2004-01-28                     House Journal                      Page 2417
HB 404                                                                                            
HOUSE BILL NO. 404 by the House Rules Committee by request of                                       
the Governor, entitled:                                                                             
                                                                                                    
     "An Act relating to the Alaska Commission on Postsecondary                                     
     Education; relating to the Alaska Student Loan Corporation;                                    
     relating to bonds of the corporation; relating to loan and grant                               
     programs of the commission; relating to an exemption from the                                  
     State Procurement Code regarding certain contracts of the                                      
     commission or corporation; making conforming changes; and                                      
     providing for an effective date."                                                              
                                                                                                    
was read the first time and referred to the House Special Committee on                              
Education and the Health, Education & Social Services and Finance                                   
Committees.                                                                                         
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Zero, Dept. of Administration                                                                   
2.  Zero, Dept. of Community & Economic Development                                                 
3.  Fiscal, Dept. of Education & Early Development                                                  
                                                                                                    

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The Governor's transmittal letter dated January 22, 2004, follows:                                  
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a bill relating to the Alaska                                       
Commission on Post-secondary Education (ACPE) and the Alaska                                        
Student Loan Corporation (ASLC).  This bill is a result of ASLC                                     
board members and management, in consultation with financial                                        
advisors, proposing a mechanism where (1) the state could optimize                                  
the use of its financial assets and deliver a greater return to Alaskans                            
for its initial investment in ASLC and ACPE; and (2) continue to                                    
effectively administer ACPE/ASLC financial aid programs.                                            
                                                                                                    
The bill would allow ASLC to issue bonds utilizing future cash flow                                 
that is in excess of that needed for effective and efficient operation of                           
corporation programs.  ASLC predicts it can return $260 million to the                              
state over a three-year period beginning in 2004; the proceeds from                                 
which would be available to finance capital projects.                                               
                                                                                                    
The ASLC's primary mission is to support, promote, and provide                                      
access to postsecondary education for Alaskans.  The objective of this                              
legislation is to continue to serve that mission, but to do so in a way                             
that permits ASLC to serve broader state interests through the efficient                            
allocation of financial resources.  As part of the development process,                             
cash flow models were developed to ensure the corporation has and                                   
will continue to have the financial capacity to discount loan interest                              
rates and deliver outstanding borrower benefits to its primary                                      
customers -- Alaska students and their families.                                                    
                                                                                                    
The bill establishes a "needs-based" grant program to be funded from                                
corporate receipts and federal matching dollars.  Grants must be used                               
for qualified Alaska education programs focused on meeting Alaska's                                 
labor shortage needs.  A priority is placed on students enrolled in                                 
programs of study (such as health care and education) where there is a                              
severe shortage of trained individuals in Alaska.                                                   
                                                                                                    
The bill also creates an "administrative collection order" and a process                            
for establishment and use of such an order by ACPE.  An                                             
administrative collection order would allow ACPE to establish a lien                                

2004-01-28                     House Journal                      Page 2419
on borrower's property when that person has broken their promise to                                 
re-pay an education loan.                                                                           
                                                                                                    
Finally, the bill exempts ACPE and ASLC contracts for disbursing and                                
guaranteeing financial aid money from Alaska's procurement code.                                    
This creates efficiencies in the internal operations of ACPE and ASLC                               
and meets the needs of participating post-secondary institutions                                    
(ACPE contracts with a guaranty agency and disbursing agents to                                     
electronically guarantee and/or disburse financial aid money for                                    
students to colleges and universities).                                                             
                                                                                                    
I urge your prompt and favorable action on this measure.                                            
                                                                                                    
                                Sincerely yours,                                                    
                                /s/                                                                 
                                Frank H. Murkowski                                                  
                                 Governor"