                    
understood that  SEARHC was oversubscribed to  their request                                                                    
to  issue  bonds, with  more  investors  than there  was  to                                                                    
service a request.                                                                                                              
9:32:53 AM                                                                                                                    
Senator  Olson  asked how  much  the  Indian Health  Service                                                                    
health corporations participated in the program.                                                                                
Mr.   Mitchell   explained   that   only   regional   health                                                                    
corporations  were currently  authorized  to participate  in                                                                    
the bond bank program.                                                                                                          
Senator  Olson understood  that the  health corporations  in                                                                    
Western Alaska were not eligible.                                                                                               
Mr. Mitchell answered in the  affirmative. He explained that                                                                    
regional   corporations  would   be  covered,   and  village                                                                    
corporations would not.                                                                                                         
Senator von Imhof asked for  clarification about raising the                                                                    
bond  ceiling for  the  University. She  asked  if the  bill                                                                    
would  allow the  University  to  add new  debt  up to  $500                                                                    
Mr.  Mitchell  explained that  the  University  had its  own                                                                    
process  for  authorizing  debt which  required  legislative                                                                    
approval. He  mentioned that the University  was included in                                                                    
the  legislation  because  the  University  had  suffered  a                                                                    
lowered credit rating because of  its uncertain funding from                                                                    
the  state  in recent  years.  The  bond bank  presented  an                                                                    
alternative   to   utilize   when   considering   authorized                                                                    
financing, and  a lowered  interest rate  would be  the sole                                                                    
reason because it could otherwise sell bonds independently.                                                                     
Senator  von Imhof  clarified that  the  University had  the                                                                    
capacity, but the bill would provide a different mechanism.                                                                     
Mr.  Mitchell affirmed  that the  sole purpose  of the  bond                                                                    
bank was to  facilitate market access on a  lower cost basis                                                                    
to entities that could not otherwise borrow money.                                                                              
Senator von Imhof thought the  bill signified that the bonds                                                                    
would be the  moral obligation of the state,  which meant if                                                                    
an  organization  defaulted,  the bond  bank  would  request                                                                    
funds of  the legislature/governor to pay  its debt service.                                                                    
She  asked if  the  arrangement  was the  same  as what  was                                                                    
currently in place.                                                                                                             
Mr. Mitchell answered in the affirmative.                                                                                       
9:36:03 AM                                                                                                                    
Co-Chair  Stedman  referenced  municipalities and  shared  a                                                                    
concern that there seemed to  be long term fixed assets that                                                                    
were  built and  financed with  bonds issued  that stretched                                                                    
out  into the  future and  refinanced and  stretched out  to                                                                    
amortization. He  used the example  of a hydro  project, and                                                                    
mentioned  assets not  being paid  off and  hampering future                                                                    
projects. He  mentioned major maintenance needs  and Federal                                                                    
Energy  Regulatory  Commission  (FERC) inspections.  He  was                                                                    
concerned  with state  involvement when  municipalities were                                                                    
not  given the  opportunity to  continually extend  the debt                                                                    
service and never pay off assets.                                                                                               
Mr. Mitchell  thought Co-Chair  Stedman was  discussing what                                                                    
was  called "pitch  and chuck,"  through which  debt service                                                                    
was placed  into the future,  which was usually viewed  as a                                                                    
credit negative unless there  were adjustments. He discussed                                                                    
bond financing terms  and the fact that there  would have to                                                                    
be special circumstances  to extend the terms  of an assets                                                                     
9:39:38 AM                                                                                                                    
Co-Chair  Stedman   had  experienced   that  the   level  of                                                                    
sophistication varied  by community. He thought  some groups                                                                    
had   less  experience   with  finance.   He  thought   many                                                                    
administrators  were  endeavoring  to keep  rates  down  for                                                                    
utilities,  which  could  lead   to  easy  determination  to                                                                    
stretch out  the amortization rather  than staying  with the                                                                    
original payoff target. He  thought that municipalities were                                                                    
inadvertently  getting into  the position  of not  paying an                                                                    
asset  off. He  was  curious if  the bond  bank  had a  more                                                                    
formal  position  in  order to  ensure  that  municipalities                                                                    
fully understood the situations.                                                                                                
Mr.  Mitchell knew  the project  that  Co-Chair Stedman  was                                                                    
referencing,  which  was  not  a  refinancing  that  led  to                                                                    
extension of  terms, but rather  original issue  and project                                                                    
scope creep.  After the project  had already  started, there                                                                    
was a  variety of potential  funding sources, some  of which                                                                    
had  not  materialized after  the  project  had started.  He                                                                    
continued that there  were multiple issues of  bonds to fund                                                                    
the facility, and the later  issues had longer amortizations                                                                    
that paid interest-only until the other debt was paid.                                                                          
Mr.  Mitchell continued  that the  bond bank  did not  offer                                                                    
financial  advice,  but  rather  encouraged  financial  best                                                                    
practices  and  offered  alternatives. The  bond  bank  made                                                                    
every effort  to ensure  local officials  were well-informed                                                                    
and understood the obligations being entered into.                                                                              
9:44:01 AM                                                                                                                    
Co-Chair Stedman  thought there had been  a second refinance                                                                    
of  the  project  that was  being  discussed.  He  mentioned                                                                    
hydro-expansion, which  had been problematic.  He encouraged                                                                    
the bond  bank to be  cognizant of the issue  and considered                                                                    
that  many   municipal  elected   officials  did   not  have                                                                    
financial backgrounds.  He clarified that he  had referenced                                                                    
Blue Lake  Dam in  Sitka. He  echoed Mr.  Mitchell's comment                                                                    
that  there  had been  "mission  creep."  He did  not  fault                                                                    
efforts  to  get  projects   going.  He  emphasized  getting                                                                    
projects  paid  off in  the  time  that was  planned  before                                                                    
expansions were needed.                                                                                                         
Senator  Hoffman thanked  the committee  for an  initial re-                                                                    
write of the bond bank  that had allowed the Yukon-Kuskokwim                                                                    
Health  Corporation  (YKHC)  to   triple  the  size  of  its                                                                    
hospital. He  noted that  the bill  had refinancing  for the                                                                    
University of Alaska  Fairbanks (UAF). He asked  if the bill                                                                    
would allow refinancing for other  entities through the bond                                                                    
Mr. Mitchell answered in the  affirmative. He recounted that                                                                    
the $102.5  million that the  bond bank issued for  the YKHC                                                                    
facility would  be eligible for refinancing  ten years after                                                                    
the  original  issue.  Additionally,  the  bond  bank  could                                                                    
reissue a portion of all  the U.S. Department of Agriculture                                                                    
portion of the  loan if it could beat the  rate. Current law                                                                    
allowed  for refinance  of no  more than  49 percent  of the                                                                    
Senator Hoffman recalled that  when the committee originally                                                                    
broached  the topic  in 2019,  Mr. Mitchell  had provided  a                                                                    
list of  projects that  the Municipal  Bond Bank  entered in                                                                    
to. He asked  if Mr. Mitchell could again provide  a list of                                                                    
projects and asked if the rate of default was still zero.                                                                       
Mr. Mitchell  affirmed that  there had  been no  defaults in                                                                    
the bond bank program.                                                                                                          
9:48:29 AM                                                                                                                    
Senator  Wielechowski asked  if anyone  had ever  lent money                                                                    
and defaulted  and required  the legislature  to appropriate                                                                    
funds to cover the default.                                                                                                     
Mr. Mitchell answered that there  had never been a community                                                                    
that had not  been able to make payments. The  bond bank had                                                                    
engaged in  discussion with communities that  had been under                                                                    
duress  because of  financial impacts,  but the  communities                                                                    
had always been able to cover the bond payments.                                                                                
Senator  Wielechowski asked  if there  had been  any concern                                                                    
expressed by bankers that the  bill was encroaching into the                                                                    
banks area of lending money.                                                                                                    
Mr. Mitchell had not heard of  such a concern. He noted that                                                                    
typically   commercial    banks   made    mortgage-type   or                                                                    
commercial-type loans that would  be secured by the facility                                                                    
that was  being built,  whereas the  bond bank  utilized the                                                                    
public  bond  market  with  a pledge  of  revenues  from  an                                                                    
organization.  The   revenues  would   be  deposited   in  a                                                                    
custodial bank, whereas  a commercial bank did  not have the                                                                    
underwriting  necessary  to  loan  with  the  same  type  of                                                                    
Senator   Wielechowski  asked   how  the   state  could   be                                                                    
responsible for the  default of another entity  if the state                                                                    
was  constitutionally  not  allowed  to  borrow  except  for                                                                    
capital   projects   ratified   by  a   vote,   and   public                                                                    
corporations could borrow (as long  as there was no recourse                                                                    
to the  state). He  questioned whether  the situation  was a                                                                    
backdoor around the constitutional prohibition.                                                                                 
Mr. Mitchell  reiterated that the  bond bank  issued revenue                                                                    
bonds  that  were  secured  by  pledges  of  the  underlying                                                                    
borrowers. The  pledges could be general  obligation pledges                                                                    
or revenue pledges, which was  all authorized by a statutory                                                                    
construct.  He   noted  that  the   process  had   not  been                                                                    
challenged, and he  did not know if the court  would find it                                                                    
was not permissible.                                                                                                            
9:51:04 AM                                                                                                                    
Co-Chair  Stedman appreciated  that the  state had  the bond                                                                    
bank  for  communities to  use  as  a resource.  He  thought                                                                    
communities  lacked the  sophistication to  go forward  with                                                                    
projects without  the bond bank,  and it would be  much more                                                                    
expensive.  He thought  the  bill was  good  and thought  it                                                                    
would  provide more  flexibility. He  was not  uncomfortable                                                                    
with lifting the  cap of 49 percent, which he  thought was a                                                                    
little low.  He cautioned against letting  communities over-                                                                    
leverage themselves.                                                                                                            
Mr.  Mitchell cited  that the  previous year  the bond  bank                                                                    
saved an estimated $51 million  and avoided interest expense                                                                    
for those that used the program.                                                                                                
Senator  Wielechowski asked  if the  bill would  potentially                                                                    
impact the state's credit rating.                                                                                               
Mr. Mitchell  informed that  the bill  would not  impact the                                                                    
states  credit  rating, as  the program  was self-sufficient                                                                    
for  all its  obligations. He  thought there  could be  some                                                                    
incremental  impact to  the state's  debt capacity  if there                                                                    
were  to be  some dislocation  and a  series of  defaults by                                                                    
underlying   borrowers,  because   the   state  would   have                                                                    
obligations it would  have to pay directly  on an annualized                                                                    
basis. At  this point,  the obligations were  not integrated                                                                    
into  any of  the  states  capacity  analysis internally  or                                                                    
9:53:14 AM                                                                                                                    
MYRON  DOSCH, CHIEF  FINANCE OFFICER,  UNIVERSITY OF  ALASKA                                                                    
(via  teleconference),  spoke in  support  of  the bill.  He                                                                    
noted that the University  supported the bill. He considered                                                                    
that   the  bill   provided   an   additional  option   when                                                                    
considering issuing a financing  obligation or a refinancing                                                                    
obligation. He mentioned that the  credit rating of the bond                                                                    
bank  was  better  than  that of  the  University,  and  the                                                                    
marginal difference would  allow the bond bank  to borrow at                                                                    
more  favorable  rates  than  the  University,  which  would                                                                    
result  in avoided  interest costs  on any  debt obligation.                                                                    
The bill did not create  an obligation for the University to                                                                    
enter engagements  with the bond  bank. He thought  the bill                                                                    
was straightforward.                                                                                                            
9:54:40 AM                                                                                                                    
LUKE  WELLES,  CHAIRMAN,  ALASKA MUNICIPAL  BOND  BANK  (via                                                                    
teleconference), stated that the  Alaska Municipal Bond Bank                                                                    
was strongly supportive  of the bill. He had  over 20 years'                                                                    
experience with  tribal health  and thought  the opportunity                                                                    
to support the increased  quality of care and infrastructure                                                                    
in  rural areas  was a  great step  forward. He  thought the                                                                    
recent YKHC  project demonstrated what the  program could do                                                                    
and  how it  could support  other communities.  He continued                                                                    
that  the bond  bank had  a unique  structure which  allowed                                                                    
entities  to aggregate  projects  and  save local  taxpayers                                                                    
Co-Chair Bishop OPENED public testimony.                                                                                        
Senator  Hoffman   asked  about  the  name   of  the  Alaska                                                                    
Municipal Bond Bank.                                                                                                            
Mr. Mitchell  relayed that  the bond  bank program  was much                                                                    
more  restrictive it  was originally  created and  could not                                                                    
lend  for electric  generation projects.  It was  determined                                                                    
that the  bond bank could  play a role in  certain instances                                                                    
where there were municipally owned  facilities, and it could                                                                    
be more efficient  in delivery of the  financing package. He                                                                    
mentioned  incremental   adjustments  to  the   program  and                                                                    
projects  outside municipalities.  He  noted  that the  bond                                                                    
bank also had the ability  to lend to Southeast Alaska power                                                                    
agencies,  as  well as  the  Alaska  Municipal League  Joint                                                                    
Insurance  Association.   He  did  not  know   if  the  word                                                                    
"municipal" word applied as much as it once had.                                                                                
Senator Hoffman suggested the name Alaska Bond Bank.                                                                            
9:59:27 AM                                                                                                                    
Co-Chair Bishop CLOSED public testimony.                                                                                        
HB 127 was HEARD and HELD in committee for further                                                                              
9:59:35 AM                                                                                                                    
AT EASE                                                                                                                         
9:59:47 AM                                                                                                                    
Co-Chair Bishop discussed the agenda for the afternoon                                                                          
10:00:05 AM                                                                                                                   
The meeting was adjourned at 10:00 a.m.                                                                                         

Document Name Date/Time Subjects
HB 127 Sectional Analysis version A 01.18.2022.pdf SCRA 2/3/2022 3:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 127
HB 127 Sponsor Statement version A 01.18.2022.pdf SCRA 2/3/2022 3:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 127
HB 127 Support Letter University of Alaska 3.9.2021.pdf HFIN 4/21/2021 1:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 127
HB 127 Letter of Support Maniilaq 3.15.2021.pdf HCRA 4/15/2021 8:00:00 AM
SCRA 1/27/2022 3:30:00 PM
SCRA 2/3/2022 3:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 127
HB 19 Sponsor Statement.pdf SEDC 1/21/2022 9:00:00 AM
SFIN 4/21/2022 9:00:00 AM
HB 19
HB 19 Explanation of Changes version B to I.pdf SFIN 4/21/2022 9:00:00 AM
HB 19
HB 19 Sectional Analysis ver I.pdf SFIN 4/21/2022 9:00:00 AM
HB 19
HB 19 Letters of Support.pdf SFIN 4/21/2022 9:00:00 AM
HB 19
HB 111 Supporting Document - FAQs 2.16.22.pdf SFIN 4/21/2022 9:00:00 AM
SL&C 3/21/2022 1:30:00 PM
HB 111
HB 111 Letters of Support Received 4.14.21.pdf HFIN 5/11/2021 1:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 111
HB 111 Supporting Document - Oral Health and Well-being in the U.S..pdf HL&C 3/29/2021 3:15:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 111
HB 111 Supporting Document - DH Medicaid Reimbursement_At_A_Glance.pdf HFIN 5/11/2021 1:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 111
HB 111 Supporting Document - Medicaid Dashboard.pdf HFIN 5/11/2021 1:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 111
HB 111 Supporting Document - Ombudsman Press -Release, DOC Dental Report 2.2.21.pdf HFIN 5/11/2021 1:30:00 PM
SFIN 4/21/2022 9:00:00 AM
HB 111
HB 111 DEN Bd - HB 111 Letter of Support - 3.16.22.pdf SFIN 4/21/2022 9:00:00 AM
HB 111
HB111 v. G Sectional Analysis 3.28.2022.pdf SFIN 4/21/2022 9:00:00 AM
HB 111
HB 111 v. G Summary of Changes 3.28.2022.pdf SFIN 4/21/2022 9:00:00 AM
HB 111
HB111 v. G Sponsor Statement 3.28.2022.pdf SFIN 4/21/2022 9:00:00 AM
HB 111
HB 168 Sectional Analysis Version O.pdf SFIN 4/21/2022 9:00:00 AM
SFIN 5/11/2022 1:00:00 PM
HB 168
HB 168 Summary of Changes Version O.pdf SFIN 4/21/2022 9:00:00 AM
SFIN 5/11/2022 1:00:00 PM
HB 168
HB 168 Sponsor Statement 4.12.2021.pdf SFIN 4/21/2022 9:00:00 AM
HB 168
HB 168 Testimony -- Recieved 4.19.2021.pdf SFIN 4/21/2022 9:00:00 AM
HB 168
HB168 DPA Response Follow up Questions--Recieved 1.28.2022.pdf SFIN 4/21/2022 9:00:00 AM
HB 168
HB168 DPA Follow up Medicaid-CHIP Renewal--Received 1.28.2022.pdf SFIN 4/21/2022 9:00:00 AM
HB 168
HB 19 4.21.2022 (S)FIN Hearing DEED Follow-Up.pdf SFIN 4/21/2022 9:00:00 AM
HB 19
HB 127 AMBBA - SFIN Follow-up on Projects Funded.pdf SFIN 4/21/2022 9:00:00 AM
HB 127