HOUSE BILL NO. 13 "An Act relating to reimbursement of municipal bonds for school construction; and providing for an effective date." Representative Croft WITHDREW Amendment 1, which had been moved during . Representative Croft MOVED to ADOPT Amendment 2: Page 9, after line 16: Add new section to read: " Sec. The uncodified law of the State of Alaska is amended by adding a new section to read: CONTINGENT EFFECT. Section 3 of this Act shall only apply if all school districts receive funding that is at least the equivalent of the funding they would have received under a base student allocation of $4919 per student, in 2005 inflation-adjusted dollars, under the formula of state aid to public school districts in effect as of April 1, 2004. Inflation shall be calculated under this section as reflected by the United States Department of Labor's Consumer Price Index for Anchorage, Alaska." Representative Croft noted the amendment would hold harmless the major urban areas: Anchorage and Fairbanks. He asserted that these areas need to be provided for during the transition period. The amendment would ensure that everyone would receive some increase. Co-Chair Meyer WITHDREW his OBJECTION to adopt Amendment 2. There being further OBJECTION, Amendment 2 was adopted. 2:10:03 PM Representative Joule MOVED to ADOPT Amendment 3: Page 1, line 1, following "to": Insert "the school construction grant fund and to" Page 1, following line 4: Insert new bill sections to read:  "* Section 1. AS 14.11.008(a) is amended to read: (a) In order to receive a grant under this chapter or an appropriation under AS 37.05.560, a district must (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  (2) provide a percentage share of the project cost, as determined under (b) or (c) of this section; a [. A] district shall provide the required participating share within three years after the date that the appropriation bill funding the grant is passed by the legislature. * Sec. 2. AS 14.11.008(a) is repealed and reenacted to read: (a) In order to receive a grant under this chapter or an appropriation under AS 37.05.560, a district must provide a percentage share of the project cost, as determined under (b) or (c) of this section. A district shall provide the required participating share within three years after the date that the appropriation bill funding the grant is passed by the legislature. * Sec. 3. AS 14.11.008 is amended by adding a new subsection to read: (g) Grant funds provided to a municipal school district under (a)(1)(C) of this section may only be used for the costs of school construction or major maintenance for a school located on a military reservation. * Sec. 4. AS 14.11.011(a) is amended to read: (a) A municipality that is a school district or a regional educational attendance area eligible under  AS 14.11.008(a) may submit a request to the department for a grant under this chapter. * Sec. 5. AS 14.11.011(a) is repealed and reenacted to read: (a) A municipality that is a school district or a regional educational attendance area may submit a request to the department for a grant under this chapter." Page 1, line 5: Delete "Section 1" Insert "Sec. 6"    Renumber the following bill sections accordingly. Page 9, line 17: Delete all material. Insert new bill sections to read:  "* Sec. 9. AS 14.11.008(g) is repealed.  * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to read: CONTINGENT EFFECT. Sections 1 - 7 and 9 of this Act take effect only if, at the first regular session or at a special session, the Twenty-Fourth Alaska State Legislature passes a bill appropriating an amount equal to or more than $100,000,000 to the school construction grant fund under AS 14.11.008 - 14.11.011, as amended by secs. 1, 3, and 4 of this Act, and that bill becomes law not later than October 1, 2005. * Sec. 11. If, under sec. 10 of this Act, secs. 1, 3, 4, 6, and 7 of this Act take effect, they take effect July 1, 2005. * Sec. 12. If, under sec. 10 of this Act, secs. 2, 5, and 9 of this Act take effect, they take effect July 1, 2006. * Sec. 13. Section 8 of this Act takes effect July 1, 2005. * Sec. 14. Section 10 of this Act takes effect immediately under AS 01.10.070(c)." Co-Chair Meyer OBJECTED. Amendment 3 would restore contingency language adopted by the House HES Committee, which was removed from the committee Substitute adopted on April 26, 2005. Representative Hawker asked for more information on the contingent effect. 2:11:46 PM REPRESENTATIVE CARL GATTO, sponsor, noted that he was not present in the House Education and Social Services (HES) Committee when the amendments were made. CODY RICE, STAFF, REPRESENTATIVE CARL GATTO, explained that the amendment was offered by Representative Cissna. The amendment would make reauthorization of the bond debt contingent on a direct appropriation of a minimum of $100 million appropriation for areas without the ability to issue debt: Regional Education Attendance Area's (REAA) and school districts under 5,000. 2:13:09 PM Representative Joule referred to Kasayulie v. State of Alaska, which questioned if rural areas of the state were able to get construction projects done at the same rate as urban schools. He noted that the amendment would be in that spirit. Representative Hawker related his reluctance to authorize additional funding and stressed the need to hold the line on the budget. He felt that areas with bonding capacity would be held hostage to a commitment on another appropriation bill. He noted that there is a school construction bill. He stated that he would support the amendment if there were an identifiable fund source and questioned if SB 155 would satisfy the $100 million requirement [for rural support]. 2:15:38 PM Representative Joule did not know if SB 155 would meet the requirements. He noted that SB 155 goes down the major maintenance list, but does not address new school construction. House Bill 13 would address new school construction. Representative Hawker felt that SB 155 would satisfy the intent [of the amendment]. Representative Joule pointed out that there is no certainty about SB 155. Representative Croft referred to Representative Hawker's use of the word "hostage" and the battle between the two concepts rural vs. urban. 2:19:52 PM Representative Gatto spoke in opposition to Amendment 3. He felt that HB 13 should stand alone and stressed that the intent is to put new schools in places where there are none. He spoke against tacking on other construction lists. He reiterated that there are areas that need schools. He argued against adoption of the amendment and recommended it be placed in separate legislation. 2:22:22 PM Co-Chair Meyer noted that the bill came forth as a continuation of a match. Representative Hawker defended his use of the term "hostage". He pointed out that there is $141 million in projects on the major maintenance list. He noted that the issue should be addressed and spoke against Amendment 3. 2:24:00 PM Representative Croft maintained that statewide need would not be met without the amendment. He stressed that the problems of school construction is not that simple. He asserted that rural Alaska only gets schools built if they get together with urban projects and pointed out that Alaskans had voted for similar language. He felt that it would be inappropriate to proceed with urban school construction without provisions for rural construction. He maintained that the legislation, without the amendment, would be a "slap in the face" of the Kasayulie case. He spoke in favor of adopting Amendment 3 because it would provide some new construction in rural Alaska. 2:27:31 PM Representative Gatto referred to the 70/30 split. He acknowledged that the only communities that only urban communities have applied, but stressed that any community could apply. He felt that the legislation would satisfy the requirements. Mr. Rice addressed a legal opinion regarding Kasayulie v. State of Alaska. He pointed out that the case has not been decided and noted that any appropriation to urban districts is contingent on a vote of those districts and legislative appropriation. He added that a direct appropriation is always within the purview of the legislature. In addition, the 2002 provision went before the voters. The current legislation would not go before the voters. He referred to SB 155 and noted that the potential implications have not been addressed. 2:29:59 PM Representative Joule spoke in support of the amendment and noted that it would be appropriate to merge the bills. He stressed that there is an opportunity to fund rural school construction. 2:31:14 PM Representative Kelly questioned the rural participation. 2:31:59 PM EDDY JEANS, DIRECTOR, EDUCATION SUPPORT SERVICES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, explained that the participating share for a REAA is 2 percent. Representative Foster observed that Nome does not get 2 percent. Mr. Jeans explained that there are REAA's and municipal school districts. There is a graduated scale for municipal school district grant programs based on property wealth per child. Representative Croft added that the percentage is on a sliding scale. Mr. Jeans noted that the sliding scale for municipalities is 5 - 35 percent. Regional Education Attendance Area's are at 2 percent. 2:33:59 PM Co-Chair Meyer maintained his OBJECTION. A roll call vote was taken on the motion to adopt Amendment 3. IN FAVOR: Moses, Weyhrauch, Croft, Foster, Joule OPPOSED: Hawker, Holm, Kelly, Chenault, Meyer The MOTION FAILED (5-5). 2:35:34 PM Representative Hawker MOVED to ADOPT Amendment 4: Page 7, line 15 through page 9, line 16 Delete all material Renumber following sections accordingly Co-Chair Meyer OBJECTED for discussion purposes. Representative Hawker explained that the amendment would delete the mechanism for the district cost differential. He felt that the legislation was an inappropriate vehicle and spoke in support of keeping a clean bill. 2:36:43 PM Co-Chair Chenault spoke against Amendment 4. He stated that the two studies were not conclusive. He acknowledged that problems remained, but emphasized that delay would only hurt students. All the studies demonstrated need, even if there is no agreement over the level of need. The bill is a compromise, phased in over 4 years, which helps out the school districts and forces everyone to admit that there is a problem in order to find a remedy. He spoke passionately about his school district's efficiency. He opined that short funding has made them efficient, but they can't go any farther. Rural Alaska only recently had to make the same cuts. He said the problem is the cost differential and stressed that he was trying to do what is best for kids around the state. 2:41:27 PM Representative Hawker observed that the legislative drafters would conform the amendment. He addressed the fiscal notes, which show a $20 million increase for each of the next four years. He pointed out that the cost would be $80 million by FY09. He argued for being judicious. 2:44:06 PM Co-Chair Meyer WITHDREW his objection. Co-Chair Chenault maintained his objection. A roll call vote was taken on the motion. IN FAVOR: Hawker, Meyer OPPOSED: Weyhrauch, Croft, Foster, Holm, Joule, Kelly, Moses, Chenault The MOTION FAILED (2-8). 2:45:41 PM Co-Chair Chenault spoke in support for the bill. 2:46:24 PM GRAYSON CARLYLE, STUDENT, DZ MIDDLE SCHOOL, spoke in support of HB 13. He referred to district cost factors and the Institute of Social and Economic Research (ISER) research. He spoke in support of the new costs factors, which he felt were better than the current ones. He stressed the need to take steps forward to improve school systems. Representative Foster MOVED to report CSHB 13 (FIN) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 13 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a new fiscal impact by the Department of Education and Early Development, and with indeterminate fiscal note #1 by the Department of Education and Early Development, and with a new indeterminate fiscal note by the Department of Health and Social Services 2:50:42 PM