SB 208-SCHOOL CONSTRUCTION BOND DEBT  8:58:14 AM CHAIR STEVENS announced that the next order of business would be SB 208, version A. DAVID SCOTT, Staff, Senator Donny Olson, Alaska State Legislature, Juneau, Alaska, presented SB 208 on behalf of the sponsor. He explained that the intent of SB 208 is to encourage small and rural schools to address their facility improvement needs by issuing debt, rather than by obtaining a state grant program. It would increase the state's share of the debt reimbursement from 70 percent to 80 percent for a select number of schools. Those schools are those who meet the 20 percent threshold of the participating share that is set in AS 14.11.008. He counted seven schools that are eligible to participate. 9:00:03 AM MR. SCOTT referred to a drafting error in Section 1, page 7, lines 1 and 2. It states that the schools would have to "meet or exceed" the 20 percent participating share requirement. It is the intent of the sponsor that it should say the schools should "meet" the 20 percent participating share. The words "or exceed" is confusing language and needs to be removed. He continued to explain that Section 2 is a retroactive clause that would allow schools that have taken debt at 30 percent after January 1, 2013, and who meet the 20 percent requirement, could take on the 20 percent share retroactively. Section 3 is the immediate effective date. 9:01:51 AM SENATOR GARDNER asked for clarification of Section 2. She inquired if it applied to anyone who has outstanding debt or if there is a start date for that debt. MR. SCOTT said the project Port Alsworth would benefit from Section 2 in the amount of $128,000. SENATOR GARDNER said that explains why Port Alsworth has sent testimony on the bill. CHAIR STEVENS agreed. 9:03:15 AM ELIZABETH NUDELMAN, Director, School Finance and Facilities Section, Department of Education and Early Development (DEED), Juneau, Alaska, answered questions related to SB 208. CHAIR STEVENS requested the department's reaction to the bill. MS. NUDELMAN agreed that clarification of an area of the bill is needed, as pointed out by Mr. Scott. She said without it, it is difficult to complete a fiscal note. CHAIR STEVENS said that is problematic. MS. NUDELMAN related that the language on page 7, lines 2, "exceeds the 20 percent participating share" is a problem. If the intent of the bill is for districts who have a 20 percent participating share in the grant program, the language needs more clarity. CHAIR STEVENS requested an explanation of a document by DEED on the FY 2015 Participating Share Requirement. MS. NUDELMAN explained that the document comes from the Construction Grant Program, a competitive program. The department does not use participating share in this manner in the debt program. The department does review and rank the applicants for the Construction Grant Program. The statute for the grant program says if the full assessed value of the property in the district is over $500,000 per ADM, then the participating share is 30 percent. There is a ladder of five categories. The participating share for a school district and their municipality is 5 percent, 10 percent, 20 percent, 30 percent, or 35 percent for the grant program. The handout shows where each school district falls. For example, the Aleutians East is at 35 percent. She pointed out that the regional education areas are at 2 percent. They do not have legal capacity to bond. CHAIR STEVENS said Aleutians East must pay 35 percent as their local share. MS. NUDELMAN said, "For our grant program; correct." 9:07:50 AM TY MASE, Superintendent, Lake and Peninsula School District, King Salmon, Alaska, testified in support of SB 208. He thanked the sponsor and said how important the 20 percent rate is to his district. He related that the district has been pursuing an 80/20 school construction grant for Port Alsworth's school expansion for the better part of a decade. He said they have been as high as number five on the list. He said with an anticipated enrollment of 70-plus students in Port Alsworth, the district could not wait any longer to begin construction. In April they obtained voter approval to issue debt and get the project underway. The participating share was set at 70/30. He concluded that debt reimbursement is a means for the district to address overcrowding and much-needed upgrades. He requested passage of the bill. 9:09:56 AM NATHAN HILL, Manager, Lake and Peninsula Borough, King Salmon, Alaska, testified in support of SB 208. He thanked Senator Olson for sponsoring the bill and the committee for considering it. He believed the bill was a reasonable request and would have a positive impact on education and teacher development for rural schools like Lake and Peninsula Borough. CHAIR STEVENS commented that the school was built under the 30 percent program, but the 20 percent retroactively would be very beneficial. MR. HILL said yes. He added that there was overcrowding and they could not wait any longer to expand the school. CHAIR STEVENS said he has been in the old school and understands the problems they were facing. 9:12:05 AM TOM BEGICH, Government Affairs Director, Citizens for Educational Advancement of Alaska's Children, Anchorage, Alaska, testified in support of SB 208. He said the bill is good public policy and would allow districts to upgrade and improve schools in rural Alaska statewide. Rural schools were chronically underfunded for years. The bill would fill the gap in school grant construction. CHAIR STEVENS thanked Mr. Begich. MR. SCOTT pointed out that the participating share requirement has some precedent. On page 6, line 6, those schools who met the 10 percent participating share were eligible for 90 percent reimbursement from the state. He reiterated that the language in Section 1, page 7, lines 1 and 2, "or exceed" needs to be removed. Also, the sponsor would like to add language to allow for 5 percent and 10 percent shares, but for all practical purposed, those districts would not be able to bond. 9:15:12 AM CHAIR STEVENS asked Mr. Scott to comment on the need for clarity, as mentioned by Ms. Nudelman. MR. SCOTT agreed. The intent of sponsor is for 20 percent and lower. CHAIR STEVENS held SB 208 in committee.