SB 264-MUNICIPAL BOND REIMBURSEMENT  JERRY BURNETT, Staff to Senator Lyda Green, introduced the bill and read the following sponsor statement into the record: Senate Bill 264 would authorize 70 percent state reimbursement for $113 million dollars of school projects that are funded by voter authorized debt issued by local government. The authorization would be distributed among school districts in the following manner; $50 million for projects in Anchorage, $15 million for projects in Fairbanks, $13 million for projects in Mat-Su, $10 million for projects in Kenai and $25 million for projects in smaller school districts in organized Alaska. The amounts are intended to equal $1,000 in projects per student rounded to the nearest million dollars in each district. Debt reimbursement is one of the methods that have been used to fund school construction in Alaska for a number of years. Debt reimbursement has a unique advantage over other financing methods in that it allows for maximum local involvement and input in the decision of which specific projects should be funded. Municipal debt reimbursement insures that the projects funded in a school district are the highest priority of the voters in that district. Projects need to meet state standards for approval but do not need to be funded in the state's priority order. SB 264 is not intended to serve as a complete school funding package. School districts in unorganized Alaska cannot use debt reimbursement. Individual school projects are often larger than the authorization in SB 264 for any school district. Other funding methods, such as general obligation debt, must be used for most school construction and major maintenance in Alaska. Municipal debt reimbursement is, however, the best method for many school districts to build and maintain the facilities most important to the people in their community. EDDY JEANS, Finance Manager for the Department of Education and Early Development, said he was available to answer questions. For the record, he wanted to state that the Legislature has done a fine job at funding school construction the last two years and they have followed the department's priority list. He clarified that this bill would only fund school construction projects in municipal school districts once there is both voter and department approval. SENATOR LINCOLN said she realizes this is for organized Alaska, but wanted to know how this affects the Kasayulie Case in which the judge said that schools in the unorganized areas are treated unfairly in terms of bonding for school projects. She asked specifically what this bill does to correct that discrepancy. MR. JEANS said he isn't a lawyer and can't make any specific comments, but the judge has been looking at the appropriations the Legislature has been making in the last two years and has looked favorably on the mechanisms. Additionally, he was pleased that the Legislature has followed the department's list. He expected the judge to continue to watch through this session and that is why the Governor introduced his funding proposal, which follows the department's priority list and includes municipal and rural school districts. SENATOR LINCOLN said she didn't hear an answer to her question so she restated it. MR. JEANS said this piece of legislation does not provide any funding for rural education attendance areas that do not have the capacity to bond. It provides a funding mechanism for municipal school districts that have bonding capacity. SENATOR LINCOLN asked if the department is supportive of this legislation knowing about the judge's analysis. MR. JEANS said he has not had that conversation with the governor's office. The Governor has submitted his own legislation that funds the department's priority list for both urban and rural school districts. CHAIRMAN TORGERSON stated for the record, "So it won't go unchallenged, I do not agree with the judge's case on Kasayulie. We proved, by numbers, that he was using the wrong set of numbers. The facts in point are not correct so, therefore, his ruling is not correct." There was no further testimony. CHAIRMAN TORGERSON announced it was his intent to move the bill since it was largely a finance issue. SENATOR KELLY made a motion to move SB 264 and accompanying fiscal note from committee with individual recommendations. There being no objection, SB 264 moved from committee.