SENATE BILL NO. 184 "An Act relating to school bond debt reimbursement; and providing for an effective date." 10:13:36 AM Co-Chair Hoffman relayed that the committee first heard the bill on May 6 and had taken public testimony and reviewed fiscal notes at the time. There had been one amendment received. 10:14:03 AM LIZ HARPOLD, STAFF, SENATOR DONNY OLSON, explained that SB 184 proposed to extend the moratorium on school bond debt reimbursement for an additional two years. The initial moratorium went into effect ten years previously. 10:14:38 AM Senator Kiehl MOVED to ADOPT Amendment 1. Co-Chair Hoffman OBJECTED for discussion. Senator Kiehl spoke to Amendment 1. He relayed that the amendment was related to a draft regulation that DEED had circulated to school business officials. The way the regulation was drawn up prevented schools that were funding at or near the cap from funding things that were not subject to the cap (non-instructional expenditures). He used the example of The Unalaska City School District, and the subject of $400,000 in school nutrition funds. He listed $400,000 of lunch money in Valdez and $13 million in Anchorage for pupil transportation as further concerns and indicated there were many more examples in the state. He cited that in rough terms, if the regulation passed, the first $25 million to $30 million provided to school districts with the legislature would go away via the department over the summer. The amendment would maintain the rules currently in place. Senator Kiehl drew attention to Section 7, which related to the school districts' operating fund that was currently in regulation and put it into statute. The amendment would prevent the department from being about to re-write how education funding was done since 1998 when the funding formula went into effect. He knew there had been concern voiced by the department that there may be issues regarding the federal disparity test. He explained that the education funding provided by the legislature for the current year allowed for headroom under the disparity test that the state had not had in the past. Senator Kiehl remarked that the federal Department of Education had not indicated that there was a problem that needed to be solved by a new regulation. He thought the regulation was set to be taken up in the summer when the legislature was not in session. He thought the amendment constituted "self-defensefrom a new regulation that would make giant changes in school funding and finance and took money away from non-instructional expenses. 10:17:39 AM Senator Kiehl continued that he had conversations with a couple of members that had questions which he needed to answer. He understood that the committee needed to move the bill, and he had wanted to introduce the issue for discussion. Senator Kiehl moved to WITHDRAW Amendment 1. There being NO OBJECTION, it was so ordered. Co-Chair Stedman thought the issue of Amendment 1 should be addressed and suggested querying the Senate Education Committee for consideration of the issue. He thought the issue should be pondered by the committee. He agreed with the amendment sponsor that the topic was a significant issue. He understood that the regulation would not take effect until 2027, but thought the committee should not lose sight of the issue. Senator Kaufman pointed out that the underlying bill was about maintenance and capital projects rather than about program funding. He thought the committee should keep a clean bill. He thought the issue raised by Senator Kiehl deserved thorough vetting in a policy committee. Co-Chair Stedman MOVED to report SB 184 out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SB 184 was REPORTED out of committee with six "do pass" recommendations and with one "amend" recommendation, and with one new fiscal impact note from the Department of Education and Early Development for Debt Service. 10:19:53 AM AT EASE 10:22:57 AM RECONVENED