Legislature(1993 - 1994)
02/03/1993 01:42 PM Senate HES
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SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE
February 3, 1993
1:42 p.m.
MEMBERS PRESENT
Senator Steve Rieger, Chairman
Senator Bert Sharp, Vice-Chairman
Sentor Loren Leman
Senator Mike Miller
Senator Jim Duncan
Sentor Judy Salo
Senator Johnny Ellis
MEMBERS ABSENT
All Present
COMMITTEE CALENDAR
SENATE BILL NO. 59
"An Act relating to school construction grants and major
maintenance grants to school districts; providing for school
district participation in the cost of school construction
and major maintenance; creating a major maintenance grant
fund; and providing for an effective date."
SENATE BILL NO. 60
"An Act making appropriations for construction and major
maintenance of schools; and providing for an effective
date."
PREVIOUS SENATE COMMITTEE ACTION
SB 59 - No previous action to record.
SB 60 - No previous action to record.
WITNESS REGISTER
Jerry Covey, Commissioner
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
POSITION STATEMENT: Testified on SB 59 and SB 60.
Gary Bader, Director
Administrative Services
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
POSITION STATEMENT: Testified on SB 59 and SB 60.
Duane Guiley, Director
School Finance
Administrative Services
Department of Education
801 West 10th Street, Suite 200
Juneau, Alaska 99801-1894
POSITION STATEMENT: Testified on SB 59 and SB 60.
ACTION NARRATIVE
TAPE 93-7, SIDE A
Number 001
CHAIRMAN RIEGER called the Senate Health, Education and
Social Services Committee meeting to order at 1:42 p.m.
The Chairman announced the committee would be hearing SB 59
(SCHOOL CONSTRUCTION & MAINTENANCE GRANTS) and SB 60
(APPROP:SCHOOL CONSTRUCTION GRANT FUND)
JERRY COVEY, Commissioner, Department of Education, came
forward to give an overview of the legislation. He
explained that the state currently has a crisis with school
facilities. As the department has been working to put
together a comprehensive education plan over the last year
and a half, throughout the state there was a lot of concern
expressed about school facilities and the need to address
problems. Commissioner Cover explained that a group
consisting of superintendents, architects, engineers, cost
estimators, legislators, and staff addressed the issue
through the Alaska 2000 process. They developed about
twelve recommendations. The final recommendations were
built into a plan for school construction.
Commissioner Covey explained that many schools in rural and
urban Alaska are overcrowded and are in need of repair. In
the urban areas many schools were over built and were far in
excess of what the actual needs were. He indicated that
many of the rural schools were built hastily and were poorly
designed.
Commissioner Covey informed the committee there are 286
portable classrooms, in sixteen school districts, which have
been in use for up to ten years. The use of portables
further compounds the crises in school facilities in that in
the current method that is used to identify capital needs,
portable classrooms count as regular classrooms. Students
in portable classrooms are being counted as though they are
in regular classrooms which reduces the apparent need for
classroom space, while the need is great.
Commissioner Covey explained that there are sophisticated
facility systems, especially in rural Alaska. They are
located in parts of the state where there is not the
infrastructure to support them. It dramatically increases
the cost of maintaining those facilities as people have to
travel from urban centers to rural Alaska to handle systems
such a pneumatic heat systems, fire suppression systems,
etc.
Commissioner Covey explained that based on the Department of
Labor's predictions, there is a projected 4 percent increase
in enrollment. It was projected that there would be a need
of up to $100 million annual increase to take care of just
new enrollment.
Commissioner Covey discussed the need of major maintenance
to school facilities and obtaining the funding. Because of
the way the CIP process is structured, the projects have
jumped from categories 3 and 4 to category 1. He explained
that category 2 is unhoused students. It is time for the
state to develop a comprehensive plan to address all the
problems and the department's plan attempts to do that. He
said a lot of time and effort has been put into it and he is
bringing it to the legislature with the understanding that
the legislature is faced with the problem of finalizing the
plan and coming up with the funding scheme. The department
and the governor propose using of the earnings of the
permanent fund as the funding mechanism. It was realized
early last fall that about $150 million would be needed each
year, for the next few years, to address the plan.
Commissioner Covey explained there are some changes in the
current CIP process which would factor a higher level of
accountability at the local school district level to
maintain facilities. Other technical changes relate to
local contributions by all school districts based on their
ability to pay. He said although the funding source is
highly sensitive to all Alaskans, it is a valid request and
an appropriate use of the funds.
Number 196
SENATOR LEMAN explained he is aware of significant needs in
the Anchorage area and said the most overcrowded school is
Sand Lake Elementary School and another is the Turnagain.
He referred to the prioritizing of projects and asked what
the rationale was. COMMISSIONER COVEY explained that the
present system has been one method of funding school
construction. In addition, through other capital
appropriations, some school districts have had their needs
addressed. Not all projects that have been funded have gone
through the process. Some school districts have made a
greater use of the process than other school districts and
that is why it appears that some of the districts are
represented better than other districts. Commissioner Covey
explained that Anchorage appears to be under represented
because of a number of things; such as, they have obtained
funding in other ways and didn't utilize the process to the
extent that other districts have. If the proposed process
is funded appropriately, there will be significant activity
by school districts all over the state to get their projects
listed in the CIP process
Number 274
CHAIRMAN RIEGER referred to Commissioner Covey's testimony
regarding the participation of the school districts and
asked him to discuss his comment regarding some of the
school districts having made much greater use of the process
than other school districts. COMMISSIONER COVEY explained
that the department believes that some districts have been
very active in seeking projects and getting them placed on
the list and others have not. He said he has been told by
some districts that the highest priority they have on the
list is not their highest priority and if funding were
available, they would want to redirect it, at the district
level, to other projects.
SENATOR SALO asked if a district is allowed to get a health
and safety grant and then use it for a preferred project.
COMMISSIONER COVEY indicated that the answer is "no."
Commissioner Covey explained that the major area that the
department is seeking to change in the process is reducing
the priorities, under the capital plan, down to about four
or five categories rather than seven or eight. He said they
would like to build in major maintenance funding so that
annually, instead of just taking care of the worst problems,
other problems of a minor nature are also being addressed.
Another change would be to build into the plan a maintenance
component that would require a district to demonstrate a
good maintenance program to qualify for any funding.
Senator Salo referred to SB 60 and said the department would
over see and mandate that there be a maintenance review.
She asked what the implications would be if the department
were to take on that responsibility. Commissioner Covey
said he would like to defer the question to his staff.
Number 333
GARY BADER, Director, Administrative Services, Department of
Education, showed the committee a book with pictures of some
maintenance projects that the department is trying to
address. He discussed the two primary components of SB 59.
The first is to separate the existing grant component into
two categories - school construction and major maintenance.
Another component is to establish the local match. Mr.
Bader explained that the participating share in cities and
boroughs is based on the per pupil amount and the full value
of taxable property within the school district bounds
divided by the average daily membership of the school
district. The categories of the share requirement under the
bill are attempted to be equitable based on the ability to
pay. He noted for FY 94 the share would range from 5 to 40
percent for city and borough school districts, depending on
the amount of wealth in the school district. Over the next
three years, the district's share would increase another 5
percent each year, so there would ultimately be 30 to 55
percent match. Mr. Bader referred to REAAs and explained
their participating share is zero the first year, 1 percent
the second year, escalating up 1.4 percent each year until
it gets to a maximum participation of 3.8 percent.
Mr. Bader referred to SB 60 and explained it is the
companion bill to SB 59 and it gives SB 59 meaning. He
referred to information in the member's files entitled
"Capital Improvement Program Budget Request" and said the
projects are placed into categories as they are submitted.
They are then ranked based upon standard ranking scales. He
explained that after the ranking is completed, the districts
are notified. The districts have the ability to ask the
department to reconsider their placement on the list. He
continued to review the "Capital Improvement Program Budget
Request" information dated January 21, 1993, in the
committee members' files.
CHAIRMAN RIEGER asked if the qualifications for the
different categories are in statute. It was indicated that
the statute was 14.11.013
SENATOR SALO asked how often the list can be changed. Mr.
Bader explained that the list is reconstructed each year.
COMMISSIONER COVEY said that the department believes that
the list of projects are all valid projects. He said he is
confident that they are real needs. Senator Salo said she
believes that all the projects are valid projects, but are
they the projects that have the most serious needs.
Commissioner Covey said the process of rating the projects
begins in September when the districts send requests to the
department. The department holds hearings from October
through this week. He explained that by the end of the
fiscal year, all projects through FY 95 will have a new
scale that will go from seven categories down to four. The
maintenance requirement will also be brought in. He
explained that the message will be given to the districts in
the spring and that time frame will allow them time to
develop their list for next year.
CHAIRMAN RIEGER asked if he is correct in saying the
regulations that the Department of Education has adopted
have basically taken statute in that the department must go
through the first category before moving to the second.
Commissioner Covey said that is his understanding. However,
the statute does say that the department may use its
judgement in terms of setting priorities. He said the
department believes that absent that regulation, they have
the authority to move between categories of projects.
Chairman Rieger referred to when the statute passed in 1989
and said the House Finance minutes state that there was a
concern that absolute prioritization not be pursued. He
said he thinks that Commissioner Covey is saying that there
is a list of projects that the school districts don't
believe are their top priorities, the commissioner doesn't
believe that they are top priorities, but because the
regulations and paperwork have lead down this path, this is
what must be put forward. The legislature is expected to
put $150 million towards it.
Commissioner Covey said he believes the process has
credibility and some school districts take it very
seriously. He said when some of the larger school districts
have millions of dollars of capital needs and they see the
state is putting somewhere between $20 and $30 million into
the process annually, it is not something that builds their
confidence and inspires them to spend a lot of time on the
process. They have found ways around it. In addition,
Commissioner Covey said although the process was designed as
well as it could be, people have learned how to manipulate
it. All it takes is to get an architect or engineer to make
certain claims about the quality or integrity of that
structure. He said he believes that the priorities at the
top of the list are valid. There was continued discussion
regarding the categorization of projects.
Number 566
Chairman Rieger asked if it would be a fair statement to say
that the major maintenance portion of SB 60 corresponds to
the third priority category "C" which says, "protect the
structure of existing school facilities." MR. BADER
indicated it would be the third and fourth.
SENATOR MILLER asked if the department has addressed all the
safety and unhoused student issues on a statewide basis.
Mr. Bader said the department has covered all the health-
life safety issues for FY 94. He noted there were
approximately twenty.
Senator Miller asked how many unhoused projects there are.
COMMISSIONER COVEY explained that there is over $200 million
in unhoused student projects alone. The department is
taking about $75 million out of the $150 million and
addressing all the priority one projects and a couple of
unfinished projects. Then the department is attempting to
split the remaining $75 million between priority 2, 3, and 4
projects. MR. BADER indicated that there are fifty-eight
unhoused student projects in FY 94.
TAPE 93-7, SIDE B
Number 001
Commissioner Covey said the projects will change as people
give greater attention to the process. He explained that
the bulk of next year's funding will be addressed towards
the unhoused student situation. SENATOR MILLER asked if the
department will be looking at the same source of funding
next year that they are looking at currently. Commissioner
indicated that the answer is "yes." Senator Miller said if
the department is looking at the same source of funding, why
not deal with the problem now. Commissioner Covey explained
that they are trying to put fourth a plan that the
infrastructure will support. Senator Miller expressed
concern of unhoused student needs in the Fairbanks North
Star School District.
Commissioner Covey referred to the rating process and said
the projects are rated based upon a specific number of
criteria. It is the department's intent, as they look at
revision of the process, to work with representatives from
the school districts in reviewing the criteria.
Number 047
SENATOR SALO referred to requiring good maintenance programs
and asked what incentive there is for the school districts
to not allow deterioration of their facilities. She also
referred to the sliding scale of local contributions and
said she believes it will be a real problem in places where
districts will go out to bond for the other portion of the
money.
DUANE GUILEY, Director, School Finance, Administrative
Services, Department of Education, said the incentive to
encourage districts to improve on their preventive
maintenance plan and their regular maintenance plan is that
the department would write regulations that would require a
preventative maintenance plan to be in place that was
auditable by a third party. That would serve as
justification for participation in the major maintenance
fund distribution. In other words, they could not apply for
a project under the major maintenance fund in FY 95 and
beyond unless they have in place a preventative maintenance
plan.
CHAIRMAN RIEGER referred to deliberations on the new
maintenance fund and asked if the committee considered
separate appropriations in the foundation formula for
maintenance versus operations. Mr. Guiley indicated that
there was discussion. He said many states provide, through
the general operating fund, a flat dollar amount per student
for school construction. In those states, they provide as
little as $30 per student and as high as $300 per student.
There are various plans throughout the states and in many of
those plans there are absolutely no restrictions as to how
those dollars are used. He said that subject was discussed
by the committee and given the various sizes of school
districts in the state and the existing backlog of
structures, the best proposal was to fund the existing list.
The committee felt very strongly that the list was an
appropriate process. The disadvantage to the existing
process was that those projects normally classified in
categories 3 and 4, relating to the protection of structure
and code upgrade, have stayed on the list and remained
unfunded, they continued to leap over all the priority 2
unhoused student projects.
Mr. Guiley explained that the statute requires the
department to submit a list to the governor by November 1,
and to the legislature within ten days after the beginning
of the legislature. It also requires the department to rank
those projects in a priority sequence. Mr. Guiley said the
statutes further provides that the department cannot award
projects unless they are in priority sequence. Even though
the statute provides broad classification of what the
department must consider in assigning those priorities, once
the department transmits that list, that becomes the
priority list. That list can only be changed though the
appeal process which the department is currently
undertaking. Mr. Guiley explained the statute also provides
that if an appeal is pending at the time of an appropriation
bill, the priority that is assigned on the date of the
appropriation is the priority in effect.
Number 086
Chairman Rieger said that as he reads the statute, it
requires the department to prioritize projects and not in
categories. Mr. Guiley said that is a fair statement. He
explained that what requires those projects to be funded in
a specific sequence is once the priority list is
transmitted, the department is supposed to prepare an
estimate of the amount of money needed to finance each
project, as stated in AS 14.11.013. The department is
supposed to provide a grant schedule with a proposed
schedule of appropriations to the governor by November 1,
and to the legislature ten days after session begins. In
preparing the grant schedule, the department shall establish
priorities among the projects for which grants are
requested. Further, the department shall award grants in
the order priority established.
MR. BADER referred to Senator Salo's question regarding the
sliding scale of local contributions and said that some of
the municipalities have indicated that the scale, as
proposed, may create some difficulty in terms of getting
voter approval for bonding. He indicated it is currently
under review.
CHAIRMAN RIEGER said it is not his intention to pass the
bill out of committee. He indicated it would be heard again
at a later date.
Number 123
There being no further business to come before the Senate
HESS Committee, Chairman Rieger adjourned the meeting at
2:43 p.m.
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