HOUSE FINANCE COMMITTEE May 9, 1998 11:25 P.M. TAPE HFC 98 - 165, Side 1. TAPE HFC 98 - 165, Side 2. TAPE HFC 98 - 166, Side 1. TAPE HFC 98 - 166, Side 2. CALL TO ORDER Co-Chair Hanley called the House Finance Committee meeting to order at 11:25 P.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative J. Davies Representative Martin Representative G. Davis Representative Moses Representative Foster Representative Mulder Representative Grussendorf ALSO PRESENT Speaker Gail Phillips; Representative Scott Ogan; Larry LaBolle, Staff, Representative Richard Foster; James Derringer, Staff, Representative Pete Kelly; Mary Lou Burton, University of Alaska, Fairbanks; Nico Bus, Administrative Services Manager, Division of Support Services, Department of Natural Resources; John Bitney, Alaska Housing Finance Corporation (AHFC), Anchorage; Mike Kriever, Staff, Representative Vic Kohring; Rick Cross, Deputy Commissioner, Department of Education; Eddy Jeans, Manager, School Finance Section, Department of Education. SUMMARY SB 36 An Act relating to transportation of public school students; relating to school construction grants; relating to the public school foundation program and to local aid for education; and providing for an effective date. SB 36 was HELD in Committee for further consideration. SB 231 An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date. SB 231 was HELD in Committee for further consideration. SB 360 An Act authorizing the issuance of bonds in the amount of $257,600,000 by the Alaska Housing Finance Corporation for certain capital projects; relating to those bonds and to the appropriation of revenue of the Alaska Housing Finance Corporation; and providing for an effective date. SB 360 was HELD in Committee for further consideration. SENATE BILL NO. 231 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." Co-Chair Hanley spoke to SB 231, Amendment #1, providing a sectional analysis. [Copy on File]. Representative Martin asked to divide the amendment, with a deletion of the deposit of the Permanent Fund, creating a separate amendment. Co-Chair Hanley agreed and MOVED to ADOPT Amendment #1(a). There being NO OBJECTION, #1(a) was adopted. Co-Chair Hanley MOVED to ADOPT #1(b), the last page of the original amendment #1. Representative Martin OBJECTED. He noted that he would not support making the deposit to the earnings reserve into the principle of the Permanent Fund. A roll call vote was taken on the motion to adopt #1(b). IN FAVOR: J. Davies, G. Davis, Foster, Grussendorf, Moses, Mulder, Hanley, Therriault OPPOSED: Kelly, Kohring, Martin The MOTION PASSED (8-3). Co-Chair Hanley MOVED to ADOPT Amendment #2. [Copy on File]. Representative Martin OBJECTED for the purpose of discussion. Co-Chair Hanley explained that it was a technical change to help implement a new phase in the computer system, not only in the design of it. Representative Martin WITHDREW the OBJECTION, and Amendment Co-Chair Hanley MOVED to ADOPT Amendment #3. [Copy on File]. Co-Chair Hanley explained that it would fund a supplemental request for attorney fees for the Alaska Commission on Judicial Conduct. There being NO OBJECTION, it was adopted. Co-Chair Hanley MOVED to ADOPT Amendment #4. [Copy on File]. There being NO OBJECTION, it was adopted. Representative Mulder MOVED to ADOPT Amendment #5. [Copy on File]. He explained that Amendment #5 would provide $500 thousand dollars, federal receipts, to be appropriated to the Department of Corrections for procurement and development of a computerized management information system. There being NO OBJECTION, it was adopted. Representative Mulder MOVED to ADOPT Amendment #6. [Copy on File]. He explained that the amendment would remove $100 thousand dollars from the University of Alaska Library placing it toward the Alaskan Public Broadcasting Commission for equipment purchase grant, and would then add $70 thousand dollars for paving and improvements to Basher Road in Anchorage. Representative J. Davies questioned why Basher Road was receiving an allocation. He asked if that area received road matching funds or local taxes. Representative J. Davies MOVED to DIVIDE the question between the add ons. There being NO OBJECTION to dividing the question, Representative Mulder MOVED to ADOPT #6(a), the add-on to for Alaska Public Broadcasting Commission. There being NO OBJECTION, it was adopted. Representative Mulder explained a technical change to Amendment #6. He noted that the bolded UAA Deferred maintenance/code compliance should be removed. Representative Mulder MOVED to ADOPT #6(b). There being NO OBJECTION, it was adopted. Representative Foster MOVED to ADOPT Amendment #7. [Copy on File]. LARRY LABOLLE, STAFF, REPRESENTATIVE RICHARD FOSTER, explained that the amendment would provide a language change which would allow for an upgrade of a Junior College facility in the rural area. There being NO OBJECTION, it was adopted. Representative MOVED to ADOPT Amendment #8. [Copy on File]. Mr. LaBolle noted that the amendment would provide general fund dollars to the City of Nome, with a $100 thousand dollar match, for the purchase of a new fire/rescue truck. Co-Chair Hanley OBJECTED. He pointed out that the request was straight general fund dollars. A roll call vote was taken on the motion. IN FAVOR: Foster, Grussendorf, Martin, Moses, J. Davies OPPOSED: G. Davis, Kelly, Kohring, Mulder, Therriault, Hanley The MOTION FAILED (5-6). Representative Foster MOVED to ADOPT Amendment #9, submitted by Representative Ivan. [Copy on File]. Representative Mulder explained that the funds were being appropriated to the Division of Energy to work in conjunction with Nuvista Light and Power on a feasibility study to identify options for regionizing the power systems in western Alaska. Co-Chair Hanley OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, Moses, Mulder, J. Davies OPPOSED: Foster, Kelly, Kohring, G. Davis, Hanley, Therriault The MOTION FAILED (4-7). Representative J. Davies MOVED to ADOPT Amendment #10. [Copy on File]. He explained that amendment would establish $4 million dollar federal receipts for the Fairbanks Municipal Area transportation study. There being NO OBJECTION, it was adopted. Representative J. Davies MOVED to ADOPT Amendment #11. [Copy on File]. He explained that the project was requested because the sub-port was being closed. This funding would provide for a replacement facility in Southeast Alaska. Co-Chair Hanley OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Grussendorf, Moses, J. Davies, Foster OPPOSED: Kelly, Kohring, Martin, Mulder, G. Davis, Therriault, Hanley The MOTION FAILED (4-7). Representative J. Davies MOVED to ADOPT Amendment #12. [Copy on File]. He explained that the funding would be used for upgrading the Mountainview Community Recreation Center in the amount of $330 thousand dollars for the project completion. Co-Chair Hanley OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Moses, J. Davies, Grussendorf OPPOSED: Kelly, Kohring, Martin, Mulder, G. Davis, Foster, Therriault, Hanley The MOTION FAILED (3-8). Representative G. Davis MOVED to ADOPT Amendment #13. [Copy on File]. He explained that the amendment would provide money from the Exxon Valdez Oil Spill Restoration Fund earnings to be used for specific purposes. He listed the numerous appropriation specifications contained in Amendment #13. Co-Chair Hanley asked if Amendment #13 would replace Section #12 of the current bill. Representative G. Davis noted it would. (Tape Change HFC 98- 165, Side 2). Representative G. Davis reiterated that the amendment would replace Section #12 and would eliminate subsection (b). He added that subsection (b) would be addressed in a future amendment. There being NO OBJECTION, it was adopted. Representative G. Davis MOVED to ADOPT Amendment #14. [Copy on File]. He commented that the amendment would provide for "clean up" of the interest earned from the Alyeska settlement fund in the amount of $400 thousand dollars. Co-Chair Hanley MOVED to AMEND Amendment #14, on line #4, replace "grant" with "low interest loan". He pointed out that there are five companies currently in the same situation as Chenega and located in that spill area. Co- Chair Hanley disagreed with the State paying for power generation equipment for communities. Representative G. Davis OBJECTED to the change proposed by Co-Chair Hanley. He pointed out that the settlement fund is required to be used for projects within Prince Williams Sound. Following Committee discussion with Co-Chair Hanley, Representative Davis WITHDREW his OBJECTION and Amendment #14 was adopted as amended. Representative G. Davis MOVED to ADOPT Amendment #15. [Copy on File]. He explained that these sport fish license fees are available to be appropriated to the Department of Fish and Game for boat wake erosion studies and studies including volume, time and location and operation of vessels on the Kenai River. There being NO OBJECTION, it was adopted. Representative G. Davis MOVED to adopt Amendment #16, intent language. [Copy on File]. He commented that the language relates to hazardous substance contamination sites and the need for a higher degree of professionalism when addressing those concerns. Representative J. Davies OBJECTED. He acknowledged that there are occasional disagreements between local citizens and the Department of Environmental Conservation (DEC), however, DEC is sensitive to each situation and most often does act with a high degree of "professionalism". Representative J. Davies WITHDREW his OBJECTION, although, noted that he did not want to indicate that there is a "big" problem with DEC's behavior. There being NO OBJECTION, Amendment #16 was adopted. Representative Kelly MOVED to ADOPT Amendment #17. [Copy on File]. He explained that the amendment would provide for project planning money that had been listed on the Statewide Transportation Improvement Plan (STIP) program for Fairbanks. He pointed out that these funds have been placed into a series of neighborhood projects. There being NO OBJECTION, it was adopted. Representative Kelly MOVED to ADOPT Amendment #18. [Copy on File]. JAMES DERRINGER, STAFF, REPRESENTATIVE PETE KELLY, stated that the amendment would provide for a statewide library consortium database. MARY LOU BURTON, UNIVERSITY OF ALASKA, FAIRBANKS, pointed out that this project had been placed on the Board of Regents priority list. There being NO OBJECTION to Amendment #18, it was adopted. Representative Kelly MOVED to ADOPT Amendment #19. [Copy on File]. He noted that this amendment would provide funding for the Mt. Edgecumbe power generation building, chemical contamination and seal facility clean up. There being NO OBJECTION, it was adopted. Representative Kelly MOVED to ADOPT Amendment #20. [Copy on File]. NICO BUS, ADMINISTRATIVE SERVICE MANAGER, DEPARTMENT OF NATURAL RESOURCES, noted that Amendment #20 would delete funding from the Mt. McKinley Meat and Sausage Plant. That funding would be used for replacement of the micrographic equipment in the recorder's office. Representative J. Davies spoke strongly in favor of the proposed legislation, noting that it was a much-needed effort for that office. There being NO OBJECTION, Amendment #20 was adopted. Representative J. Davies MOVED to ADOPT Amendment #21. [Copy on File]. Representative Mulder OBJECTED. Representative J. Davies explained that the Alaska Craftsman Home Program is very popular statewide and provides building professional training for building five star homes. He believed that Alaska Housing Finance Corporation (AHFC) had corporate receipts to fund the request. JOHN BITNEY ALASKA HOUSING FINANCE CORPORATION (AHFC), ANCHORAGE, spoke in favor of supporting the program. He noted that AHFC supports this program as a competitively bid program within AHFC, with the intent to assist statewide home building industry. Representative Mulder spoke against the amendment. He suggested that there are many other programs which need funding if an extra $300 thousand dollars exists. Representative J. Davies countered that this program has performed well for many years and that it is a program that builders throughout the state are enthusiastic about. A roll call vote was taken on the motion. IN FAVOR: Moses, J. Davies, G. Davis, Grussendorf, Kelly OPPOSED: Martin, Mulder, Foster, Kohring, Hanley, Therriault The MOTION FAILED (5-6). Representative Martin MOVED to ADOPT Amendment #22. [Copy on File]. Representative Martin MOVED to change the amendment by deleting "general fund" and replacing it with "UAA deferred maintenance". He noted that the funding would help the University to replace instruments which had been damaged last September in the Music Department. Co- Chair Hanley noted that it is essential to clarify that this funding will be allocated not appropriated should it become insurance reimbursable. There being NO OBJECTION, Amendment #22 was adopted. Co-Chair Therriault MOVED to ADOPT Amendment #23. [Copy on File]. He explained that the funds would provide an appropriation to the Alaska Court System for the assessment and remediation of the "Year 2000" related computer problems. There being NO OBJECTION, it was adopted. Representative Kohring MOVED to ADOPT Amendment #24. [Copy on File]. He stated that the funding would be used for the City of Wasilla ground water contamination investigation. There being NO OBJECTION, it was adopted. Representative J. Davies MOVED to RESCIND action taken on Amendment #21. There being NO OBJECTION, Amendment #21 was before the Committee for reconsideration. Representative J. Davies MOVED to ADOPT Amendment #21. Representative Mulder OBJECTED. A roll call vote was taken on the motion. IN FAVOR: J. Davies, G. Davis, Grussendorf, Kelly, Kohring, Moses OPPOSED: Mulder, Foster, Martin, Hanley, Therriault The MOTION PASSED (6-5). REAPPROPRIATIONS Co-Chair Hanley MOVED to adopt the draft reappropriation, File]. There being NO OBJECTION, it was adopted as Amendment #25. Representative Moses MOVED to ADOPT Amendment #R-1. [Copy on File]. This funding would provide for design and construction of the Bethel public health facility. He pointed out that adoption of this amendment would replace previous action taken in the bill. There being NO OBJECTION, it was adopted. Representative Kohring MOVED to ADOPT Amendment #R-2. [Copy on File]. He explained that the amendment would provide funding to the Homer area for addressing the Matanuska River erosion mitigation. REPRESENTATIVE SCOTT OGAN emphasized that the dikes on the Matanuska River require maintenance as the river erodes them away. Representative J. Davies OBJECTED to process of converting a loan to a reappropriation. A roll call vote was taken on the motion. IN FAVOR: J. Davies, G. Davis, Foster, Grussendorf, Kohring, Martin, Moses, Mulder OPPOSED: Kelly, Hanley, Therriault The MOTION PASSED (8-3). Co-Chair Hanley MOVED to ADOPT Amendment #R-3. [Copy on File]. He commented that the amendment would provide a change to one of the municipal matching grants which had inadvertently been left out. There being NO OBJECTION, it was adopted. Representative Kohring MOVED to ADOPT Amendment #R-4. [Copy on File]. He stated that this amendment would provide a reappropriation to an Anchorage Senior Housing program to include road construction and water connection. Mr. Bitney noted that this reapporpriation would allow funds to be placed in the same project intended last year. The language of the amendment would correct technical language that the U.S. Housing and Urban Development (HUD) agency had last year. There being NO OBJECTION, the amendment was adopted. (Tape Change HFC 98 - 166, Side 1). Representative Moses MOVED to ADOPT Amendment #R-5. [Copy on File]. He commented that the appropriation would be used on behalf of the Adak Reuse Corporation. There being NO OBJECTION, it was so ordered. Representative Martin MOVED to ADOPT Amendment #R-6. [Copy on File]. Co-Chair Hanley explained that the funding would be used for mailing, electronic registration and licensing systems. There being NO OBJECTION, it was adopted. Co-Chair Hanley MOVED to ADOPT Amendment #R-7. [Copy on File]. There being NO OBJECTION, it was adopted. Co-Chair Hanley MOVED to ADOPT Amendment #R-8. [Copy on file]. There being NO OBJECTION, it was adopted. Co-Chair Hanley MOVED to ADOPT Amendment #R-9. [Copy on File]. There being No OBJECTION, it was adopted. Co-Chair Hanley MOVED to ADOPT Amendments #R-10, #11, and changes. There being NO OBJECTION, they were adopted. Co-Chair Hanley MOVED to ADOPT Amendments #R-13 & #14. [Copy on File]. The amendment would allow for the purchase of election related equipment. There being NO OBJECTION, they were adopted. Co-Chair Hanley MOVED to ADOPT Amendment #R-15 which would provide for a title change expansion within the Department of Health and Social Services. [Copy on File]. There being NO OBJECTION, it was adopted. Co-Chair Hanley MOVED to ADOPT Amendment #R-16 which would provide for the Department of Public Safety to purchase four patrol vessels. [Copy on File]. There being NO OBJECTION, the motion was adopted. Co-Chair Hanley MOVED to ADOPT Amendments #R-17 & #18, changes to airport projects. [Copy on File]. There being NO OBJECTION, the motion was adopted. Representative Martin MOVED to ADOPT Amendment #R-19. [Copy on File]. There being NO OBJECTION, the motion was adopted. Co-Chair Hanley MOVED to ADOPT Amendment #R-20. [Copy on File]. He explained that this would be lapse money allocated to the City of Sitka, to assist with the final payment to the Corps of Engineers for the inner-harbor facility improvements, and to the City of Ouzinkie, interim solution for moorage during the completion of a breakwater dredging and construction. [Copy on File]. There being NO OBJECTION, it was adopted. Representative Mulder MOVED to ADOPT Amendment #26. [Copy on File]. He stated that this would be money dispersed to Anchorage for economic development of the Ship Creek area, as well as library books for the University of Anchorage, boys and girls clubs, blood banks, digital technology and citizens patrol. Representative J. Davies OBJECTED. He pointed out that the back-up information regarding potential projects indicates that no Minority members had been polled. Representative Mulder acknowledged that an attempt had been made to have an Anchorage caucus meeting in order to address these projects. He added that the vast majority of the House and Senate membership supported the amendment. A roll call vote was taken on the motion. IN FAVOR: G. Davis, Foster, Grussendorf, Kelly, Kohring, Martin, Moses, Mulder, Therriault OPPOSED: J. Davies, Hanley The MOTION PASSED (9-2). SB 231 was HELD in Committee for further consideration. SENATE BILL NO. 360 "An Act authorizing the issuance of bonds in the amount of $257,600,000 by the Alaska Housing Finance Corporation for certain capital projects; relating to those bonds and to the appropriation of revenue of the Alaska Housing Finance Corporation; and providing for an effective date." Co-Chair Hanley spoke to Amendment #1, #0-LS1780\K.3, Cook, 5/9/98. [Copy on File]. He explained that Amendment #1 would adopt changes made in the authorization bill which had been made to the appropriation bill and which would include authorization for certain bond projects. Co-Chair Hanley advised that Amendment #1 would make the changes based on Amendment #1, SB 231. He added when the amendment is moved, it will include the other amendments in the appropriations bill so as to conform these changes with the AHFC bonding bill. Co-Chair Hanley MOVED to ADOPT Amendment #1 with the addition of necessary technical changes so that the authorization bill will conform. There being NO OBJECTION, it was adopted. SB 360 was HELD in Committee for further consideration. SENATE BILL NO. 36 "An Act relating to transportation of public school students; relating to school construction grants; relating to the public school foundation program and to local aid for education; and providing for an effective date." Representative Mulder MOVED that work draft #0-LS0070\J, Ford, 5/8/98, be the version before the Committee. [Copy on File]. There being NO OBJECTION, it was so ordered. Co-Chair Therriault MOVED to ADOPT Amendment #1. [Copy on File]. EDDY JEANS, MANAGER, SCHOOL FINANCE SECTION, DEPARTMENT OF EDUCATION, explained that the amendment would add money appropriated for single site funding to the base in order to calculate the funding floor. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to ADOPT Amendment #2. [Copy on File]. Mr. Jeans explained that Amendment #2 would add a transition section defining "basic need" for the purpose of calculating the required local effort. For some school districts, local effort requirement will be 45%. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to ADOPT Amendment #3. [Copy on File]. Mr. Jeans explained that Amendment #3 would allow the pro-ration of the quality school grant funds. Co-Chair Therriault added that these schools would be treated the same way, noting that the pro-ration formula which also applies to the general formula. Mr. Jeans commented the action would delete "competitive" before "grant". There being NO OBJECTION, Amendment #3 was adopted. Co-Chair Therriault MOVED to ADOPT Amendment #4. [Copy on File]. Mr. Jeans commented that Amendment #4 would delete the language which the Department of Education recommended on Line 7, Page 5. There being NO OBJECTION, the motion was adopted. Co-Chair Therriault MOVED to ADOPT Amendment #5. [Copy on File]. RICK CROSS, DEPUTY COMMISSIONER, DEPARTMENT OF EDUCATION, explained that Amendment #5 would modify the quality school language. The substantive change is that the accreditation process would be removed. Mr. Cross advised that during the past week, Commissioner Holloway had been holding meetings with school communities in the State in order to discuss the proposed language. Mr. Cross pointed out that Amendment #5 was the result of those conversations, and has the support of the Department of Education. Co-Chair Therriault asked if school districts would be required to continue reporting. Mr. Cross replied that there would continue to be a testing and reporting of student results in order to insure that students are meeting high standards. Such action provides a tool to identify schools in crisis and decline, requiring them to submit improvement plans. If during the next two-year cycle improvement was not occurring, those school districts would then have to submit a report to the State Board of Education. There being NO OBJECTION, Amendment #5 was adopted. Co-Chair Therriault stated that Amendment #6 would be HELD. [Copy on File]. He asked Mr. Cross to address the problematic impact of "bumping up" the determination need for two schools or two programs. Mr. Cross replied that Amendment #6 would move the definition of "school" from regulation to statute, establishing definition for application of a foundation formula. The definition provided during a previous Committee meeting included a "breaking" point as to where to begin running an elementary or secondary program in communities that were greater than 50 and up to 75 students. Amendment #6 would change that number from 50 to 100. Additionally, for those communities over 750, alternative schools would be counted separately when having over 200 students. At this time, Alaska does not have alternative schools with over 200 students. In response to Representative G. Davis, Mr. Cross explained that prior to SB 36, there has not been a definition of schools for the specific purpose of computing state aid. This is the first bill which uses schools as a point of focus. The definition was created for the purpose of applying state aid and was made in consultation with McDowell Group. Co-Chair Therriault stated that Amendment #6 would be HELD for further consideration. Representative Foster questioned the impact of the proposed amendment. Co-Chair Therriault replied that the impact would be to those school districts with over 50 children, which are counted as two schools. Amendment #6 would raise the break point of one school up to 100 students. Co-Chair Therriault remarked that the Committee would need more time to consider the number of schools which that change would impact. Co-Chair Therriault MOVED to ADOPT Amendment #7. [Copy on File]. He explained that Amendment #7 would provide a two- year phase-in for districts benefiting under the new proposed formula. There being NO OBJECTION, it was adopted. Representative J. Davies MOVED to ADOPT Amendment #8. [Copy on File]. Co-Chair Therriault OBJECTED. Representative J. Davies noted that the amendment would delete the comparison of administrative to instructional costs. He explained that the "average" recommended in the proposed legislation was heavily weighted toward larger districts. Amendment #8 provides language to address this concern. Co-Chair Therriault questioned the Department's procedures when viewing district records, moving them into compliance, filing information. Mr. Jeans responded that school districts are statutorily required to have an annual financial audit. The problem, which the McDowell Group discovered, is that the Chart of Account used is only a guide, and that there are 53 different school districts interpreting that information differently. He guaranteed that there will be inconsistencies without the Department staff comparing expenditures. Co-Chair Therriault asked if the Department had proposed regulations that could define the chart, which would hopefully lead to a more consistent reporting. Mr. Jeans replied that the Department did initiate that process and that the State Board of Education had adopted a revised Chart of Accounts. The definitions are now tighter. Representative J. Davies pointed out that currently, there has not been enough time to gauge for the efficiency follow-up. (Tape Change HFC 98 - 166, Side 2). Mr. Cross understood that the language referenced by Representative Mulder would indicate that an analysis would occur in order to guarantee that a school district complies. If they do not comply, they would need to petition the Department to receive justification. If a waiver were granted, it would be forwarded to the Legislative Budget and Audit Committee (LBA) for review. He believed that a standard was being established in which most districts in the State would not be able to comply, consequently, the Department believes that the exemptions will become standard. Mr. Cross pointed out that the operative portion of Amendment #8 would provide oversight to insure that the administrative costs are minimized. The idea is consistent with what the McDowell Study recommended. All the audits done in the State are independent and must apply with generally acceptable accounting principles. Therefore, there are wide differences in how each district reports information. Until there is an agreement within the districts to gain consistency in reporting, it will be difficult to establish targets and goals. The Department needs to provide the oversight and to work in partnership with the school districts. Co-Chair Therriault inquired the percentage of districts which operate efficiently. Mr. Cross replied that would be an impossible question to answer because of the vast differences which exist in our school districts. A roll call vote was taken on Amendment #8. IN FAVOR: Grussendorf, Moses, J. Davies OPPOSED: Foster, Kelly, Kohring, Martin, Mulder, G. Davis, Therriault Representative Hanley was not present for the vote. The MOTION FAILED (3-7). Representative Grussendorf MOVED to ADOPT Amendment #9. [Copy on File]. He explained that the amendment would address the true and assessed value of a borough. The North Slope Borough is afraid that they will not be capable to continue to make a high payment as they have in the past. Passage of the amendment would allow them to contribute the same amount as in prior years. Mr. Cross commented that when the current foundation formula was developed ten years ago, everyone believed that the assessed valuation of the North Slope Borough (NSB) was the "high" number. The formula was written with that amount and the excess contribution was based on $12 million dollars. When SB 36 was drafted, the high number was used and the North Slope Borough based their calculations on that understanding. Current law was written to allow a high local contribution for the NSB. Representative Grussendorf emphasized that Amendment #9 is essential to continue the practice currently used in that community. Co-Chair Therriault questioned the impact. Mr. Cross explained that NSB has both a required local effort and an excess local effort to arrive at their cap which is 23% of the basic need. NSB does not have a cap because it falls outside the disparity test, resting in the high five districts of the State. The crafters of the current foundation formula wanted some limit on the amount that NSB should contribute. Two (2) mills was used, based on the belief that to use the higher accessed number would determine the value. He continued, 2 mills was under the target and, thus, was allowed. Representative J. Davies pointed out that the community does not want to be limited by the lower amount and that the language of the amendment stipulates that they could use last year's amount. Co-Chair Therriault noted that if the pending litigation determines that the assessed valuation is the lower amount, they would be able to use prior years-actual local contribution or the 2 mills. Mr. Jeans explained that currently, NSB is contributing approximately $27 million dollars toward their school- operating budget. The proposed language would allow them to continue to contribute at the $27 million dollar level. Co-Chair Therriault noted that Amendment #9 would be HELD in Committee. SB 36 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 2:40 A.M. H.F.C. 17 5/09/98 p.m.