HOUSE BILL NO. 193 "An Act relating to funding for Internet services for school districts; and providing for an effective date." 9:15:24 AM Co-Chair Foster noted there were two amendments for the bill. Representative Stapp MOVED to ADOPT Amendment 1, 33- LS0817\A.31 (Bergerud, 2/13/24) (copy on file): Page 1, following line 9: Insert a new bill section to read: "* Sec. 2. AS 14.03.127 is amended by adding new subsections to read: (d) If the total cost to a school district for Internet services exceeds the amount awarded to the district under the federal universal services program combined with the amount awarded under this section and the district uses an Internet services provider that is not approved under the federal universal services program but that meets the needs of the district, the district remains eligible to receive funding under this section, and the school may use funding received under this section to pay for part of the cost of using the Internet services provider. (e) If the total cost to a school district for Internet services from an Internet services provider that is not approved under the federal universal services program is equal to or less than the amount that would have been awarded to the school under (a) or (b) of this section, the school district is eligible to receive an amount equal to the actual cost for Internet services, up to the amount that the school district would have been awarded under (a) or (b) of this section." Renumber the following bill section accordingly. Co-Chair Foster OBJECTED for discussion. Representative Stapp explained the amendment. He outlined some of the structural issues he believed to be within the program that were likely not the intent of the bill sponsor. He was offering the amendment because he had compared the Universal Services Program information and all of the E-Rate billings per eligible school (in the committee packets) to the Broadband Assistance Grants (BAG) that some of the school districts receive and had noticed a couple of things that did not add up. First, he determined that after large federal and state subsidies there were rural schools in small districts that still had to pay around $50,000 for internet. He highlighted that during public testimony the committee had heard from school districts that were buying systems for internet that were not qualifying for a BAG award. He used the Bristol Bay School District as an example and stated that the total monthly billing from its service provider was over $100,000. A 90 percent E-Rate discount from the federal government was applied to the school district's bill. Additionally, the school district received $91,000 for BAG. Representative Stapp underscored that despite all of the subsidies, the school district paid over $50,000 for internet the previous year. He relayed that staff within the school district had told him they were looking at buying a different service provider because despite the subsidies, their internet costs were still extremely high. He stated that the school district had options that worked better that cost less money; however, due to the BAG structure, the school district could not receive any state money for those other options. He believed that if the state was going to give the school district $91,000 in BAG funds and the district wanted to move to a service provider that better met its needs at a cost of $40,000, the state should be able to give the school district the $40,000 instead. He reasoned the school district would get the product it wanted, and the state would save money. He noted there were some issues with the amendment that should be discussed. 9:18:46 AM Co-Chair Edgmon felt like they were relitigating the bill. He had brought the bill to the committee and explained that the intent was to build off a well established program that had been through the legislature in a couple of iterations and involved a very complex application process at the school district level. He stressed that the program had to meet a complex federal regulatory process in the Universal Services Program. He stated that on top of those things there was the Board of Education regulatory process. He was opposed to relitigating the bill and spending several additional hearings on the topic. Representative Stapp stated it was not his intent to re- litigate the bill. His intent was to withdraw the amendment because he did not believe it met his intended goal. He believed the intent of the program - when it was enacted in 2014 - was to help rural schools get higher speed internet and act as an equalizer [with urban schools]. He had listened to the meetings from 2014 and 2019. He clarified that he was not out to structurally change the program. His only concern, particularly when it came to the fiscal aspect of the BAG award, was that the discussion was about two separate things that did not depend on each other. He remarked that there were plenty of schools that had E-Rate awards that did not get BAG money. He elaborated that the state grant was not dependent on the E-Rate awards. He reasoned that it was dependent on the fact that E-Rate awards were based on the concept of megabits per second (Mbps). Representative Stapp emphasized there was no mechanism within the program that considered an internet service provider that did not maintain a constant speed (i.e., 25 to 100 Mbps). He highlighted a scenario where an ISP [internet service provider] offered internet at 100 Mbps that increased to 105 Mbps occasionally and the school district could no longer receive a BAG award. He knew there was a problem, but he did not know how to fix it. He suggested at some point the legislature should look at how to better deliver the goal of the best internet possible for school districts. He stated his intent was to try to deliver a better outcome that districts wanted and to leave the decision up to districts. He believed it would cost the districts and the state less money. He highlighted the goal of lowering the fixed costs paid by districts via the program. 9:22:02 AM Co-Chair Foster noted there were two avenues. Withdraw the amendment or explore the issue further. Co-Chair Edgmon wanted to respect Representative Stapp's ability to investigate the bill; however, he reminded committee members of the hard deadline. He pointed out that there was separate legislation [SB 140] that would need to go through a conference committee if it were to supersede HB 193. He underscored that time was of the essence. He remarked that virtually every school district had visited the building in the past couple of weeks and he had 100 conversations that had touched on the issue. He was not saying the concerns addressed by Representative Stapp were not legitimate; however, none of the school districts had brought up the issue to that extent. He believed the recognition was that 100 Mbps was the best the state could do, but in a perfect world it would be much higher. He stated there was a large fiscal note attached to the bill. Co-Chair Edgmon recognized the bill was imperfect in nature as had been the case upon introduction in 2014 and when amended in 2020. The hope was that the billions of dollars in federal funds primarily coming through the Broadband Equity, Access, and Deployment (BEAD) program would mean the state did not have to put undesignated general fund (UGF) money into supporting the BAG program. He believed the discussion was worthy, but he stressed that the committee could spend a lot of time in the minutia of the bill and still not have a perfect outcome. He stated the bill helped a lot of schools and may not perfectly fit the scope of every school; however, the business managers and superintendents in his district had told him it was good enough. He highlighted that missing the deadline would mean losing an entire year. Co-Chair Foster echoed Co-Chair Edgmon's comments in the sense that the program had existed for some time, and he did not want the perfect to become the enemy of the good. He wanted to give DEED time to elaborate on Representative Stapp's comments that there did not appear to be an easy fix. He suspected the department would likely say the same thing. 9:25:11 AM Representative Stapp asked to hear from individuals with DEED. LAURAL SHOOP, LEGISLATIVE LIAISON, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, introduced herself. KAREN MORRISON, DIRECTOR, DIVISION OF FINANCE AND FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, introduced herself. Co-Chair Foster asked if there was an easy fix to the issue brought up by Representative Stapp. Ms. Shoop believed the intent of the amendment was for schools to have alternatives to the federally approved internet service providers. She explained that the E-Rate program had been long-established by the federal government. She detailed that internet service providers were required to register with the federal E-Rate program in order to be considered in the application process. There was a very specific set of forms school districts were required to use when applying for the E-Rate program. She believed the amendment was intended for internet service providers who were not registered under the federal services program to be eligible for school BAG funding. Representative Stapp agreed. He clarified that he did not necessarily mean it should be a requirement for the internet service provider to be registered. He thought there were benefits of having the provider registered. He stated that at the end of the day it did not matter. He explained that the intent of the amendment was to give a school district the ability to use a service provider that best suited its needs. He suggested that if the cost was less, the state should give the school districts the lesser amount of money to cover the entirety of their cost as long as it was less than the state would have given school districts under the BAG program. He was not sure how to craft it properly. He asked the department why a hard cap on the Mbps did not work with different service providers. Ms. Shoop deferred the question to a colleague. FAYE TANNER, PROGRAM COORDINATOR, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT (via teleconference), asked to hear the question again. Representative Stapp considered the scenario where the eligible BAG award was increased to 100 Mbps. He asked whether an internet service provider that had a service rate that fluctuated between 80 and 200 was eligible to use BAG money because the rate was not a consistent number. Ms. Tanner responded that under current statute anything exceeding 100 Mbps would not qualify. She stated it was one of the issues several school districts were having with the use of Starlink or speed that exceeded 100 Mbps. The current speed was 25 Mbps. 9:29:44 AM Representative Stapp relayed that he had talked to many school district business managers about their upcoming bids. He relayed that some of the school districts were planning on changing their bids. He WITHDREW Amendment 1. Representative Coulombe WITHDREW Amendment 2, 33-LS0817\A.7 (Klein/Bergerud, 2/12/24)(copy on file). Co-Chair Foster highlighted that the fiscal notes had been reviewed the previous week. Co-Chair Johnson MOVED to REPORT HB 193 out of committee with individual recommendations and the forthcoming fiscal note and the ability for Legislative Legal Services to make technical and conforming changes. HB 193 was REPORTED out of committee with eight "do pass" recommendations, two "amend" recommendations, and one "no recommendation" recommendation and with one new fiscal impact note from the Department of Education and Early Development. 9:31:46 AM AT EASE 9:33:28 AM RECONVENED