HOUSE BILL NO. 180 "An Act amending the percentages required to be paid by a municipal school district receiving a school construction or major maintenance grant; making a conforming amendment to a bond debt reimbursement provision referencing the percentages; and providing for an effective date." CHRISTINE HESS, CHIEF OF STAFF, REPRESENTATIVE REGGIE JOULE, stated that the legislation proposed a change in the participation share of local governments in grant funding for school districts. Currently, A.S. 14.11.008(b) established the required participating chair for a municipal school district for a construction or maintenance grant project based on the district's full value per average daily membership (ADM). In 2008, SCS HB 373 passed the legislature on April 11th, near the end of the session. On the senate side a change was made, which the house concurred with on the same day. The change placed the participating shares into four categories; 5, 10, 30, 35 percent. For most participating governments, the local participating share went down, but for several local governments the share jumped from 10 percent to 30 percent. The bill proposed to stair-step those local governments with a 20 percent share. The fiscal note attached was for $2.6 million. The impacted communities were; Kake, Dillingham, The Northwest Arctic Borough, Klawock, Nome, and Kodiak. The list of proposed projects was located on the sponsor statement (copy on file). 1:59:53 PM SAM KITO III, SCHOOL FACILITIES ENGINEER, DEPARTMENT OF EDUCATION AND EARLY CHILDHOOD DEVELOPMENT, testified as to how the legislation would affect his district. He stated that concerning ADMs; the department was examining the average daily membership, which was the count of the students on an annual basis, but the full assessed value of the property for the given district divided by the number of student in the district. Representative Gara asked if the equation applied to regional education attendance area (REAAs). He queried if there was a contribution requirement for REAA villages. Mr. Keno replied that REAAs had a limited amount of 2 percent participating share, the participating share table only applied to municipal governments. Representative Doogan understood that the legislation would reduce the participating share for districts between 275,000 and 500,000 by 10 percent. He wondered what the benefit of the change would be. Ms. Hess replies that the increase from 10 to 30 percent, instituted in 2008, had been too extreme for the affected communities. Representative Doogan understood that the assumption was that larger districts had more resources, so the participating share should be higher. Ms. Hess replied in the affirmative. 2:03:08 PM Co-Chair Stoltze added that rural schools had a limited tax base. He acknowledged the difficulty of funding schools with a weak municipal economy. Representative Foster asked if the legislation was an attempt to create parity across the board for all schools in the state. Ms. Hess replied that ultimately it was a policy call where the participating share would fall for each district. The smaller communities would be receiving the reduced share. Representative Foster expressed support for the bill. Representative Gara summarized that if the ADM per student was over 800,000, the municipality paid 35 percent, and the schools on major maintenance projects were placed on the major maintenance project list. Mr. Kito replied that the municipality was responsible for the participating share percentage. Representative Gara wondered why a district would want a project on the major maintenance list, when bonding would be less expensive. Mr. Kito responded that when a municipality bonded for a project, the bonds need to pay interest. The municipality would need to weigh the principal and interest cost against what the participating share cost would be on the major maintenance or the grant list. 2:07:19 PM Co-Chair Stoltze asked if the community received the money up front if it was on the major maintenance list. Mr. Kito replied yes. Representative Salmon wondered who sponsored HB373 in 2008. Representative Fairclough shared that the bill was introduced by the House Finance Committee in 2008. Ms. Hess added that HB373 had been changed on the senate side. DR. NORMAN ECK, NORTHWEST ARCTIC BOROUGH SUPERINTENDENT OF SCHOOLS, KOTZEBUE (via teleconference), spoke in favor of the legislation. He testified that the jump from 10 percent to 30 percent had been difficult for the district to reconcile. He informed the committee that the Northwest Arctic School District had done a lot independently over the years to provide for school construction, rather than wait in line for grants. Schools had been remodeled and rebuilt with bonds. The 30 percent participating share had stifled further school projects. He stated the burden that had been placed on the region had been unfair, and the 20 percent stair step would make a positive difference in the lives of the students. 2:12:25 PM Co-Chair Stoltze closed public testimony. Representative Joule clarified that the request was not to return to the 10 percent, but rather a mid-level percent. He hoped as the session progressed the bill would continue to live. Representative Austerman asked how much more work needed to be done on the bill. Co-Chair Stoltze wanted gather more debt reimbursement information for further discussions. 2:14:09 PM HB 180 was HEARD and HELD in committee for further consideration. Co-Chair Hawker discussed housekeeping.