News from Senator Jerry Mackie

Alaska State Legislature

Wendy Lindskoog, Senate Majority Press Secretary
State Capitol
Juneau, AK 99801-1182
Phone: 907/465-4582
http://www.akrepublicans.org
Broadcast Actualities: 800/478-6540

For Immediate Release: February 27, 1997 Contact: Senator Jerry Mackie 907/465-4925

Funding Method Proposed for New School Construction and Major Maintenance

Juneau -- Senator Jerry Mackie (D-Craig) Thursday introduced two measures that will provide a creative mechanism for the State to build new schools and repair existing facilities for our 160,000 elementary, secondary, and university students.

The first measure is a sponsor substitute for Senate Bill 37 which forms the Education Facilities Financing Authority. The second measure, Senate Bill 111, appropriates $1.2 billion from the Constitutional Budget Reserve (CBR) to a Facilities Fund which capitalizes the Authority.

Senator Mackie explained that the Authority would issue bonds to finance the construction and repair of schools directly or it could reimburse municipalities and the university for the debt service on their own construction bonds.

"The corpus of the Facilities Fund itself would never be spent," said Mackie. "It would be placed under Permanent Fund Corporation management and invested for long-term growth. The legislature could appropriate debt service to the Authority each year and the earnings -- and only the earnings -- of the Facilities Fund, would be used to pay the debt service."

Sponsor substitute for SB 37 also contains legislative authorization for $500 million worth of new school construction and major maintenance projects:

• $285 million authority bonds for rural and small municipality schools
• $135 million authority bonds for large municipality schools
• $80 million for University of Alaska Bonds

Stephen McPhetres, Executive Director of the Alaska Council of School Administrators, said, "This legislation allows the use of a state savings account to provide needed school facilities. It will also enable the state to anticipate the financial requirements for future educational facilities and prepare to meet those needs."

"The legislature could approve more projects in future years," said Mackie. "I estimate that the bonding capacity of the fund would support upwards to $1.4 billion for new construction with the initial deposit from the CBR."

Mackie pointed out that the new legislation would use the same structure used for years to sustain the housing and industrial development needs of Alaskans. "Why not use the funding mechanism so successful at AIDEA and AHFC-- a mechanism that has allowed these state agencies to underwrite billions of dollars of private infrastructure and return dividends to the General Fund-- to meet our children's needs in repairing and constructing facilities statewide for our schools and university?," he asked on the Senate floor.

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