Senators Joe Paskvan, Dennis Egan, and Gary Stevens during the closeout hearing of the Senate Finance DEED Subcommittee, March 20, 2012
This blog contains highlights from the Alaska Education Update. The update is issued daily during session and contains detailed summaries of education issues under consideration by the Alaska State Legislature. If there is a hearing on a Monday, a report will, with few exceptions, be released by Tuesday morning. There is also a weekly edition of the update. During interim, reports are issued only when there has been action. Interim action may include hearings, bill signings, the release of the Governor's proposed budget for the next fiscal year, and other items that may be of interest to the education community.

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Monday, March 22, 2010

Senate Finance Proposes Major Policy Shift for Funding School Construction

The Senate Finance Committee proposed a major change today in how school facilities across the state should be funded.  The committee heard and held SB 237, and adopted a committee substitute for the bill.  

Jay Livey, staff to Sen. Hoffman, reviewed the committee substitute for SB 237. The bill will provide a more predictable method of funding for both REAA’s and municipal school districts.
Section 1 contains legislative findings related to the Kasayulie Decision.

Section 2 creates a fund to disburse REAA construction dollars. Money will be deposited into the fund according to a formula linked to the outstanding debt amount for municipal schools. The outstanding debt is about $1.2 billion, which is expected to remain the same over the years as old projects are paid off, and new ones come on line. About $515 million has been spent on REAA schools in recent years. Money from the fund created by Section 2 would be spent by DEED, which would approve projects by methods currently in place. The balance of the fund could not exceed $100 million. This process will provide some certainty to REAA’s and DEED that funds will be available every year.

Section 3 of SB 237 addresses municipal school districts. Currently, municipalities are reimbursed at either 60 or 70 percent of their outstanding school construction debt, depending on whether facilities meet DEED's space requirements, but the statute must be renewed every three years. The committee substitute proposes making school construction debt reimbursement permanent, removing funding uncertainty for municipalities.

Three rural schools would be funded this year, and eleven more in the next two years. The fund will initially be capitalized with $40 million.  SB 237 originally started out as just a simple extension of the debt reimbursement program. In the past, each time the program was extended, some funding for rural schools was included.

Sen. Hoffman said he has had initial conversations with the Anchorage and Fairbanks superintendents, and he hopes there will be support for the committee substitute.

Chairman Stedman noted that there was a very big policy issue before the committee. He asked if DEED supported SB 237. Eddy Jeans, director, School Finance & Facilities, Dept. of Education & Early Development, said the department is neutral on SB 237.

A link to background documents on SB 237:
http://www.legis.state.ak.us/basis/get_documents.asp?session=26&bill=SB237

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