HOUSE BILL NO. 212 "An Act relating to funding for school construction and major maintenance; and relating to the regional educational attendance area and small municipal school district fund." 2:52:01 PM Co-Chair Foster passed the gavel to Co-Chair Seaton. 2:52:23 PM AT EASE 2:52:56 PM RECONVENED REPRESENTATIVE NEAL FOSTER, SPONSOR, provided detail about the bill. He reported that HB 212 expanded the Regional Education Attendance Area (REAA)and small municipal school district fund to include major maintenance in addition to new school construction. The bill would save the state money by reducing the need for replacement. The bill was supported by the Coalition for Education Equity, which was a coalition comprised of several school districts and was heavily involved in the Kasayulie decision. He asked his staff to continue. JANE PIERSON, STAFF, REPRESENTATIVE NEAL FOSTER, provided an explanation of changes in the new Committee Substitute (CS). Section 1 from version D is eliminated from version U The new CS supports keeping the two lists for school construction and major maintenance as they are currently in statute. Section 2 is new, amending AS 14.11.030(b) to add clarifying language that it is the unexpended and unobligated balance of the fund that may not exceed $70,000,000. Section 3 Adds a new subsection AS 14.11.030(e) that states that not more than 20 percent of the fund available for appropriation from the REAA and small municipal school district fund may be used for major maintenance projects. Ms. Pierson cited the two spreadsheets that were included in members' files; "With School Debt Program Reinstated" and "Without School Debt Program Reinstated" (copy on file). She continued to address the bill with a prepared statement: The school construction and major maintenance grant programs were the only significant programs that provided funding for new construction, renovation, or major maintenance without bonding capacity. A healthy and continued grant program for construction and major maintenance provided a vetted solution to the funding for high priority major maintenance needs such as boilers, roofs, and other important systems and safety measures in schools. Ms. Pierson furthered that in 2010 the legislature passed SB 237 - School Construction & Costs [CHAPTER 93 SLA 10 - 06/21/2010], which established the REAA and in 2013, five small municipal districts were included in the fund. The program was a success and greatly reduced the number of schools on the school construction grant list. She explained that the funding was based on the amount of debt outstanding for municipal schools adjusted by the amount of money spent on REAA schools and by the percent of student population. The method provided a consistent level of funding for REAA and small municipal school districts' school construction and addressed the concerns raised in the Kasayulie case. She furthered that in 2015 the legislature passed SB 64 - School Bond Debt Reimbursement [CHAPTER 3 SLA 15 - 04/24/2015], which placed a moratorium on school projects employing debt reimbursement as authorized by local voters until July 1, 2020. Currently due to an increase in applications for the major maintenance grant funding list the bill expanded the REAA funding which was beneficial for rural and urban Alaska. She elaborated that by including major maintenance to the REAA fund other non-REAA projects could take priority on the major maintenance list. 2:57:52 PM Vice-Chair Gara MOVED to ADOPT the proposed committee substitute for HB 212, Work Draft 30-LS0741\U (Laffen, 3/29/18). There being NO OBJECTION, it was so ordered. Co-Chair Foster summarized that the bill did not ask for additional funding, it merely changed how the pie was cut and how the funds were allocated. He explained that currently the funding was only authorized for school construction for REAA schools and the bill requested that the money could also fund major maintenance. He emphasized that the bill did not request more money. Representative Wilson asked for the definition of major maintenance. Ms. Pierson replied that the definition was in AS 14.11.013. She read the following from the statute: (A) avert imminent danger or correct life-threatening situations; (B) house students who would otherwise be unhoused; for purposes of this subparagraph, students are considered unhoused if the students attend school in temporary facilities; (C) protect the structure of existing school facilities; (D) correct building code deficiencies that require major repair or rehabilitation in order for the facility to continue to be used for the educational program; (E) achieve an operating cost savings; (F) modify or rehabilitate facilities for the purpose of improving the instructional program; (G) meet an educational need not specified in (A) - (F) of this paragraph, identified by the department;? Ms. Pierson indicated that the projects had to cost over $25 thousand. Representative Wilson asked whether the funding applied to any district or only REAA schools. Ms. Pierson replied that the funding applied to REAA schools and the small municipal districts. Representative Wilson spoke about the state's other project list for school major maintenance that included many urban schools. She stated that REAA schools on the state major maintenance list that were funded through the REAA fund would move off the list and allow other schools to advance on the list. 3:00:40 PM Ms. Pierson replied that a major maintenance list existed and was included in members' packets (copy on file) titled "Attachment 4 Major Maintenance List FY 19 Final," which included the Department of Education and Early Development (DEED) Capital Improvement Projects (FY 2019) Major Maintenance Grant Fund. Representative Wilson was trying to connect the dots and understand the project list Ms. Pierson was referring to. She used an example with a top listed school being a REAA school and inquired whether it could use funding from the REAA fund versus using an Undesignated General Fund (UGF) only appropriation. Ms. Pierson replied in the affirmative. Representative Tilton asked whether there was any prioritization of maintenance versus new school construction and if so, she wondered why. Ms. Pierson explained that the reason the CS included that not more than 20 percent of the fund available for appropriation from the REAA and small municipal school district fund may be used for major maintenance projects was to ensure the priority was new school construction. The provision specified "up to 20 percent" because at times of new school construction utilizing 20 percent might not be possible. Representative Tilton asked for the average lifespan of a school building covered by the bill. Ms. Pierson deferred to the Department of Education and Early Development (DEED). Vice-Chair Gara recalled that in some cases it had been easier to move up the major maintenance list if the school district had more resources to justify its need in the application, leaving districts with less funding at a disadvantage on the list. He asked whether the scenario had been a concern. Ms. Pierson responded that the Major Maintenance Grant Fund was a grant program requiring applications. She pointed to AS 14.11.011 that outlined application requirements. She agreed that a better application proposal could improve the chances of rising on the list. However, she pointed to the current major maintenance list and noted that the first, fifth, seventh, eighth, fourteenth, sixteenth, and seventeenth schools were all REAA. 3:04:03 PM Vice-Chair Gara did not want a REAA school to not be included on the major maintenance list if REAA funds were diminished and guessed that was also the sponsors intention. He deduced that the bill's purpose was to find an "easier source of funding" for some major maintenance but not remove REAA schools from the list. Ms. Pierson answered in the affirmative and noted that was the reason the sponsor wanted only one list. She detailed that there was a cap on the REAA small municipal school fund of $70 million. She indicated that in 2011 some funding was moved out of the fund and it would be "advantageous" to use funds for maintenance. Representative Tilton restated her question regarding an average current building life span to help understand what the maintenance level was. TIM MEARIG, SCHOOL FINANCE AND FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, answered that no standard life span for schools existed. The district used 50 years as an average. Representative Tilton asked whether the 50 years applied to all school districts. Mr. Mearig responded that it was difficult to speak to average life spans of individual buildings but overall the state strove to achieve 50 years of life for school facilities. Co-Chair Seaton asked for clarification. He wondered whether the answer applied to REAA buildings. Mr. Mearig replied that he was speaking about the average lifespan of the buildings. He had details on the average age of schools but was referring to average lifespan. Representative Guttenberg asked how the list was upgraded. He looked at the order of the list and asked why school number 4 that was at the cut off in the prior year was not always the first on the list the following year. He inquired how the ranking took place. Mr. Mearig answered that all the projects were ranked against a series of criteria by points, which determined priority. He furthered that if a project that was introduced in a given year had points exceeding other projects previously on the list it would out rank the prior year's priority schools. Representative Guttenberg noted that priorities changed from year to year. He asked if a school was given a chance to redo its grant application from one year to the next. 3:10:10 PM Mr. Mearig responded that every year a district had an opportunity to apply for the grant. He reported that several years ago the department allowed districts to extend the previous year's application for an additional year, so they would not have to invest in a new application every year. The scores from the prior year were carried over for one additional year, but the district would be able to write a new application with better or different information in an attempt to elevate the project on the list. Co-Chair Seaton OPENED public testimony. KERRY BOYD, SUPERINTENDENT, YUKON KOYUKUK SCHOOL DISTRICT, EAGLE RIVER (via teleconference), spoke in support of the legislation and believed it would help her school district. The bill would potentially allow for the backlog of major maintenance projects to be addressed. She stated the need for the major maintenance grants to be funded. She reported that the governor had requested $70 million in HB 282 - Approp: Capital Budget Contingent on Tax. She asked whether the funding would be included in the capital budget and asked the committee to pass HB 212. Representative Guttenberg asked Ms. Boyd to provide a geographic description of the Yukon Koyukuk school district. Ms. Boyd complied and noted that she was presently in the Eagle River office. She listed the districts that included six urban areas in Fairbanks, Wasilla, Delta Junction, and Juneau. The ten rural remote schools in the district were spread out over 70 thousand square miles; most were accessed by airplane and two were accessible via road. The district had some older schools and that were addressed through the major maintenance list. Co-Chair Seaton CLOSED public testimony. Representative Wilson MOVED to REPORT CSHB 212(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, CSHB 212(FIN) was REPORTED out of committee with a "do pass" recommendation and with one previously published zero fiscal note: FN1 (EED). 3:15:23 PM AT EASE 3:18:21 PM RECONVENED