SB 11 SCHOOL DEBT REIMBURSEMENT  CHAIRMAN WILKEN introduced SB 11 as the next order of business before the committee. The committee took a brief at ease and Chairman Wilken announced that SB 58 would not be taken up today. Chairman Wilken noted that there is an amendment for SB 11. Number 580 BRETT HUBER , Staff to Senator Halford, noted that Senator Halford had provided the committee with an amendment for consideration. The amendment is a result of testimony and committee discussion during the last hearing of SB 11. The amendment changes the date of reactivation of the school bond debt reimbursement program from July 1, 1995 instead of July 1, 1997. The amendment also changes the reimbursement level from 50 to 70 percent which applies to future funding that receives authorization and local voter approval. The amendment broadens the qualification criteria for DOE to improve the projects which includes a reduction in school districts' operating costs because of the project or facilities that require modification/rehabilitation to improve the instructional program. Mr. Huber pointed out that adoption of this amendment would allow the Mat-Su three school package approved by local voters in 1995 as well as the Anchorage package scheduled for April for the reimbursement program. TAPE 97-31, SIDE B CHAIRMAN WILKEN noted that SB 11 would be held for a committee substitute to include these changes. Mr. Morgan is present to discuss the overhead charge from DOE. SENATOR WARD moved to adopt the amendment which reads as follows: Page 3, line 30: Delete " 1997 " Insert " 1995 " Page 4, line 7: Delete " 50 " Insert " 70 " Page 4, line 10 Delete " 1997 " Insert " 1995 " Page 5, line 26, following "enrollment;": Delete "or" Insert "[OR]" Page 5, line 28, following "codes": Insert "; (C) operating costs that would be reduced by the project;  or (D) facilities that require modification or rehabilitation for the purpose of improving the instructional program " Page 5, line 29: Delete "takes effect July 1, 1997" Insert "is retroactive to July 1, 1995" Page 5, following line 29: Insert a new bill section to read: " *Sec. 6. This Act takes effect immediately under AS 01.10.070(c)." CHAIRMAN WILKEN noted that the reimbursement level has bounced around. He believed that it would be best to make the percentage 75 and discussed that with Senator Halford. Chairman Wilken asked if Mr. Huber and Senator Halford had discussed that issue. BRETT HUBER said that he had talked with Senator Halford about that issue. Senator Halford is not opposed to that idea, that is a policy call. CHAIRMAN WILKEN requested that Mr. Huber notify Senator Halford that was discussed and requested that it be included in the forthcoming CS. MIKE MORGAN , Facilities Manager for the Department of Education, explained that as districts apply for reimbursement of the principle the district has paid on bonds, the interest the district paid, and for any fees associated with the bonds. When the department includes that in the budget request for the year, the department adds the overhead amount to that district's request. There are no reductions in the request of the district. Mr. Morgan clarified that as long as the Legislature fully funds the requests of districts, the district receives 100 percent. If there is a reduction in funding, that is not taken from the districts. With regard to the amendment, Mr. Morgan noted that the amendment was in response to a suggestion by the department. Mr. Morgan noted that as written, the amendment has language saying "if a district can demonstrate an operating cost reduction". Therefore if a district shows that it can save $1,000 per year with a project, but the cost of the project is $12 million the department would have to approve that project. On the grant side, there are statute provisions that specify that the grant should be reviewed and in the best interest of the state. There is an opportunity for abuse. BRETT HUBER said that portion of the amendment was included per the department's testimony at the last hearing. Mr. Morgan's point makes sense, as the criteria is broadened and the percentage of state funding is increased; those are issues to review. CHAIRMAN WILKEN asked if there was any objection to the amendment. Hearing none, the amendment was adopted. SB 11 was held for the pending committee substitute. Chairman Wilken realized there were witnesses via teleconference for SB 11. LARRY WIGET , Director of Government Relations for the Anchorage School District, supported SB 11 and the amendment. This Spring Anchorage voters will be asked to approve a bond for capital construction in the amount of $24,593,000. Currently, there is no debt reimbursement if these bonds pass and changing the effective date to July 1, 1995 would include these bonds. Mr. Wiget said that a state to local match provides an incentive for voters to approve bonds, enables districts to stretch dollars to cover much needed school construction and demands public accountability. BOB DOYLE , Finance Director for the Mat-Su School District, supported the amendment. Mr. Doyle indicated the need for assurance that the Legislature is committed to funding SB 11 and the intent of debt reimbursement. Next year, Mat-Su expects 12,606 students. Mat-Su is the third largest district in the state with an annual growth of seven percent over the last 20 years. Mr. Doyle emphasized that the Mat-Su district is growing at two percent per year which equates to 250 students per year. Therefore, the district would need to build a new elementary school every two years in order to house those students, but that has not been done. Mat-Su has 1,000 students that are taught in portables and the majority of the schools are over capacity. Mr. Doyle pointed out that three necessary schools were approved by voters and are awaiting legislative support. Mr. Doyle discussed some of the projects included in the six year capital improvement program for Mat-Su. BETH MCKIBBEN , the Mat-Su Borough Planning Department, said that the Mat-Su Borough is one of the fastest growing areas in the state. Between 1990 and 1996, Mat-Su's population increased by 11,076 which is a 4.7 percent annual increase, the highest annual growth rate in Alaska. Since 1990, the Meadow Lakes population has increased by 2,311 with an annual average growth rate of 13.1 percent. Palmer has increased by 7.9 percent annually, Big Lake by 7.3 percent annually, and Butte by 3 percent. Ms. McKibben said that those communities are four of the fastest growing areas in Alaska. CHARLES HUGGINS , parent and school board member, noted that most in the Mat-Su district were pleased with the 50-50 proposition, and even more pleased with the 70-30 proposition. Mr. Huggins informed the committee that the elementary school in Big Lake has a capacity of 500 which increased to 723 students this year. This increase resulted in the need for portables and an increase in staffing. Mr. Huggins stressed that accommodating that increase in students is challenging. There have been some special sessions with the community in order to determine how to reduce those numbers, but that is disruptive. The public questions why new schools cannot be built. Mr. Huggins echoed Ms. McKibben's comments that Meadow Lake is one of the fastest growing areas in Alaska and there is not even an elementary school in that community. Mr. Huggins discussed the situation in the Talkeetna School where the ceiling in one room is covered with visqueen that connects to a hose in order to evacuate the incoming water. The amendment heads in a positive direction for that situation. Also the community is reviewing year-round schooling in order to accommodate the population. Number 412 BARBARA LACHER , Mayor of Wasilla, believed that the ease with which the amendment was adopted would indicate the ease with which the forthcoming CS would be reported out of committee. Mayor Lacher hoped that when the bill is before the entire Legislature, there will be a commitment to funding in the short term as well as the long term. Mayor Lacher was pleased with the consideration of the increased percentage. Mayor Lacher informed the committee that increasing the percentage from 50 to 70 percent would save the average homeowner $100 per year and over a 20 year bond repayment that would result in a savings of $2,000 per year. Mayor Lacher said that the Mat-Su Borough would help with this legislation. CHAIRMAN WILKEN requested that Mr. Morgan submit some written testimony regarding over head charges in order that the testimony could be sent to some of the school districts.