SENATE BILL NO. 64 "An Act relating to school bond debt reimbursement; and providing for an effective date." 9:05:30 AM LAURA PIERRE, STAFF, SENATOR ANNA MACKINNON, explained SB 64. She said that SB 64 would sunset the school bond debt reimbursement program for five years, and would reduce the rates. Currently, the reimbursement rates were 70 percent for a standard construction or new build on a school; and 60 percent on non-standard expansion and construction. Ms. Pierre discussed the Sectional Analysis (copy on file): Section 1: Amends AS 14.11.014, adds new subsection (d) Sunsets the bond debt reimbursement provisions for school construction and major maintenance for five years, January 1, 2015 - July 1, 2020. Section 2: Amends AS 14.11.100(a) Page 6, line 21 restricts reimbursement of bonds authorized after January 1, 2015. Page 7, lines 1 - 11, deletes language relating to bonds authorized after May 1, 2015. Section 3: Amends AS 14.11.100(a) Page 12, line 17 - Page 13, line 2 inserts language relating to bonds authorized on or after July 1, 2020. (18) For projects approved under AS 14.11.100 (h), (i), and (j)(2) - (5) the reimbursement would be 50 percent. (19) For projects approved under AS 14.11.100 (h), (i), and (j)(2), (3), and (5) the reimbursement would be 40 percent. Section 4: Amends AS 14.11.100, adds a new section (s) Restricts the Commissioner from approving an application for bond debt reimbursement between January 1, 2015 - July 1, 2020 Section 5: Amends AS 14.11.102, adds new section (c)Restricts the Commissioner from approving an application for bond debt reimbursement between January 1, 2015 - July 1, 2020 Section 6: Repeals sections 1, 4, and 5 of this act on July 1, 2020 Section 7: Retroactivity clause Sections 1, 2, 4, and 5 of this act are retroactive to January 1, 2015 Section 8: Section 3 of this act takes effect July 1, 2020 Section 9: Sections 1, 2, 4, 5, and 7 of this act take effect immediately 9:08:49 AM Senator Olson remarked that the bill was a positive move toward addressing the shortfall in revenue. He wondered how the bill affected the construction of the Kivalina School as related to the Kasayulie Case. Ms. Pierre replied that the only school with projects on a potential ballot was the Anchorage School District, and their election would be April 7, 2015. The Anchorage School District would not receive reimbursement for the bonds, if the bill were signed and passed into law prior to the election. She did not know how the other school districts' bond packages were structured. Senator Olson wondered if the bill affected the Kivalina School construction. Ms. Pierre replied that the legislation did not affect the Kivalina School construction. Senator Bishop wondered if there would be any new budget requests for new projects. ELIZABETH NUDELMAN, DIRECTOR, SCHOOL FINANCES AND FACILITIES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, explained that the timeline eligibility throughout the legislation was voter authorization. Some of the voter- authorized bonds were not yet applied to the department, and some had not yet sold all of the bonds. The legislation stated that the commissioner may not approve and application for indebtedness authorized by the qualified voters of the municipality. DAVID NEES, SELF, ANCHORAGE (via teleconference), testified in support of the legislation. Co-Chair MacKinnon CLOSED public testimony. 9:16:58 AM AT EASE 9:18:36 AM RECONVENED 9:18:48 AM Co-Chair MacKinnon discussed the retroactive effective date. She remarked that there was some concerns about the legality of the retroactive date of January 1, 2015, and how it affected language consistent with statute. Ms. Pierre explained that she had some discussion regarding the retroactive effective date. The legislative legal department suggested and effective date of May 1, 2015, which reflected current state statute. The statute stated that districts could issue bond debt from October 2006 through May 1, 2015. She announced that legislative legal did not express concern regarding the retroactive date, so long as the legislation were signed and passed by the Anchorage election on April 7, 2015. Senator Olson asked if the administration was in favor of the legislation. Ms. Pierre responded that there was a scheduled meeting with the governor to discuss the bill. Co-Chair MacKinnon announced that local communities currently had the ability to indebt the state to an amount that the community determines, rather than what the state determines. Senator Dunleavy felt that SB 64 was responsible legislation. He believed that the legislature often invited lawsuits, but he felt the fear of litigation should not be a driving force behind supporting a bill. 9:23:30 AM AT EASE 9:23:59 AM RECONVENED 9:24:06 AM Senator Olson agreed with the focus of the legislation. He remarked that school construction was important, but also very expensive. He felt that the legislation was prudent. Senator Dunleavy stressed that there was no guarantee that the state would provide funding, because it was always subject to appropriation. Co-Chair MacKinnon agreed with that assertion. Vice-Chair Micciche stated that the fiscal note related to debt service. 9:25:51 AM AT EASE 9:26:52 AM RECONVENED Vice-Chair Micciche expected the bill to have zero fiscal impact on the state. Vice-Chair Micciche MOVED to REPORT SB 64 out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SB 64 was REPORTED out of committee with a "do pass" recommendation and with one new indeterminate fiscal note from the Department of Education and Early Development. 9:28:03 AM AT EASE 9:33:09 AM RECONVENED