SENATE BILL NO. 7: An Act relating to reimbursement of school construction debt; and providing for an effective date. Co-chair Pearce announced that SB 7 was before the committee and that Judith M. Brady, Executive Director, Alaska Municipal Bond Bank Authority, was joining the meeting via teleconference from Anchorage. She also invited Robert Poe, staff for Senator Pearce, to join the committee at the table. Co-chair Frank MOVED for adoption of SB 7(FIN) work draft "E". Hearing no objections, IT WAS SO ORDERED. ROBERT POE reviewed the sectional analysis (copy on file) that outlined SB 7 including grants for school construction, the review of the grant applications by school districts, reimbursement of school debt, and the authorization of the Alaska Municipal Bond Bank to facilitate the reimbursement of that school debt. Co-chair Pearce pointed out that Senator Kerttula had introduced SB 7 as a school construction reimbursement plan, and although there were some changes to CSSB 7(FIN) she asked him to speak to it. Senator Kerttula said that years had been spent on the issue of school reimbursement. He said that this legislation would provide local decision making with the state supporting the decision with 70 percent funding. He felt this bill was conservative but would help service the rural areas. Senator Kelly spoke in support of SB 7 but had a concern with the state supporting 70 percent of all swimming pools. He also had concern with new programs and said he would prefer that traditional programs be funded. His last concern was a $50,000 amount which he considered an operational expenditure and not suitable for this bill. Co- chair Frank voiced his support regarding Senator Kelly's remarks and said he would consider amendments to that affect. GARY BADER, Director, Administrative Services, Department of Education, said that there were statutes that limit the size of a swimming pool or excluded them from programs that can be funded. He agreed to get back to the committee with more information. JUDITH BRADY, via teleconference, said that in the short time she had to review SB 7, she felt that it would not cause any problems for the bond bank. The main concern was that the bank would not lose its rating. She asked if the municipalities and the bond bank would be doing financing before a constitutional amendment took effect. When the committee answered affirmatively, she asked how the bond would be paid back. Co-chair Frank asked her and the bond council to look at the bill more extensively. He hoped that the constitutional amendment would be passed next year but in the meantime, several school districts would issue debt and wanted to know if that would cause problems for the bond bank. Ms. Brady said that the bond bank's financial advisor would forward his ideas about this issue to the committee. End SFC-93 #64, Side 2 Begin SFC-93 #66, Side 1 Senator Kerttula said that the state had a 25 year history of repayment of school construction funds that technically were not obligations of the state. Senator Sharp asked if convertible bonds could be used to lock in a percentage difference once those funds were assured to be dedicated by the voters. Ms. Brady said that was possible. She concurred that the state had a good rating and had never had a default. Discussion was had by Senators Kelly, Frank and Ms. Brady regarding who was responsible for scrutinizing the municipality regarding their ability to pay. The Department of Education would be involved in the grant and design criteria. Mr. Brady suggested that an amendment be added to the bill making the community's ability to pay as a criteria for project approval. Mr. Poe and Ms. Brady agreed to prepare an amendment to CSSB 7(FIN). Discussion was had by Senator Rieger, Co-chairs Pearce and Frank regarding an amendment to determine a threshold for project costs. Discussion was also had on the words "alternative education project" on page 3, lines 13 and 14. Co-chair Pearce asked the committee to bring amendments to CSSB 7(FIN) as soon as possible. She announced the end of the teleconference part of the meeting and that CSSB 7(FIN) would be HELD in committee until April 21, 1993. Recess 10:45am Reconvene 10:50am