HOUSE BILL NO. 313 "An Act relating to preventive maintenance programs required for certain state grants; and providing for an effective date." MICHAEL MORGAN, FACILITIES MANAGER, DEPARTMENT OF EDUCATION stated that the Department supports HB 313, with one exception. He noted that the legislation affects the Department's process for ranking and prioritizing projects for school construction maintenance. The legislation affects the eligibility of school districts to have projects on the list. Districts want to be on the Department's list of eligible projects even if they are at the bottom. Some projects, which were rejected by the Department, were recommended for funding by the Deferred Maintenance Task Force. The legislation adds further criteria for rejecting projects. Mr. Morgan noted that the Department of Education proposes that the criteria be used for scoring projects on the list instead of rejecting projects from being placed on the list. To affect the Department's proposed change, AS 14.11.011 (b) would be amended to add a new subsection 7 in AS 14.11.013(b). Mr. Morgan pointed out that the legislation requires that a district "is adequately adhering to the preventive maintenance plan." He questioned if the district would be rejected in a case where a roof has failed due to past practices, even if they have changed their practices. Representative Davies noted that the school district has to comply with the list to be eligible for a grant. He questioned what would prevent the project from being included on the list. Mr. Morgan explained that projects on the list are certified by the State Board of Education as being eligible for funding. (This conflicts with the legislation's provision that projects are not eligible for funding if a recognized maintenance plan is not in place.) Representative Mulder stated that the Task Force felt strongly that projects would not be funded unless the school district has a recognized maintenance program. He stressed that school districts would be encouraged not to do maintenance unless there is a requirement. He observed that schools that have not been maintained are jumped up the list when there are catastrophes, while schools that perform regular maintenance remain lower on the list. He maintained that schools that do regular maintenance are penalized. Representative Davies spoke in support of the Department of Education's proposal. He noted that criteria would be moved from the grant area to the review portion of statute. Projects would be allowed to be on the list, but would be prevented from receiving funding unless there is a maintenance program. In response to a question by Co-Chair Therriault, Mr. Morgan explained that the current method for ranking projects uses a whole range of criteria for which projects receive points. The legislature could look at scores to base funding decisions. Representative Mulder spoke against the suggestion. He pointed out that deferred maintenance decisions would be based on politics. Representative Martin pointed to private business. He observed that the Internal Revenue Service allows 3 to 4 percent of the operating budget to be used for annual maintenance. Co-Chair Therriault observed that a renewal and renovation system needs to be demonstrated. Representative Grussendorf questioned if there was discussion regarding the fact that municipal leaders change and crises occur. Representative Mulder stated that the Task Force did discuss those issues. He emphasized that the intent was to remove politics from the deferred maintenance program. He observed that some rural districts have great maintenance programs. He stressed that it is not that expansive to have a recognized, well-established maintenance program, but if there is no maintenance program there will be a huge capital project on the backside. Representative Grussendorf expressed concern that municipalities facing a crisis would not be able to follow the schedule. Representative Mulder noted that the Task Force did not find a school district or municipality that was opposed to the concept. Co-Chair Therriault thought that as long as the district showed that the reduction in maintenance was the result of a fiscal emergency and not a year after year reduction of components on the list that they would still be deemed to be in compliance. He observed that it was easy to short maintenance of university facilities to support programs. It has taken time to convince the University Regents that if they have to shift funding from a program to maintain a roof, that that is what they have to do. Representative Davies questioned how politics would be put into the process by the change to AS 14.11.113. Representative Mulder explained that problems would occur if the legislature could decide to knock a program off the list. Co-Chair Therriault emphasized that politics would occur if scoring could be disregarded. He stressed that if projects are not on the list then politics would be kept at arm's length. Representative Davies argued that politics would not be involved if projects were simply taken as they occur on the list, based on scoring criteria. Representative Mulder stated that it was the Task Forces' intent that projects not be on the list if they do not have a recognized maintenance program. To be eligible for state aid, as a community or school, the criteria should be followed. In response to a question by Representative Davies, Mr. Morgan explained that there are some big districts that do not follow the criteria on the list. He noted that the Anchorage School District indicated on their maintenance manual that they do not do roofs. He did not know how many districts would be currently eligible. He observed that the legislation has a one-year implementation period and that school districts have been responsive. Districts have also expressed frustration that there has not been significant state funding. The Department of Education supports the concept that school districts need to have maintenance programs. Mr. Morgan pointed out that on page 2 line 8 a coma is missing between the words "program" and "cardex". Representative Davies noted that there were additional places in the bill that should also have a coma. Co-Chair Therriault MOVED to ADOPT an amendment to add comas where needed between "program" and "cardex". There being NO OBJECTION, it was so ordered. KEVIN RITCHIE, ALASKA MUNICIPAL LEAGUE, ALASKA CONFERENCE OF MAYORS, JUNEAU noted that deferred maintenance is a top priority of both entities. He spoke in support of the legislation. He cautioned that the legislation be implemented in a way that is sensitive to the capabilities of various municipalities. He noted that municipalities have varying capabilities for implementing technology. He stressed that the deferred maintenance requirement is within the constitutional mandate and appropriate. He emphasized that the lack of resources creates deferred maintenance problems. The program is tied to school funding. Representative Davies emphasized that the intent is to have preventive maintenance. Representative Martin asserted that deferred maintenance problems have occurred because funding was used for other purposes. Representative Foster MOVED to report CSHB 313 (FIN) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 313 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Office of the Governor, dated 2/25/98 and a fiscal impact note by the Department of Education, dated 2/25/98.