Bill Summary – FastDemocracy

State of Alaska
                                                             Fiscal Note
                                                                                               Bill Version:                    HCS CSSB 74(FIN)
 2020 Legislative Session
                                                                                               Fiscal Note Number:              3
                                                                                               (H) Publish Date:                2/14/2020
 Identifier:        SB074CS(FIN)-EED-LO-1-31-20                                 Department:        Department of Education and Early Development
 Title:             INTERNET FOR SCHOOLS                                        Appropriation: Alaska State Libraries, Archives and Museums
 Sponsor:           HOFFMAN                                                     Allocation:        Library Operations
 Requester: House Finance                                                       OMB Component Number:               208
 Expenditures/Revenues
 Note: Amounts do not include inflation unless otherwise noted below.                                                                 (Thousands of Dollars)
                                                 Included in
                                    FY2021       Governor's
                                Appropriation      FY2021                                             Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES               FY 2021        FY 2021       FY 2022                       FY 2023           FY 2024            FY 2025       FY 2026
 Personal Services
 Travel
 Services                                 36.0          150.0         180.0                         180.0             180.0             180.0             180.0
 Commodities
 Capital Outlay
 Grants & Benefits                     6,516.0        1,337.5       7,617.9                       7,389.4           7,167.7            6,952.7       6,744.1
 Miscellaneous
 Total Operating                       6,552.0        1,487.5       7,797.9                       7,569.4           7,347.7            7,132.7       6,924.1
 Fund Source (Operating Only)
 1004 Gen Fund (UGF)                          8,039.5                           7,797.9           7,569.4           7,347.7            7,132.7       6,924.1
 1226 High Ed (DGF)                         (1,487.5)         1,487.5
 Total                                        6,552.0         1,487.5           7,797.9           7,569.4           7,347.7            7,132.7       6,924.1
 Positions
 Full-time
 Part-time
 Temporary
 Change in Revenues
 None
 Total                                            0.0              0.0                 0.0             0.0                0.0              0.0              0.0
 Estimated SUPPLEMENTAL (FY2020) cost:                                    0.0                (separate supplemental appropriation required)
 Estimated CAPITAL (FY2021) cost:                                         0.0                (separate capital appropriation required)
 Does the bill create or modify a new fund or account?       No
 (Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
 ASSOCIATED REGULATIONS
 Does the bill direct, or will the bill result in, regulation changes adopted by your agency?                  Yes
 If yes, by what date are the regulations to be adopted, amended or repealed?                                  12/31/20
 Why this fiscal note differs from previous version/comments:
 This fiscal note updates the 2019 version provided for the first session in which this bill was considered. In addition, this note includes
 the current cost of getting 72 schools up to 10 mbps, and adds the cost of getting 173 schools up to 25 mbps. This fiscal note reflects
 the entire cost of the School BAG program.
 This fiscal note also changes the funding source for School BAG from the Higher Education Investment Fund (HEIF) to Unrestricted
 General Funds. The HEIF is a designated funding source that by statute is to be used for the Alaska Performance Scholarship and the
 Alaska Education Grant. School BAG is considered a non-designated use of the HEIF and thus should be changed to UGF.
 Prepared By:              Patience Frederiksen, Director                                                            Phone:         (907)465-2911
 Division:                 Libraries, Archives, and Museums                                                          Date:          12/12/2019 02:26 PM
 Approved By:              Heidi Teshner, Director of Finance and Support Services                                   Date:
                                                                                                                             OUT OF 01/31/20
 Agency:                   Department of Education and Early Development                                           REPORTED
Printed 2/14/2020                                                        Page 1 of 2                                HFC 02/13/2 020
                                                                                                                             Control Code: MVRlE
                                                                                                      HCS CSSB 74(FIN) - Fiscal Note 3
                                                  FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                    BILL NO. CSSB 74(FIN)
2020 LEGISLATIVE SESSION
Analysis
   This bill amends AS 14.03.127, Funding for Internet Services, by increasing the megabit threshold for the School
   Broadband Assistance Grant (School BAG) from 10 megabits to 25 megabits per second (mbps). A district, in which one or
   more schools qualify for a discounted rate for internet services, is eligible to receive a School BAG for each school for the
   amount that is necessary to bring all schools in that district up to 25 mbps of download speed.
   The Department of Education and Early Development (DEED) used a Federal Communications Commissiongenerated
   (FCC) list from 2019, which showed that 245 sites that had applied for ERate funding were also under 25 mbps. The list
   was then revised to delete duplicate services going to the same sites for which the district had applied for ERate funding.
   Some schools receive a direct line of broadband while also receiving broadband through a circuit, so the schools would
   have two ways to access the internet and both of those ways are eligible for ERate funding, thus the duplicate
   applications for the same schools. This reduced the number of schools under 25 mbps to 173 total, which includes the 72
   schools currently receiving the subsidy for 10 mbps of service.
   Currently, under AS 14.03.127, $1,487.5 is included in the Governor's FY2021 budget request to fund 72 schools at 10
   mbps and fund administrative costs. An additional $6,516.0 is required to bring all 173 schools to the 25 mbps service
   level. The entire program will continue as one application for up to 25 mbps. This fiscal note assumes that internet costs
   will rise proportionately from 10 mbps to 25 mbps. This fiscal note also assumes that the FY2020 School BAG program
   numbers are an accurate predictor of what the FY2021 School BAG program will need at 25 mbps.
   FY2021 School BAG at 25 mbps
   Cost to Get 72 Schools Up to 10 mbps
   FY2020 School BAG Award                                            $1,337,500
   Cost To Increase 173 Schools from 10 to 25 mbps
   Schools at less than 25 mbps in 2019                               173
   FY2020 average School BAG cost per school to 10 mbps               $15,066
   School BAG cost for 173 schools to 10 mbps                         $2,606,418
   Proportional School BAG increase from 10 to 25 mbps                $6,516,045
                             Formula
                             2,606,418   =   10
                             6,516,045       25
   Total Cost (72 sites to 10 mbps + 173 sites from 10 to 25 mbps) $7,853,545
   The outyear costs are estimated on a 3% reduction in grants based on funding patterns of the current School BAG
   program. The estimated amounts may be larger or smaller based on FY2021 information submitted to the FCC.
   Additional contract hours and a technical review of grant applications will be necessary to administer the expanded grant
   program for an additional $30.0 per year; bringing the annual cost of administering the program to $180.0. In addition,
   regulations will need to be updated to reflect the increase from 10 mbps to 25 mbps, requiring an additional onetime
   increment of $6.0 in FY2021 for legal services costs associated with the regulation changes.
(Revised 10/22/19 OMB/LFD)                                                                                          Page 2 of 2
SB074CS(FIN)-EED-LO-1-31-20                                     Page 2 of 2                                              Control Code: MVRlE
Statutes affected: 
SB0074A, AM SB 74, introduced 03/06/2019: 14.03.127
SB0074B, AM CSSB 74(EDC), introduced 04/01/2019: 14.03.127
SB0074C, AM CSSB 74(FIN), introduced 05/06/2019, passed Senate 05/09/2019: 14.03.127
SB0074D, AM HCS CSSB 74(FIN), introduced 02/14/2020: 14.03.127
SB0074Z, AM Enrolled SB 74, introduced 03/21/2020: 14.03.127