Alaska Legislature: House Finance, 4/9/26, 1:30pm

I call this meeting of the House Finance Committee to order. Let the record reflect that it is 1:36

It's p.m. on Thursday,

April 9,

2026. Present today we have Representative Hannon,

Co-Chair Foster,

Co-Chair Josephson,

myself,

Co-Chair Schrage,

expecting other members to join us shortly, including Rep Galvin by telephone.

Also here for our committee today to help us with behind the scenes work is committee assistant Helen Phillips, page Tallulah Ostuka, secretary Bri Wiley, secretary Leah Frazier, and our LIO moderator Emily Mesh. Thank you for being with us today. Please remember to mute your cell phones if you have not done so already. Today we will hear a presentation from the Bond Reimbursement and Grant Review Committee, which plays a key role in the school major maintenance and new school construction.

production process.

To help us with our presentation today we have department of uh from the Department of Education, Aleah Preston, here in the room. And joining us online will be Heather Heineken, Finance and Support Services Director, Michael Budicoffer, Facilities Manager, as well as committee members Kevin Lion, Ranson and Ne uh Anania I hope I'm saying that right, and Randy Williams.

And I would also like to note that one of our committee members,

Representative Galvin, also serves on the burger committee.

Ms. Preston, thanks for coming forward already. If you could please put your name on the record and begin with the presentation and direct us through this uh and also before you do, we've been joined by Representative Stapp and Representative Allard. Go ahead and move us forward,

By

Ms.

the Preston. record my name is Alea Preston and I am the lead liaison for the Department of Education and Early Development and presenting today is Heather Heineken.

Great, and we've been joined by Rep. Jimmy.

Uh please continue.

Please continue when you're ready.

For the record is um Alia Preston for the Department of Education and Early Development is Heather on line please?

She is. Uh Ms. Heineken, uh do you wanna take us away here?

Thank you.

Thank you, Co-Chair Schragi, and good afternoon,

Chair Foster,

Chair Josephine and members of the House Finance Committee.

Just for the record,

we also have the Commissioner Dina Bishop online available for questions as well.

For the record, my name is Heather Heineken. I'm the Director of Finance and Support Services with the Department of Education and Early Development.

Online with me today is Michael Budenkopper, our Facilities Manager.

Committee members online include Kevin Lyon, who is a member with urban or rural school facilities management,

and the Director of Planning and Operations at Kenai Borough School District.

We have Brandon Anania,

a public representative,

and the Facilities Director for Cusk School District.

And finally, Randy Williams holds the seat of a member with a professional degree and experience in school construction, and he is a mechanical engineer at Resect.

In addition to the members who are online,

we also have, as you mentioned,

Representative Elise Galvin,

Senator Matt Clayman.

Larry Morris who is a member with experience in urban or rural school facilities management and currently is the planning and design supervisor at Anchorage School District and also Douglas Heyman a public representative and an administrator at Kenai Borough School District.

We have one vacant seat on the committee that we are in the process of filling.

Today I will provide a brief overview of the bond reimbursement and grant review committee,

commonly referred to as the BRGR or burger committee.

Next slide please.

We always like to begin with a department's mission,

vision,

and purpose,

and while school construction and major maintenance may not always be viewed as part of a student's daily learning experience,

they are foundational.

Our role is to provide the resources,

structure,

and oversight that ensures students have safe,

functional environments.

We're learning can occur every day and this work directly supports the department's purpose to provide information,

resources,

and leadership in support of an excellent education for every student.

Next slide, please.

And this slide highlights the Alaska education challenge and the department's five shared strategic priorities.

These priorities focus on the student outcomes.

But it's important to recognize they will be difficult to achieve without safe and reliable school facilities.

Whether it's reading proficiency,

workforce readiness,

or student well-being,

those outcomes depend on an environment that are operational,

warm, and structurally sound,

and facilities are the platform to make all of this happen.

Next slide, please.

So here are a few of our commonly used acronyms, and you may hear me mention them today during the presentation just for reference.

So next slide, please.

Today's presentation will walk through the creation and history of the Burger Committee,

the evolution of the CIP application,

committee composition, and both department and committee responsibilities.

We'll conclude with a summary of last week's burger meeting results and highlight key changes moving forward.

Next slide, please.

The burger committee was established in statute under AS 1411.014 in 1993.

It established a nine member bond reimbursement and grant review committee.

And the purpose of this committee is to review the department's CIP priorities,

make recommendations concerning grants and bond reimbursement project requests,

develop criteria for cost-effective school construction,

analyze existing prototypical school designs,

establish a grant application form,

establish a method of ranking projects.

Recommend to the board necessary changes to the approval process for school construction grants and for projects for which bond reimbursement is requested,

and then set the standards for school energy efficiency that minimize long-term energy and operational costs.

In addition,

regulations under 4AAC31 provides a framework for how those responsibilities are implemented.

defining the application requirements,

the eligibility,

the scoring criteria,

and facility standards.

Together statute and regulation ensure the process is structured,

transparent,

and consistently applied statewide. Next

I'm going to pause you

slide

for just

please.

one moment to acknowledge that Representative Tomaszewski and Representative Bynum have both joined us.

Please continue.

Thank you.

For the record,

Heather Heineken.

Over the, and we're on slide seven now,

over the past 30 years, the BRGR has established a core framework still used today.

This includes the CIP application,

the scoring methodology,

and ranking process,

along with facility standards and maintenance classifications.

The committee has developed foundational tools such as preventative maintenance guidelines,

condition surveys,

and cost modeling specific to Alaska's unique construction environment.

They continue to analyze existing prototypical school designs,

recognizing the regional diversity,

develop criteria for cost-effective school construction.

more recently have set standards for the full energy efficiency to minimize long-term energy and operating costs.

These efforts have created a system that is both structured and adaptable over time.

Next slide please.

The application and scoring process has been refined to rely more heavily on objective data driven criteria.

reducing subjectivity in how projects are evaluated we've also expanded technical guidance particularly around the energy efficiency and project standards we've increased stakeholder engagement through public comment and coordination with industry professionals and the goal has been to improve consistency transparency and overall confidence in the process.

Next slide, please.

Director Heineken, I have a question for you. In terms of modernizing and standardizing the process, one of the things I've heard from other legislators and members of the community in recent months is that there's a major challenge in schools being able to adequately submit projects for scoring. I think due to both of the technical requirements and the complexity of doing so and because of the cost.

In terms of expanded policy and technical guidance and increased stakeholder engagement,

are you providing any technical support or other support to the schools and helping them to submit projects for consideration,

or is this simply in terms of helping to provide more technical guidance around energy efficiency?

Can you talk about whether that extends to schools in their application process?

To Chair Schrager,

thank you for the question.

Just for reference,

I've been in the department a short period,

about a year and a half.

And over the course of the year and a half I've been there,

some of that we have tried to do, we continue to do outreach every spring and this has been ongoing for many,

many years.

We do a CIP application workshop that the department does and I should clarify most of this support work that you're referencing is done more by the department than by the burger committee. However,

the burger committee members would absolutely.

help support any district that needed help but this is this is department level work we do a CIT application process last year in the spring we held regularly meetings where people could come in and ask Q&A on how to go through the process and we will answer any questions up until that September 1st deadline to help support districts

to put the best application forward that they can possibly put forward.

Once the September 1st deadline hits,

we can no longer provide details, obviously, because we're in the process of reviewing and evaluating that application.

Okay,

thank you.

Please continue.

Thank you. So slide nine.

is where we should be and the burger committee is made up of nine members as defined in statute this includes the commissioner or her designee two legislative members and six public members with expertise in construction facilities management and public representation this composition is intentional and it brings together technical expertise

policy perspective and public accountability to support balanced decision making.

Next slide please.

The department's role is to implement the CIP process.

This includes reviewing district applications,

verifying eligibility,

applying the established rating criteria,

and developing the statewide priority lists.

We also ensure projects align with statute,

are cost effective,

and meet facility standards.

Equally important, we facilitate the public process,

publishing proposed lists,

conducting hearings, and producing the annual school capital project funding report required under statute.

Next slide, please.

So looking ahead.

From our meeting,

these are the outcomes of our meeting that was held on April 2nd and 3rd in Juneau.

Looking ahead,

we're proposing updates to the CIP application for the FY28 rating period.

One of the most significant changes is shifting from weighted average age to a facility conditioning index,

or FCI.

This will allow us to measure actual building condition rather than relying solely on the age as a proxy,

which improves our ability to identify true need.

We're also increasing emphasis on life safety concerns,

ensuring that projects addressing structural issues,

code deficiency,

and safety risks rise more clearly to the top.

Next slide, please.

Additional changes focus on improving how we evaluate project scope and accessibility.

We are introducing more consistent analysis of space utilization to ensure facilities are appropriately sized for the student population.

We're also redistributing points within the application to better support districts that may not have the resources to fully develop projects to later design stages.

This is intended to help level the playing field and ensure smaller or rural districts can compete more effectively for funding.

Director Heineken, can you expand on that and tell me a little bit more about how redistributing points to give more points for concept and schematic design levels the playing field?

Is it that schools are more able to get to that stage and they're just not able to put forward a project that?

in its entirety and that this smaller stage or kind of stage gating it helps break it up and make it easier?

How does this work? How does that actually address the issue?

Thank you, Chair Froggy, for the question.

So there's been conversations heard in some public meetings that several of the projects are reimbursable projects.

So some districts have the funds to put the projects forward.

If you put a project forward that is completed,

the application is a much more complete application because you know all of the details. So they effectively get higher points for a project that's already done as opposed to a district that doesn't have the capital funds available to put.

to pay for a project in advance and then get reimbursed so the different level we give different levels of points for the design concept as opposed to different types of drawings and then obviously completed projects so instead of maybe giving them and I don't have the points break out in front of me but instead of giving them ten points for

For 35% drawings,

we're going to lower that. We're going to equal shift that out a little bit so that the 10 points are at a lower level,

and I think I said that backwards. If you get 10 points at 65%, well,

now we're going to get 10 points at 35%. So that those who can get a little bit further in the process.

are getting the point.

The key here is to not punish those who are doing good work,

but also to reward those who don't have the ability to get there.

So the intent is to make it a little bit more equitable game for them.

Okay,

thank you.

Representative Ballard.

I apologize.

Chair,

I have a question in regards to this presentation.

Are we going to have deed in front of us again?

Before I, I don't know that we have a lot of time and I have a ton of questions and I just don't want to take up the body's time if we are going to have them back in front of us.

Well, Representative Allard, I'd note that we do have a shorter presentation today.

I think we have a bit of time for questions and that Commissioner Bishop is online.

So if you would like to talk to Deed now or ask questions of Deed now, I think that would be appropriate.

Okay.

I don't know when they will be next before us.

Okay.

Do you want to ask a question now, Rep Allard?

Yeah, I'm,

um.

Hmm.

I'm a little bit concerned of what the,

I

need a moment and

Very

then I'll

good.

come back to you.

Thank you.

Commissioner,

excuse me, Director Heineken,

please continue.

Sure.

So we're on slide 13 now, please.

So historically, as we move forward,

the Berger, historically and as we move forward, the Berger Committee has continued to evolve and maintain fairness,

transparency and cost effectiveness.

The proposed changes for FY28 are intended to better reflect the realities of aging infrastructure across the state,

address disparities between districts and ensure that the highest risk.

highest need projects are prioritized.

And one thing I'd like to mention here is this is an annual process.

So next year in April,

the burger committee will get together and look at the application,

look at the changes we made this year, come together with other recommendations, if there are any,

and continue to help this process evolve into something that really can address all the needs in the state.

and so next slide please and with that I'd just like to thank you for your time and opportunity to provide the overview today we're happy to answer any questions and again I've got several committee members online and Michael Budicofer who leads the actual ranking process

Very good, thank you, Director Heineken. I have a couple questions,

but I'd like to go to committee members first,

if members have questions. And I believe rep Allard would like to get

Thank

in the queue.

you.

Rep Allard.

Thank you. And through the chair, is Commissioner Bishop,

is she still online?

I believe so,

Representative Allard.

Okay.

I'm waiting for a document to come back because I can you circle back around I want to make sure what I ask is accurate on that that document okay

Yeah, absolutely.

It just so happens Rep Bynum would like to get a question in. Rep Bynum.

Why thank you co-chair Schragi appreciate that through the chair is Miss Heineken on the phone that's who yes Director director

Heineken, yes.

Heineken thank you for being here giving us this presentation I know that

This is part of the budget cycle that I really appreciate is when we get into the capital budget.

I think it's one of the most overlooked portions of what we do here.

But when we talk about school capital and what we're going to need throughout the state,

I think it's an important conversation to start having. And one of those important conversations is on slide 12.

So I was hoping that maybe we could go in a little bit more detail when we talk about the right sizing of facilities requiring the space per day ADM. I know that this is something I've looked at before. And when we talk about school design,

we start talking about students per square foot, whether it's elementary or high school, there's going to be differences.

And I was just hoping that you might be able to talk a little bit more in depth about.

Uh some of these issues on here with the over building and utilization and and at capacity, I know that in my district this is something that we are uh looking at very closely and our school board has made some very tough decisions on closing two schools because of capacity. So I'd like a little bit more input from the department.

Director Heineken?

Uh

Thank you. Through the chair to Representative Bynum, thank you for that question.

This is something I want to talk at a high level, and we have some experts on here who can speak at more detail if we'd like it.

At the department level,

statute allows us, when we're doing the evaluation,

to make modifications to projects.

So we take that opportunity to look and see.

The last thing we want to do is overbuild a school because their ADM is also what has to support the operations and maintenance of that facility.

And if they don't have the student body to help generate the revenue for that,

then they have multiple problems. But we also don't want to...

make a obviously we don't want to have unhoused students and have population issues so we do look very closely at the formulas and it is very formula driven on how many students what grades what types of classrooms but one of the challenges that we do run into is that in many of our most rural communities these school facilities are are more than a school they

They do, and they provide,

I'll use the Western storms as an example.

They were the place for refuge during the typhoons.

And so we are mindful of that where obviously that's not the main focus to provide the community support,

but we also want to make sure that the school does meet the need of the entire community when it's necessary. And then sometimes if we look at the capacity of a school,

it may warrant based on our...

calculation they no longer have a gym so so we have to keep always we try to balance all of these things and you know ultimately our goal is to be fiscally responsible and mindful of the state need and and so we try to make that balance through the whole process so

Representative Bynum, follow up.

Yes, thank you. Thank you, through the chair.

Yeah,

I was thinking about that when we talk about like right sizing of facility and then other uses.

And I know there's been instances where a school district might overbuild, as you would say,

those fixed costs then remain the same.

Then those pressures get put on the state through our foundation formula.

And so I was wondering if there was any kind of review.

of saying,

of separating out what those expenses would be and putting that over sizing back out of the, you know, out of funding from the foundation,

you've given an example of maybe in a small village.

We're a small community that we build the school,

but the school is then used for other things, for other space and that's very valid,

very necessary but the foundation formula is supporting that ultimately and that's putting pressure on teachers and our kids.

As far as being able to make sure we have the right revenue or I'm sorry, the right foundation monies available to for teaching has there been any just conversation about trying to separate out those other uses and even if the state is still providing the funding but isolating them so that we can recognise what's actually a true space per ADM for the purposes of education versus maybe other purposes.

Director Heineken.

through the chair to Representative Bynum

We in the department have had some very high-level conversation. I believe maybe you mentioned this in a previous hearing,

and so we have talked about it a little bit, but no formal research has been done to identify what those costs or what that usage are.

It's certainly something that I can take back to my team and we can see about gathering that information.

A quick follow-up? Yeah, follow-up, Representative Bynum?

Yeah, thank you, Coach Hirshroge, yeah, I you know I I obviously want our local school districts to be able to identify what they need for space and if they want to have more space available and they're willing to pay for it, they should be able to do that, but I don't want it to impact uh disparity test as an example. Um

And I also, you know, want to make sure those other uses are there if it's needed.

But we, you know, I want a good focus on this space per ADM to make sure that we're putting the dollars directly toward the child's education.

But with that being said, we have a task force that was developed under HB 57 to kind of.

try to address this issue among many other issues.

Has the task force reached out to the department at all to specifically request information to this topic?

And then a second part of that is to the topic of funding overall and getting the department's direct engagement in doing these evaluations.

Director Heineken.

Through the chair to Representative Bynum, we did provide a capital presentation, not specifically the BRGR, but we did have a capital presentation to the task force.

a few weeks ago and they I don't believe we've been asked for this specific question to gather that information.

One last follow-up.

One last follow-up. Yeah,

I know that when we talked about the importance of including the task force in HB 57,

it was specifically to try to identify.

not only the foundation formula but utilization of facilities and those school factors.

And I think that the people that are probably the best positioned to provide detailed information is the department.

And, you know, my my stance before when we were talking about this bill was that I think it's important that we have the task force to ask those types of questions. But I also at that same time said I felt like it was the full responsibility of the department to be sharing with the legislature recommendations for needed changes. And so I'm not sure what that specific capital presentation was. I'll go back and I'll try to watch that,

but I don't know that that's sufficient.

For the kind of crisis that we're in statewide to be able to answer the questions on what do we need for foundation formula,

what do we need for energy cost in our communities. We've talked about today on the floor, pupil transportation, a lot of that's formula driven and it needs to be that way because of the disparity test that we need to apply.

But you know, I'm relying heavily on the department to help us out there. So

Is there ongoing efforts beyond what you've given us here today to try to answer some of those questions even at a high level?

Dr. Heineken?

Through the chair to Representative Bynum,

when we receive requests, we do provide information that we have available to us.

The particular question you asked about school and community usage, that would require us reaching out to the districts, and we have not taken that action,

but I'm not aware of that being a direct request.

We certainly do try to respond to any questions or inquiries that come to us and provide all the information that we have available to us.

I'll be the last follow-up co-chair.

Last follow-up Representative Bynum, but before we go to you, let me just take a moment to note that Rep Galvin joined us shortly before two o'clock.

Rep Bynum, please continue.

Thank you, Coach Ruggie.

So, Director,

I think what I'm getting from that answer is that basically that the response will be based on an inquiry basis.

So meaning that the legislature,

if these are things that we're concerned about,

that we would have to formally ask for the department to say, do an evaluation on how we're structurally funding not only facilities but education in general,

and then give us guidance.

Am I misinterpreting what you're saying?

Director Heineken.

Through the chair.

to Representative Biden,

I would say you're not misinterpreting what I'm saying.

It's not,

I'm going to say that I have had three vacancies in the last six months, so if I had full capacity, it might be something that we would pursue a little bit further on our own, but right now, without it being a formal request,

we haven't had the capacity to pursue it any further.

Thank you

Representative Ballard, did

Yeah,

you want

thank

back

you.

in the queue at this point?

Yeah, thank you.

Representative Ballard.

So um and I'm not really sure maybe the Commissioner can I I came into some information that's quite alarming.

So um maybe Commissioner Bishop can answer these questions.

Uh Commissioner Bishop, are you on the line still?

Commissioner Bishop?

Commissioner Bishop.

Through the chair,

yes,

I

Thank you.

am here.

Representative Ballard.

Thank you. And through the chair,

thank you, Coach Arshragi.

So I have some documents in front of me and my staff was doing some research and we went back to September of 2022 with the debt bond reimbursement.

And it looks like.

I don't think you were the superintendent any longer, and I believe you weren't even the commissioner. I think you had taken some time off.

I'm concerned about the debt bond reimbursement that,

if I'm not mistaken,

the ASD did not get reimbursed for quite a few years.

I think it was,

can you tell me which those years are that they finally got reimbursed in 2022,

Commissioner?

Commissioner Bishop.

Through

the chairs to Representative Allard, yes, when I was superintendent in all districts and when it was some lean years,

there was, I guess a hiatus, if you will, on bond debt reimbursement at the state level and those years were 17.

2021 and 22, but the state then did repay those.

May I do some follow-ups?

Yep, Representative Ballard.

Okay,

so then the state in 17-20,

21 and 22 that the state hadn't paid,

we did reimburse that and it looks like it came forward in...

2022 okay so then my question would be when the state when Anchorage School District was reimbursed the state the debt the state bond reimbursement they had a couple of options on what to do with those reimbursements and I'm looking at a memo from the Anchorage School District

And on the memo,

it gives three different options. They can return the funds to acreage taxpayers via some holiday tax.

They could also do some capital projects and securities.

And then they have another option where they can do conjunction with option two to be allocated by the school board.

So my question is, do you recall what, I know what they did with it, but I want to know on record,

do you know what they did with those funds?

I think it was almost 70.

They have like 79 million in savings right now. Can you tell me what they did with those funds,

please?

Commissioner Bishop.

Through the chair to Representative Allard, yes, this actually occurred in FY23, so it was the fall, I believe, of 22,

but school year 23,

and the Anchorage School District.

retain, you know, the funds, I believe, for projects in a savings,

a capital savings account.

Okay, so,

and then I'm going to go into a couple of the capital project issues too.

Sure.

So,

Representative Ballard.

thank you. I appreciate that, co-chair.

So are you, so for clarification,

instead of reimbursing the taxpayers when the school district was reimbursed for debt bond,

bond debt reimbursement. They put it in the savings and I believe there's 79 million in there.

So not only did we increase the taxes to the taxpayers in the Anchorage School District,

but they also kept the money as well and they have it in a savings account currently,

correct?

Commissioner Bishop.

Through the chair to Representative Allard. Yes, I don't know, but I do know, you know, in their audit there is a capital savings account for, you know, over,

it was over $70 million and my guess is that the original, that account, the original funds did come from the reimbursement.

Um,

for,

yeah,

and the issue came up from a constituent in regard to inlet view of how inlet view was paid for.

And that's, I believe,

the school board shared that, that they utilize some of it for inlet view.

May I?

Got one more representative

Thank you.

Ballard then we'll go back to Representative Bynum

Okay,

so then that's fair.

Thank you.

If I'm not mistaken,

the school board or the school district, let's go there just because I'm not sure which who did what,

gave $9 million to Inlet View Elementary School because the voters voted it down.

But in actuality, the school, the ASD access money from the debt reimbursement and it actually cost $40 million to rebuild that school.

Is there a sleight of hands or some change of?

Like a shell game that I'm missing because I'm looking at the numbers and I'm concerned.

Commissioner Bishop,

is there a shell game?

I didn't say sludge fun,

so that's good.

Just to represent Representative Allard,

the decisions and things like that are all made, just so you know, at the capital level at Anchorage School District.

I believe they might be the only district.

At the time when we were there,

when I was there, that we had our own capital,

when the state reimbursed for their lapsed debt,

they reimbursed boroughs and other cities that run their bond debt.

Anchorage was the only one I believe that probably went because they handled their own construction at ASD.

But it was the city that would have collected the taxes.

So I don't know,

but certainly there was a vote at the board level. I'm not sure if there was a vote at the city level.

And just a quick comment, then if you can loop back around when you get a second.

Yep, quick comment,

repelled.

Thank you. So it sounds like to me that the school district was in debt with bonds.

They were then.

charged the taxpayers,

increased our property taxes.

Then the state finally came around the fall of 2023,

reimbursed the school district,

and instead of the school district reimbursing the taxpayers,

they kept it and shuffled all that money into a savings account.

Okay,

I'll wait and I'll come back in.

Commissioner Bishop,

do you know whether or not the bonds that were reimbursed by the state

When they were originally incurred by the municipality of Anchorage,

if that debt was incurred during the period at which there was still bond reimbursement from the state,

I have it here,

and I will pass it out to the committee.

Commissioner

I'm ready

Bishop.

to, through the chair,

the bond debt that was held was for prior bonds.

That we did.

So in ASD, we passed bonds when I worked there that were 100% and we knew they were 100%. The bond debt reimbursement program had already been on hiatus. I believe the funds that the state repaid were for 20 years back that prior bonds that were passed with the knowledge of 60-40 when the program was in place.

So the state couldn't pay for four years. I do know that working with the city mayor,

we did have to raise taxes. We also used some of our savings in ASD to cover a portion of it,

but taxes had to be raised.

I already left the school district. I was not paying attention to anything anymore,

and I do know, though,

when the question came to me when I began to work,

I did see that the state did reimburse.

All borough cities and of course the Anchorage School District.

Anchorage School District does not have the authority to place a levy, so the levy would have been made by the city to increase the state share.

So basically the local citizens had to take on the share that was promised from like 20 years ago. Those were not the recent bonds,

they were prior bonds.

The recent levy that were passed had the 100% on it and taxpayers would have known that.

So the rebate for prior 20,

30-year-old bonds went to Anchorage,

I believe,

the school district, and then they decided,

they made plans for it.

Okay.

Okay, thank you very much. And one additional question before we go to Representative Bynum.

Commissioner Bishop,

are you aware of any other school districts that have similar capital savings accounts?

Great question, Chair.

I don't, most districts have savings accounts not to that amount.

That's quite a large amount for a capital savings account.

Okay, so they didn't reimburse us.

Did, I'm sorry, Commissioner Bishop,

it was a little hard to hear you. Did you say not of the same amount or that other districts do not have funds of a similar purpose?

There are, if school districts and school boards would like to place money into savings accounts for capital,

they can do that.

If they have,

they would be basically taking their operational funds and placing them into a capital account.

So that is absolutely allowable on the chart of accounts, they would make that designation.

These funds came about just a little bit differently.

Representative Bynum.

Thank you, Co-Chair Shragi through the chair.

Thank you, Commissioner,

for being here and available to us.

I think that means a lot to us to have the commissioner available and all your staff.

So just really quick, I just and I apologize if it had previously been covered in the presentation, but I don't believe that it was.

We're talking a lot about school bond debt reimbursement. We're talking about capital.

Capital investments in schools and grant programs.

When we talk about this,

obviously we have a different system of how we fund things in the state. We have REAAs and then we also have city and borough school districts.

So in an REAA, who is responsible for the facilities and the cost of those facilities?

Commissioner,

or is that better for Director Heineken?

Thank you. Through the chair to Representative Item,

once the school is built and it's the local school district that is responsible,

however,

we do have some facilities where actually the title has not been transferred over to the local REAA and the state continues to hold that title,

but the operation of the school and the major maintenance things like that are the responsibility of the school district.

The follower.

Follow-up, Representative Bynum.

Thank you, Co-Chair Sharkey. So when we need major school maintenance on those REA facilities, are we utilizing mechanisms like school bond debt reimbursement or bonds, or are we using major school maintenance list direct funding from the legislature through a capital program?

Commissioner Bishop?

Thank you, Chair.

Thank you, Chair. Through the Chair to Representative Bynum, now I understand your question.

So for REAAs, there would be not— there would not be a local ability to levy a tax.

So for REAAs, they could be on the major maintenance or capital list or the REAA fund,

which is a direct—

a new fund to fund schools, which is directly associated with the bond debt reimbursement program.

Perfect.

Now I get to where I'm going. I'm driving down the road here and I'm trying to get to the location.

Follow?

So thank you for that.

So now when we look at the, turn the page and we look at city and boroughs and actual school districts that are covered under that city and borough model,

those facilities without school bond debt reimbursement in the conversation,

who's responsible for the building that the school resides in?

Commissioner?

Thank you. Through the chair to Representative Bynum, that would depend on how it's set up for the Anchorage School District because they have their own capital and major maintenance departments.

That would be the Anchorage School District.

I'm familiar with that.

In the Mat-Su School District.

The buildings are actually owned by the city.

I mean, you know, the borough and they work, when you want to build and do that major maintenance,

the city and borough is involved with that project.

In places like Kenai, I've talked to superintendents there and he is

His borough really does a lion's share.

That's why his borough gives a lot of in-kind,

his maintenance is run out of his borough. So each individual school district is kind of set up in a different manner in regard to those larger cities.

Perfect.

Follow up.

Thank you through the chair.

So when we start talking about the actual construction and cost of these schools, one of the things that comes to mind, and I don't know that the public is.

really aware of this but is it you know the fact of you know foundation formula money what is its intended purpose and should it be used for the cost of the actual facility as opposed to minor maintenance and facilities and then when we have these bonds going out or a borough directly pays or a city directly pays for constructions of a facility the expectation of participating in a bond debt reimbursement program

Can you comment briefly about foundation formula money being used for the purposes of actual facility cost?

What are the limitations?

And then what is the expectation as the part one,

part two, expectation of a school district for bond debt reimbursement and help offsetting the cost of the actual facility?

Commissioner?

Sure.

Thank you, Chair to Representative Bynum.

So in any budget, you would budget in your maintenance fees and also the care of the facility,

the heating,

the utilities, things like that. Any other minor maintenance care such as painting,

repainting a room that occurs often in schools,

cutting the grass.

making sure that you're tidying up you know keeping you know your spigots and spouts clear from your foundation so all those minor things are naturally built into your operating budget that is from the foundation formula items over $50,000 are generally established for major maintenance which would be either bonded and at this time you know I believe it's 50-50 or 50-40 of the state

Depending on the project and approval of the project,

the state would pick up 40% or 50%. In the past, it's been 60-40 and 70-30,

so that local government and the state would each share in the cost of that major maintenance. However,

if a district does not bond,

they can place their facilities on...

you know, the major maintenance and capital list just in the regular six-year CIP list that they keep up,

then they would do an application and similar to what Director Heineken shared,

they would be ranked.

So there's a different opportunity that city schools and boroughs, anybody that has a tax base,

you have.

you can compete that way with your local government if you will and being able to pass a bond and take on that the portion of those funds to keep up your schools but I think that was your question what what does that look like and what is the expectation generally minor maintenance and operations is the expectation for foundation formula major maintenance over $50,000 and inputs into the school

you would begin to think about major maintenance.

Then one follow,

Yep,

one

one last follow

final.

-up there,

Yep.

Brian.

Thank you, co-chair.

And so when we talk about the school district in practical application has

basically two options, and we're assuming this is a city borough, not an REAA,

but they have a couple options there. They can take it on themselves and take on that obligation.

and put it to taxpayers.

They can use their general funds to pay for some of those things if they don't do a bond.

But when they go out and get a bond debt reimbursement, I know that in years past there's been this,

the school district is operating,

working with the borough, for example, down where I'm at, and Ketchikan, you know, the school district works with the borough specifically for the facilities.

And there's some expectation for that bond debt reimbursement, but as we all know, it is subject to appropriation.

As far as you're aware,

is there any obligation once we've entered into these agreements to actually pay the money at some point?

Is it a matter of timing or is it just purely subject to appropriation and a school district might ultimately be on the hook for covering those costs on an ad hoc basis?

Commissioner?

Thank you, Chair.

To Representative Bynum,

I believe in 2017 when the state did not pay its share from bonds that were passed years ago,

that was a shock.

That was the first time.

However,

in 2022,

the state repaid all city boroughs.

and governments that took out bonds.

So they repaid their debt, which was a nice thing to have happen.

But that doesn't keep a local district from participating.

For instance,

Anchorage,

when I was there,

and this is what brought up the BRGR issues.

When I was in Anchorage, we built new roofs. We kept our roofs up. We sold bonds for 100% because the state's program was put on hiatus.

So our community supported bonds and like safety vestibules for roofs and safety vestibules.

Then what, so they were paid for and they were completed and then because they're completed projects they're then applied for on the CIP list and then they score very high on the CIP list because the safety vestibule is a safety and it's a project that's already complete.

So then the state reimburses through this major maintenance and then the district then can then reinvest those major.

maintenance funds into other things and that's I think generally what's been happening so there's different avenues based on the statutes that are allowed and so you can actually do both if you take that incur all the bond yourself in a community you could still apply for CIP and major maintenance funds at the state level and receive them there's evidence of that that those

have scored high and received payment.

Thank you. Through the chair, if it's okay.

Yep, Representative.

Just as a quick follow-up to that,

really what I was trying to ask or get at is, is there an obligation once we've entered into a bond debt reimbursement agreement,

is there an obligation of the state to actually reimburse that bond at whatever rate was set?

Or is it just subject to appropriation? Because I know there were years where schools were relying on that money and they didn't get it. Thankfully,

at some point they got reimbursed on it. But the local school district has to carry that cost year after year without uncertainty.

And so when I was on the borough assembly,

there was this question,

well, I don't know if we'll ever get the money.

And the borough had to carry that cost.

And so I was wondering,

is this just subject to appropriation from your understanding or is it some point?

Are we obligated to pay those agreements?

Commissioner Bishop?

Commissioner Bishop?

Thank you, Chair Swaggy.

It is subject to appropriation and to your point, it is, I believe, each and every year when the small language, the tiny language on those bond packages of levies that go out do share that notice.

And so yes, it is a risk that boroughs, you would say, take because it's the borough or the city that has to go back and raise taxes.

And that was what member Allard was getting at,

that when it wasn't paid,

the city did raise taxes on its residents.

Thank you.

Thank you.

Thank you.

I think does a good job of demonstrating the way in which the state and our local municipalities are intertwined in the financial impact that can be put onto our municipalities when the state pulls back state-level support for things like school maintenance. Representative Ballard?

Thank you.

Commissioner Bishop,

I have a question in regards to the CIP.

I'm looking at some documents and I will hand them all out to the committee members to get them copies.

But it looks like there was one dated in February 24,

2026, and then the superintendent,

Bryant,

asked the school board to pass some capital projects, and I'm a little bit concerned because I'm just going to read one. One of the capital projects was for a pre-K playground,

and another one was for E-lights,

and I'm trying to figure out, I don't know where that falls under capital projects. Does a playground?

fall under capital projects and

Commissioner Bishop?

Through the chair, to Representative Allard,

a district could put in for anything that they'd like. A playground would be ranked really low, according to the needs.

As you know, we have mold in some of our schools and we're trying to abate that.

That,

I did get some calls on that, and although it says, just because the money's scarce,

but although it says that it's from the capital improvement project,

it is not from the local,

it's from the reimbursements from past projects.

So Anchorage was reimbursed for their roofs and their...

vestibules and they were able to then reinvest the money into into their other projects that they desired because the original bond was passed

then they were reimbursed and then they could invest although it's I did get that at a time and I know it was misleading because it said it was a department CIP program that it wouldn't have ranked high for the department but essentially it is CIP money because it was reimbursed from a different project that they're redirecting

I just have one last question and then

Yeah, one last

I've

thing.

already got a headache.

No offense to anybody.

Representative Ballard.

Thank you. So how would a playground as a capital project bump above other capital projects across the state?

I mean, aren't there other schools that have more?

I mean, I got a new roof at Homestead Elementary.

How would this be a priority across the state to have a CIP that just...

That's just allowed that a playground takes precedence over, I don't know, roof?

Representative Ballard, I think what we just heard from the Commissioner is that it would not rank higher than those other projects. But when the school district received reimbursement from the state for other projects that did qualify and rank higher, they were then able to use some of those reimbursed funds

Yeah, I just wanted her to repeat it on the record. Okay, so then my question would be that this—

Representative

sorry. Alward. Alright, just a comment then. So

Representative Ellard.

All right, just a comment then.

So the—

So at any point, Anchorage School District could have reimbursed the taxpayers,

but instead they levied, bonded,

got the money back from the state and said, you know what, we're going to put it in savings and we're going to keep spending money, but we're not going to reimburse the taxpayer.

That's what I heard.

Okay,

thank you. No more questions, right?

Thank you Representative Allard and since we're into comments I'll just say that as someone with two very young children I am very grateful for our investments in our schools and our playground equipment.

Back to the presentation for a moment. Slide thirteen if I could.

Director Heineken, I wanted to ask a little bit about uh this first statement around the burger has evolved over thirty years to maintain fairness, transparency and cost effectiveness. Can you tell me a little bit about what fairness means to you director in terms of this process?

Thank you for the question,

Chair Schrabe.

The intent is to have a very objective approach that is not based on subjective things within a district like I'll just say academic performance or things of that nature, something that is available to all districts.

I know that there has been conversation about the costliness of the applications and that is that does change the fairness because not every district has the same financial resources so that is one of the things that we have at the burger committee tried that we

continuing to try to address is to develop that fair and objective approach to the application based

Yeah, thank you, Director Heineken.

on facts.

Yeah, thank you, Director Heineken. That is partly where my mind is going,

is that it is good to have a transparent process that's objective.

Um, well I won't say not gameable because I think we've heard some concerns around how schools are able to advantage themselves in that process. But one of the concerns I have is that school districts do not have the means to submit uh projects for consideration. And I know that on the prior slide we talked about giving more points for concept and schematic design, but I'm concerned that some school districts don't even have capacity to do that. It Can you tell me, I I had not really heard of Burger or this process.

us uh in years prior this is the first year that I've really honed in on it a little bit. It does the state, does DEED, does the Burger committee have any role in evaluating school district and and school facility conditions, or are we solely reliant on the school districts and the school operators to submit information on the condition of their facilities uh for consideration and scoring on the school major maintenance list?

To Chair Schragi, that is information that we rely on from the district to provide to us.

And have you all ever explored what it would take to play a more active role in scoring school facilities throughout our state?

To Chair Schragi, I don't know that we've done a...

that we have, we've had the conversation,

staffing would be an issue, and expertise.

That does require a whole host of different expertise than what we have on staff at the department.

Okay. Thank you.

We need to we've got about ten minutes before we need to adjourn. So we have some time still. Uh I think our Representative Hannan has a question. If we end up adjourning early, that's great too. But Representative Hannan, please.

Thank you, uh Chair Schragi. I actually didn't have a question, had a comment and I wish my colleague from Eagle River was still here. Um

In our community, we undertook a consolidation of schools and shuttered schools three years ago and turned what had been a middle school into a school that now houses

Our charter school switches a K_ eight programme, our Montessori which is a K_ eight programme, our alternative high school. And as a result of that, there was not a playground, because it was a middle school, but now you have all those young minds and all pedagogy around education incorporates the importance of play as a primary and in significance in early learning, and certainly I think for all

Thus, even as adults, more activity through your day stimulates your brain and your capacity.

Our school board was kind of stuck in that they were divided over.

cost cutting and then what the expense to build a safe playground and they undertook fundraising etc and it took our brave and bold borough assembly who that final budget in all borough governments it's not your school board but your borough assembly who had to authorize and say it's okay to spend some of this money to get this completed because it's so important for the

For the pedagogy of kids that we've put into a facility that doesn't adequately meet their needs by not having a playground for those young learners. And um our our school board had supporters to do that, but when they're cutting positions in stuttering buildings for them to say and we're gonna build kindergartners a playground, some of our school board members couldn't say that. But our bold assembly encouraged them, and we are delivering on that.

that. And I'm proud to say I was, you know, their fundraising included buying bricks at it. And I think borough assemblies who understand their responsibility and role of education do that. They make sure they remind themselves they're the ones passing the budget. School boards bring them to the borough assemblies for final authorisation. So I'm pleased that Anchorage put a a s

playground at a school when it's needed, because it's important for young learners. Thank you, uh coach here.

Your hand. Other questions from committee members?

Not seeing any. Uh one additional question from me. Go going back to slide eleven. Proposed changes to the CIP application process, what what is the timing on these changes and when they're considered, when they're approved, if if they are approved uh Director Heineken, can you provide that information to me?

Sure, Co-Chair Schraggi.

So the CIP application is reviewed every April during the annual— during the April, uh, Berger Committee.

We have a two-day meeting, and the committee members are presented with a collection of any proposed changes at that time. And we go through, we went through question by question and line by line and redlined it for approval and voted on that last week.

um next on the 28th and 29th we will roll this application out in our CIP um training uh our meeting in Anchorage where we invite all uh school districts and we're going to offer a virtual option this year so um it's approved at the beginning of the month and then we roll it out at the end of the month of April so they have the most current version um

to apply for, and then the application is due on September 1st. To the department, and then we evaluate them, and through that— during that same time, we are collecting changes and proposals for the following application period. So, as of today, we'll start collecting— or as of last week, we collect new proposed changes for next year's application.

Okay, very good. Last chance for questions from committee members. Not seeing any, I want to

Thank Director Heineken,

Mr.

Budenkoffer, Ms. Preston, and Committee members,

Commissioner Bishop as well for being with us today and answering our questions.

With that, our next meeting of the House Finance Committee is scheduled for tomorrow, Friday, April 10th at 9 a.m., where we will hear House Bill 193 unemployment benefits, paid parent leave.

With nothing else before the Committee, we are adjourned at two forty p.m.