HOUSE BILL NO. 2003 "An Act relating to municipal bond reimbursement for school construction; and providing for an effective date." SENATOR JOHN TORGERSON reviewed SCS HB 451 (RLS), which would be used in the creation of a proposed committee substitute to HB 2003 [work draft, 22LS1810\C]. The legislation authorizes local governments to go out to vote for bonds. He noted that the Senate adopted the following language: (1) be (A) a rural educational attendance area; (B) a municipal school district and, as of June 30 of the previous fiscal year, have a population of less than 1,000; or (C) a municipal school district that operates schools on a military reservation; and Senator Torgerson explained that two local government reimbursement programs would be established. Existing programs would be funded at a 70 percent level and the appropriation would be open-ended for four years. A new program would be created at 60 percent, which would require the Department of Education and Early Development to review the program for compliance. The new language would read: (11) subject to (h), (i), and (j)(2) - (5) [(j)(2), (3), (5)] of this section, and after projects funded by the bonds, notes, or other indebtedness have been approved by the commissioner, 70 percent of payments made by a municipality during the fiscal year for the retirement of principal and interest on outstanding bonds, notes, or other indebtedness authorized by the qualified voters of the municipality on or after June 30, 1999, but before July 1, 2006 [July 1, 2008], to pay costs of school construction, additions to schools, and major rehabilitation projects and education related facilities that exceed $200,000, are approved under AS 14.07.020(a)(11), and are not reimbursed under (n) or (o) of this section; (12) subject to (h), (i), and (j)(2), (3), and (5) [(j)(2), (3), (5)] of this section, 60 percent of payments made by a municipality during the fiscal year for the retirement of principal and interest on outstanding bonds, notes, or other indebtedness authorized by the qualified voters of the municipality on or after June 30, 1999, but before July 1, 2006, to pay costs of school construction, additions to schools, and major rehabilitation projects and education related facilities that exceed $200,000, are reviewed [approved] under AS 14.07.020(a)(11), and are not reimbursed under (n) or (o) of this section. Senator Torgerson observed that authorization for Fairbanks was extended from July 1, 2004 to July 1, 2006 on page 8. He added that July 1, 2008 was also changed to July 1, 2006 on page 10 lines, 6, 14, and 29. "In the principle amount of at least $240 million dollars" was deleted on line 25. He summarized that bonding is contingent on the bond package passing. Vice-Chair Bunde questioned who would be excluded under the grant criteria on page 1. Co-Chair Mulder explained that the concern with military reservation schools is that they are not owned by the local school district, which would therefore be hesitant to contribute local money. The legislation would upgrade military schools, so that they could be transferred from the Department of Education and Early Development to local school districts for authorization and oversight. Once this occurs the local school district would own the schools and be responsible for the upgrade. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR, noted that the version passed by the Senate (SCS HB 451 (RLS) would not provide continued funding opportunities for rural schools. The Administration would support the linking of the two concepts together [funding for rural and urban schools]. Urban school districts would be able to direct their own schedules and do projects on the timing that works best for them. She observed that in the past there has been a major debt reimbursement program every few years, the debt reimbursement programs have driven the timing of schedules that come under the reimbursement programs. A different percent of support from local districts would occur depending on whether the school falls within the current statutory restrictions or the project addresses future growth needs. Co-Chair Williams requested that Ms. McConnel point out those areas of the bill and provide a spreadsheet for Committee members. Ms. McConnell replied that she would provide that information. Ms. McConnell added that the Administration had support from the Anchorage School district for the concept of allowing them to drive their own schedule and work on a statewide bases. A process for stabilization and easier planning for school funding would be a benefit, which would be well received by the state's school districts. Ms. McConnell observed that the initial recommendation was to put in place something that could be done in five funding cycles. The GO bond bill would occur in the first year, which would address rural schools. Anchorage and Juneau already have projects approved by the voters. Other communities, such as the Mat-Su Borough, would just be getting their processes underway to do their bond issuance over this cycle. Five years was picked in order to get past the "first shot at all of this" and allow school districts to work the process into their planning cycles. HB 2003 was heard and HELD in Committee for further consideration.