03/19/2012 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| Discussion: Proposed State Education Standards with Eed | |
| Presentation: Northwest Arctic Borough School District/ University of Alaska-chukchi College/ Star of the Northwest Magnet School Alaska Technical Center | |
| HB272 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 137 | TELECONFERENCED | |
| += | HB 272 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
March 19, 2012
8:05 a.m.
MEMBERS PRESENT
Representative Alan Dick, Chair
Representative Lance Pruitt, Vice Chair
Representative Eric Feige
Representative Paul Seaton
Representative Peggy Wilson
Representative Sharon Cissna
Representative Scott Kawasaki
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
DISCUSSION: PROPOSED STATE EDUCATION STANDARDS WITH EED
- HEARD
PRESENTATION: NORTHWEST ARCTIC BOROUGH SCHOOL DISTRICT STAR OF
THE NORTHWEST MAGNET SCHOOL
- HEARD
HOUSE BILL NO. 272
"An Act providing for a reduction in interest on postsecondary
education loans for residents."
- HEARD & HELD
SENATE BILL NO. 137
"An Act requiring suicide awareness and prevention training for
certain school personnel."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HB 272
SHORT TITLE: STUDENT LOAN INTEREST REDUCTIONS
SPONSOR(s): REPRESENTATIVE(s) GARA, GUTTENBERG, GARDNER,
KERTTULA, HOLMES, TUCK, KAWASAKI, PETERSEN, GRUENBERG, CISSNA
01/17/12 (H) PREFILE RELEASED 1/13/12
01/17/12 (H) READ THE FIRST TIME - REFERRALS
01/17/12 (H) EDC, FIN
01/25/12 (H) SPONSOR SUBSTITUTE INTRODUCED
01/25/12 (H) READ THE FIRST TIME - REFERRALS
01/25/12 (H) EDC, FIN
02/22/12 (H) 2D SPONSOR SUBSTITUTE INTRODUCED
02/22/12 (H) READ THE FIRST TIME - REFERRALS
02/22/12 (H) EDC, FIN
02/27/12 (H) EDC AT 8:00 AM CAPITOL 106
02/27/12 (H) <Bill Hearing Rescheduled to 02/29/12>
02/29/12 (H) EDC AT 8:00 AM CAPITOL 106
02/29/12 (H) Scheduled But Not Heard
03/05/12 (H) EDC AT 8:00 AM CAPITOL 106
03/05/12 (H) Heard & Held
03/05/12 (H) MINUTE(EDC)
03/19/12 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
COMMISSIONER MIKE HANLEY, Commissioner
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Provided comments on the proposed state
education standards.
DR. NORMAN ECK, Ph.D., Superintendent
Northwest Arctic Borough School District
Kotzebue, Alaska
POSITION STATEMENT: Provided a presentation from the Northwest
Arctic Borough School District on the Star of the Northwest
Magnet School.
REPRESENTATIVE LES GARA
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as one of the joint prime sponsors of
SSHB 272.
DIANE BARRANS, Executive Director
Alaska Commission on Postsecondary Education (ACPE)
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: During hearing of SSHB 272, answered
questions.
ACTION NARRATIVE
8:05:14 AM
CHAIR ALAN DICK called the House Education Standing Committee
meeting to order at 8:05 a.m. Representatives Pruitt, Feige,
Seaton, P. Wilson, and Dick were present at the call to order.
Representatives Cissna and Kawasaki arrived as the meeting was
in progress.
^Discussion: Proposed State Education Standards with EED
Discussion: Proposed State Education Standards with EED
8:05:39 AM
CHAIR DICK announced that the first order of business would be a
continuation of the committee's discussion of the proposed state
education standards.
8:06:54 AM
COMMISSIONER MIKE HANLEY, Commissioner, Department of Education
and Early Development (EED), began by clarifying his thoughts in
regard to the letter [Chair Dick] sent regarding reasons not to
adopt the proposed Alaska state education standards. The letter
mentions multiple times that a full third of the state's 9th
graders will leave the system prior to graduating. However, the
annual dropout rate for 2011 was 4.7. In terms of a cohort of
9th grade to 12th grade, the dropout rate is closer to 18-19
percent, which isn't a third. However, that rate is still too
high.
8:08:20 AM
CHAIR DICK surmised then that if 18 percent of all the 9th
graders four years ago were considered dropouts, the other 82
percent must have received a high school diploma.
COMMISSIONER HANLEY explained that those receiving diplomas
could've been fifth- or sixth-year graduates. There are a small
percent, about 2-3 percent, of students who don't graduate but
aren't considered dropouts because they have severe cognitive
disabilities.
8:09:15 AM
REPRESENTATIVE CISSNA indicated that the dropout explanation
should also reference those students affected by fetal alcohol
syndrome, although she reported that such students may no longer
be identified.
COMMISSIONER HANLEY clarified that the 2 percent of students who
have severe cognitive disabilities are students who are learning
to communicate with devices, feed themselves, and clothe
themselves. The students with fetal alcohol syndrome, which is
an entire spectrum, were not included in the 2 percent.
8:10:43 AM
COMMISSIONER HANLEY, referring to the letter, addressed the
concern regarding the language used in the standards. He
reminded the committee that the audience is educators and
implementers of the standards, which requires specificity in the
standards to ensure they are all teaching toward the same
criteria. Generalities don't work in standards because it could
result in trying to measure one thing while teaching in several
different directions. The letter also mentions the "Elite 7"
that is the 7 percent of students who graduate college in six
years. He acknowledged that 7 percent is a dismal percentage,
although he stated that the K-12 education system isn't totally
to blame. The standards, he said, aren't necessarily aimed at
the 7 percent because if they were the [education system] would
be considered to be failing. He highlighted a chart that
illustrates that a much higher percentage of [high school
graduates] move on to careers and into jobs. Therefore, he
opined that Alaska's education system has college- and career-
ready standards. However, from the university system he
understands that the chance of graduation from college declines
[in relation to] every remediation course a student needs.
Therefore, the college-readiness portion of the education
standards needs to be strengthened such that remediation isn't
necessary. When students arrive at college, they should not
require remediation.
8:13:03 AM
CHAIR DICK pointed out that anyone can attend the University of
Alaska system and be accepted, unlike many Ivy League or private
schools that have entrance requirements.
REPRESENTATIVE SEATON agreed that one must be cautious with the
comparison, however, of the top 10 percent of Alaska's high
school graduating classes, 35-50 percent require remediation
courses at college. Therefore, the [K-12 education system]
needs to do a better job preparing students for college.
COMMISSIONER HANLEY agreed that students need to be prepared for
whatever postsecondary education they choose.
8:14:53 AM
COMMISSIONER HANLEY, recalling the testimony from
superintendents to this committee, related that he has been
encouraged by programs such as the Nenana School District's
vocational education program, the dual credits with Western
Oregon, and student leadership teams. He also highlighted the
Aleutians East Borough School District that uses laptops and
Alaska's Learning Network (AKLN) distance delivery education to
achieve its 100 percent graduation rate. The Valdez City School
District has a graduation rate in the 90th percentile. In the
Klawock City School District work ethic is taught and the
district's mission focuses on exemplary, well-rounded education
for the whole child. The Klawock City School District has a 91
percent graduation rate, low teacher turnover, and a focus on
youth employability skills. The Delta/Greely School District
offers welding, construction, trades, forensics, and robotics.
Most students in the Delta/Greely School District participate in
some extracurricular activity and the graduation rate is about
79 percent. Although he acknowledged that there's need to
improve, he said it's difficult to say education/school
districts across the board are a broken paradigm. There are
some shining lights, including three districts that have raised
their standards beyond the state standards. For instance, the
Alaska Gateway School District focuses on the common core, which
is a set of standards that 49 states have adopted. Those
standards, he mentioned, were developed by the National
Governor's Association. He noted that the Juneau School
District also teaches to the common core. The new proposed
standards heavily reference the common core. He emphasized that
although the standards can be different, Alaska needs to match
the level of rigor of the majority of the nation because
Alaska's students will compete with those in the rest of the
nation.
8:18:27 AM
REPRESENTATIVE P. WILSON asked for a list of the schools that
are considered outstanding. Further, she expressed interest in
knowing what it is that these schools are doing right, which
might be utilized by other schools.
COMMISSIONER HANLEY remarked that success is a subjective
measurement. Although he said he could provide a list of
schools with high performance and many programs in place, he
related his belief that a program doesn't necessarily make the
difference. The success, he indicated, is a result of the
attitude, the vision, and focus of the faculty with a tool. He
told the committee that the Yukon-Koyukuk School District just
came out of intervention during which the teachers said that the
kids are worth whatever it takes. That attitude has resulted in
the Yukon-Koyukuk School District doing great things that it
wants to spread to other districts.
REPRESENTATIVE P. WILSON asked then whether teacher development
is being done in ways that excite teachers. She opined that
there are a lot of schools not on the list that need
intervention.
COMMISSIONER HANLEY informed the committee that currently the
department is reviewing the state system of support, which
includes the coaches in the intervention districts. The intent
is to maximize the use of the coaches that have one area of
expertise such that each coach is trained [over a broader
spectrum] so that they can be versed in more areas and used
throughout more districts in the state.
8:22:11 AM
CHAIR DICK returned the committee's attention to the standards,
which refer to what is taught not how it's taught.
8:22:37 AM
REPRESENTATIVE CISSNA highlighted the shrinking populations in
rural Alaska, which results in a negative effect. She opined
that educators need to be taught such that they operate with the
inner core belief that the kids are worth whatever it takes.
She further opined that should be the overarching standard. She
expressed hope that there could be more conversations about
standards.
CHAIR DICK agreed and said that anyone interested could meet
with him and the commissioner regarding standards.
8:25:17 AM
REPRESENTATIVE SEATON surmised that the basic premise is the
state standards for language and math. He then requested that
the commissioner present the structure of the existing standards
versus the structure of the new standards and how that will
impact the school districts. He recalled the deputy
commissioner discussing the mathematical practice standards.
However, he didn't see a parallel in the English language arts
standards.
8:27:15 AM
COMMISSIONER HANLEY clarified that there isn't a huge paradigm
shift in the standards and further there aren't many new
standards rather there are adjustments and specificity of the
standards. The proposed standards, he stated, are specific
enough that a separate level of grade level expectations (GLE)
aren't necessary. Teachers should be able to review the
standards and understand what his/her students need to learn by
the time they graduate from a specific grade level.
COMMISSIONER HANLEY, in further response to Representative
Seaton, explained that initially the standards were content
based and were measured by performance standards that ultimately
became the GLEs to quantify the progress. The proposed
standards are performance based. He acknowledged that some
teachers complain that the proposed standards are too specific,
but he believes they are specific enough that they allow the
teacher to see and measure the standard. The biggest change is
that requirements have been shifted between grade levels such
that the knowledge that was expected in one grade level is now
expected at an earlier grade level. This shift and
clarification of standards allows the state to extend what it
expects students to know through high school.
REPRESENTATIVE SEATON inquired as to where the new mathematical
practice standard and content standards appear in the list. He
related his understanding that there are content standards and
standards of mathematical practice as well as individual
classroom grades.
COMMISSIONER HANLEY said that he wasn't prepared to speak to the
math as he only brought along the language arts standards. He
acknowledged that the standards for math and language arts seem
to be organized in totally different systems. Math is very
concrete learning, whereas there are several components to
reading. Therefore, the two look very different in terms of the
content area. He offered to bring the math standards to the
next meeting for review and discussion.
8:32:55 AM
CHAIR DICK, drawing from a discussion with a local math teacher,
related his belief that as good as the proposed math standards
are he didn't believe every teacher in Alaska is able to
incorporate the standards. Furthermore, there's no way to
measure that a student has been taught in the fashion envisioned
by the standards beyond classroom evaluation. He maintained
that not all teachers would be able/prepared to teach what is
being required nor was he sure that there are enough resources
to ensure the professional development necessary.
8:35:37 AM
REPRESENTATIVE CISSNA observed that the goal is to cultivate
college-ready students. She defined college as anything beyond
high school; that is skill sets that are beyond high school.
These skill sets, she opined, would be those that work in urban
settings, which don't take into consideration culturally
sensitive aspects. Therefore, students would be tested in terms
of being college ready not in terms of being able to work with
each other. Furthermore, testing that focuses on areas that
students who are affected by fetal alcohol syndrome and other
issues could do isn't being done. There is something missing
and large groups of people are being left behind [in terms of
education], she emphasized. Therefore, the state and those
thinking about education need to address those groups that are
left out. She inquired as to how the aforementioned can be
incorporated into the conversation.
8:38:17 AM
COMMISSIONER HANLEY agreed that the skills mentioned by
Representative Cissna are critical but difficult to assess. He
said he wasn't sure they wanted to assess those skills on a
statewide level, although he believed it's key for school
districts to focus on characteristics it wants to cultivate such
as employability and citizenship skills. Although these
characteristics would look different from community to
community, he acknowledged that every student needs to be able
to work well with others, problem solve, be good citizens,
etcetera. Commissioner Hanley turned to Representative Cissna's
point regarding shrinking communities, especially in rural
Alaska. He opined that there couldn't be standards that focus
on rural Alaska because those areas are shrinking and students
need to be provided the opportunity to be successful anywhere
they choose to go, including rural Alaska. The aforementioned
is a difference between setting a standard that provides
opportunities for the student in rural Alaska and standards to
provide students opportunities in and out of rural Alaska. He
informed the committee that an average adult changes careers
five times, and thus students need to be educated with a basic
set of skills that allow options.
REPRESENTATIVE CISSNA interjected that what's missing is that a
study of what is occurring in rural Alaska is not being
undertaken and thus, she said, "We're batting in the dark."
Therefore, she stressed that the state needs to change its
priorities and what is being done.
COMMISSIONER HANLEY said he wasn't sure what organization would
determine that dynamic.
8:41:06 AM
CHAIR DICK paraphrased a comment from Diane Barrans, as follows:
"Data published for all of 2010 reflects that 7 out of 100
Alaska ninth graders will complete a college credential." He
then questioned whether the standards will be directed to the 7
percent of students who will complete a four-year college
degree, or will the standards be directed to all students with a
fast track for those [going on to college]. He acknowledged
that there's the need for specific language in describing the
standards in order for there to be accuracy. However, if the
public finds it difficult to read the standards and can't
understand them, then he questioned whether the public comment
is really meaningful. Chair Dick noted agreement that the 7
percent should be increased, but asked how [the education
system] would speak to the needs of the remaining percent of
students. He further asked whether the remaining percentage of
students may be marginalized due to the way in which these
standards are written. He read one of the mathematical
standards and said even as a math teacher he would need help
understanding the standard. However, he maintained that even if
he understood the standard, he struggled to understand how it
could help someone be successful with a career path of a
fisherman, miner, or truck driver. Therefore, he emphasized
that the fundamental question is whether a set of standards is
going to be created that is totally focused on students going to
college or standards that are focused on rigor for all students
and include the career path portion. With regard to the concern
about the student who proceeds on a career path but then changes
his/her mind and seeks a college path, he informed the committee
that in Northern Ireland two tracks were utilized. The two
tracks resulted in more college graduates because the students
on the career track were so engaged and saw the meaning of what
they were doing such that they decided to cross over to the
college track. Those students who crossed over were better
prepared, he opined, because with only a college track the
career track students would've become disengaged and perhaps
wouldn't have even qualified [for college].
8:45:25 AM
COMMISSIONER HANLEY remarked that the converse of the 7 percent
is that 93 percent of the students are sent to the career track.
The 93 percent aren't marginalized but rather are in careers, he
opined, unless they are unemployed, which isn't borne out with
Alaska's unemployment rate. Therefore, he further opined that
the state has done a better job with its standards and focus on
education to prepare students for a career than for completion
of a college degree. The 7 percent isn't enough to fill the
vacant [college degree] positions.
8:46:37 AM
CHAIR DICK questioned whether it would be better to teach to a
real life application, if the purpose of education is to provide
meaningful understanding of the world. He recalled his
experience writing curriculum and producing videos to motivate
Alaska Native students in Anchorage to become involved in the
Alaska Native Science & Engineering Program (ANSEP) for
engineering. He read a mathematical standard and maintained
that it would be a struggle to teach the concept in terms of
applying it to real life.
8:48:36 AM
COMMISSIONER HANLEY acknowledged that as a commercial fisherman
he didn't require much of what he learned in high school, which
could also be said for a good portion of mining employment.
However, when fishing he decided to add value to his product,
which required a college education or at least a high school
education. Commissioner Hanley pointed out that although
simpler aspects of math, such as the circumference of a circle
may not be used every day or used by a miner or a fisherman, he
didn't believe geometry shouldn't be taught. He opined that
people are more than a set of skills rather they are the sum of
all that they know. Understanding what is beyond skills that
are used on an everyday basis cultivates a sense of wonder and
is important even if it doesn't fit into a career. Therefore,
the rigor is necessary to allow Alaskan students to compete no
matter what they choose to do. When comparing urban and rural
students, the ANSEP commercial comes to mind and he stressed the
need to allow them [to take college track classes] more than
placing a ceiling on the standards that challenge them [in terms
of career ready classes].
8:51:22 AM
CHAIR DICK clarified that the suggestion is to provide a fast
track for the ANSEP students, not a ceiling. He said that upon
reviewing those on the standards review list only three people
are not educators. Therefore, he expressed the need for there
to be an equal voice from career path representatives because
that's where the students are heading. Furthermore, the career
destinations are relating that the students aren't reaching them
prepared. Chair Dick posed a scenario in which an employer
finds that a student can't do a math problem. He suggested that
the student could solve the problem in the textbook, but the
real life application isn't being presented to students. That
is where the system is failing, he stressed. Moreover, if
there's no real life application perhaps it shouldn't be taught
because there's no shortage of information available.
8:53:35 AM
REPRESENTATIVE CISSNA recalled the engineering that is displayed
in the museums of the nation in the artifacts from indigenous
people. For them the test was survival, and the science and
technology was very advanced. She stressed the need to promote
and build on their success.
CHAIR DICK promised that he would fiercely defend any standard
that teaches applied math that's necessary to be successful.
8:56:14 AM
The committee took an at-ease at 8:56 a.m.
CHAIR DICK passed the gavel to Representative Seaton.
8:56:48 AM
REPRESENTATIVE SEATON requested the department provide a
comparison of the current standards and the proposed standards
in reading and math, specifically a comparison of the anchor
standards, the grade level standards for each of the anchor
standards, and how they correspond with the math standards and
the math performance standards.
8:57:47 AM
REPRESENTATIVE P. WILSON opined that a comparison of the
proposed Alaska standards with the common core standards reveal
the two are almost identical. She inquired as to the reasoning
behind [and expected outcome] in adopting these standards.
Would adoption of these proposed standards allow the state to
get out from under No Child Left Behind (NCLB), she asked.
COMMISSIONER HANLEY stated that there is no direct connection
with NCLB. Basically, the National Governors Association
through the Chief Council of State School Officers developed the
common core standards. Forty-five states bought into those
standards, which couldn't be changed. Since Alaska chose to
make some adjustments, it couldn't be considered a common core
standard state. He informed the committee that one of the
criteria of NCLB is to have college- and career-ready standards.
The common core standards are recognized as such. The proposed
Alaska standards have been reviewed by those who have
implemented the common core standards and they are considered
college- and career-ready standards. Therefore, the state could
request a waiver for NCLB.
9:00:32 AM
REPRESENTATIVE P. WILSON surmised then that the current
standards aren't acceptable for NCLB, and thus would allow
Alaska to opt out of the federal requirement.
COMMISSIONER HANLEY replied yes, adding that he spoke with the
U.S. Assistant Secretary of Education who said that the current
standards aren't enough to allow a waiver to be requested.
REPRESENTATIVE P. WILSON related her understanding that if the
proposed standards are rejected, NCLB couldn't be opted out of,
only frozen while the state works on new standards.
COMMISSIONER HANLEY replied yes, adding that the freezing would
occur with the understanding that the state would apply for the
waiver in September. Therefore, if HB 330 is adopted, it would
preclude the state from opting out. In further response to
Representative P. Wilson, Commissioner Hanley confirmed that the
state would continue [under the existing standards] and there
will be higher levels of schools deemed as failing by NCLB.
REPRESENTATIVE P. WILSON inquired as to what would happen if the
state adopted the proposed standards and opted-out of the NCLB.
COMMISSIONER HANLEY answered the only thing that would change is
that it would allow the state to put in place its own standards,
change its growth model, and determine the accountability.
9:04:10 AM
REPRESENTATIVE SEATON requested that the commissioner provide
that in a written statement.
9:05:14 AM
REPRESENTATIVE P. WILSON inquired as to whether September is the
only NCLB deadline to opt-out.
COMMISSIONER HANLEY indicated that there are rolling deadlines
and he didn't know when the next one would be.
9:05:26 AM
REPRESENTATIVE CISSNA requested information regarding the
effectiveness or lack thereof of NCLB. She related her belief
that using failures with school isn't appropriate.
^PRESENTATION: Northwest Arctic Borough School District/
University of Alaska-Chukchi College/ Star of the Northwest
Magnet School Alaska Technical Center
PRESENTATION: Northwest Arctic Borough School District/
University of Alaska-Chukchi College/ Star of the Northwest
Magnet School Alaska Technical Center
9:06:42 AM
REPRESENTATIVE SEATON announced that the next order of business
would be a presentation from the superintendent of the Northwest
Arctic Borough School District.
9:07:15 AM
DR. NORMAN ECK, Ph.D., Superintendent, Northwest Arctic Borough
School District, introduced a video that explains the
cooperative arrangement the Northwest Arctic Borough School
District has with the University of Alaska Fairbanks-Chukchi
College and the Alaska Technical Center. From that partnership
the Star of the Northwest Magnet School has begun to be
developed. Star of the Northwest is designed for grades 11-14
to take students from the high school experience into
postsecondary education in terms of process technology, health
care, and public school teaching. The committee then viewed the
video.
9:17:50 AM
DR. ECK pointed out that the committee packet should include a
cover letter from him as well as a booklet on the Star of the
Northwest Magnet School. He informed the committee that
construction is beginning on the Alaska Technical Center to
completely remodel and expand it so that it can become the Star
of the Northwest and allow high school students to mix with the
postsecondary students. The hope is to obtain funds through the
capital budget to construct a 100-bed dormitory for the high
school students.
9:19:17 AM
REPRESENTATIVE P. WILSON asked if the program is being set up to
accommodate students in the immediate area or is it available to
students outside the immediate area.
DR. ECK responded that the dormitory is important because the
program is for students in Kotzebue as well as the "high-fliers"
[from outside of Kotzebue] who require a challenge. He opined
that many dropouts are bored with school, and thus the Star of
the Northwest would provide them an option. Dr. Eck further
opined that it's time for regional boarding schools in the
state. The state needs several regional boarding schools to
meet the needs of rural high school students who don't receive
an adequate education. In further response to Representative P.
Wilson, Dr. Eck expected no more than a few students from the 10
high schools outside of Kotzebue. Therefore, there would likely
be 40-50 slots available for those outside the region.
9:21:46 AM
REPRESENTATIVE SEATON inquired as to the impact on the small
schools from which the boarding school would draw.
DR. ECK answered that the small schools in the region are K-12
schools, and thus he didn't anticipate the boarding school
having an effect on them. However, he expressed the small
schools need to be maintained as an option for students and
families. The boarding school allows a student to develop a
career in a high paying field while also living in a village.
9:23:42 AM
REPRESENTATIVE CISSNA asked if any thought has been given to
having short-term camps or [intense] classes [for a shorter
period] in order to involve more students from the area.
DR. ECK replied yes, intensive courses/camps will be offered.
He then highlighted that in rural Alaska there is a real need
for young people to obtain a driver's license, which led to the
purchase of a driver's education automobile to offer a driver's
education course.
9:26:25 AM
REPRESENTATIVE CISSNA characterized the Star of the Northwest
Magnet School as a good model and asked whether there will be a
website to obtain further information.
DR. ECK informed the committee that the district website is
under reconstruction, but will contain information about the
Star of the Northwest Magnet School once it's available.
HB 272-STUDENT LOAN INTEREST REDUCTIONS
9:28:19 AM
REPRESENTATIVE SEATON announced that the final order of business
would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 272, "An Act
providing for a reduction in interest on postsecondary education
loans for residents." [Before the committee was CS 2d SSHB 272,
Version 27-LS1162\R, Luckhaupt/Mischel, 3/2/12, adopted 3/5/12.]
9:29:13 AM
REPRESENTATIVE LES GARA, Alaska State Legislature, reminded the
committee that SSHB 272 provides a principal reduction for
students who stay in state or return to Alaska after completing
their degree.
9:29:49 AM
The committee took a brief at-ease.
9:30:01 AM
REPRESENTATIVE SEATON reviewed the materials that should be
included in the committee packet.
9:32:37 AM
REPRESENTATIVE GARA, referring to a question from Representative
Cissna, explained that the statutes referenced in SSHB 272 are
regarding the rules for default, consolidating loans, and
eligibility. Those statutes weren't changed but had to be
referenced in the legislation.
9:33:11 AM
REPRESENTATIVE GARA reminded the committee that the original
intention of the legislation was to reduce the interest rates
for those students who, upon completion of a degree, stayed in
Alaska or returned to Alaska. To reduce the cost, the discount
isn't given until the student completes his/her degree. The
commission has the authority to determine what a timely
completion of a degree/certificate is. It is much easier to
administer the program by reducing the principal versus the
interest rate as it would save on staffing. Therefore, the
legislation currently specifies that for those students who,
after completing their degree, remain in or return to the state
would receive a 3 percent reduction in the principal annually.
The program has residency requirements that reflect those that
are in the permanent fund dividend qualification. He reported
that currently roughly 40 percent of the students who leave the
state [for education] do not return. The existing student loan
rates are between 6.2 percent and 7 percent for new loans and
higher for older loans. He compared student loan rates to car
loan rates, which can sometimes be as low as 3 percent.
9:37:08 AM
DIANE BARRANS, Executive Director, Alaska Commission on
Postsecondary Education (ACPE), Department of Education and
Early Development (EED), directed attention to the memorandum
dated March 14, 2012, that she provided to the committee. The
memorandum addresses information requested by the committee in
regard to default rates, expectation of the effect of a
principal reduction program on the default rate, and timely
completion of the degree in Alaska.
9:37:53 AM
REPRESENTATIVE P. WILSON noted that the out-of-state default
rates are much lower than the in-state default rates.
MS. BARRANS said that has historically been the case. Although
ACPE hasn't performed a study regarding the reasons for the
higher default rate for in-state students, she pointed out that
the types of schools students attend out-of-state tend to be
more highly selective. Therefore, one can assume that the
students [attending out-of-state schools] are more prepared and
are succeeding at a higher rate, and thus have the wherewithal
to earn wages that allow them to repay the loans.
9:38:59 AM
REPRESENTATIVE SEATON, upon reviewing the first page of the
memorandum, surmised that in-state default rates in Alaska have
been consistently 2 percent higher than the default rate for
out-of-state schools. He asked if [Alaska's] out-of-state
default rate is comparable to other states and other loan
programs.
MS. BARRANS answered that hasn't been reviewed. Comparing state
alternative loan programs is difficult because often the terms
and conditions vary from state to state. For instance, the
alternative program in New Jersey has a very high underwriting
standard for students to qualify, including having a credit
worthy co-signer. Therefore, the default rate is substantially
lower than those in Alaska. The practice, at least until the
last two to three years, in Alaska basically has been to offer a
loan that's available to anyone, regardless of their credit
history or lack thereof. Only in recent years would Alaska
expect to have rates that are comparable to other state
programs.
9:40:21 AM
REPRESENTATIVE SEATON pointed out that Alaska required a credit
worthy co-signer in 2009, but the 2010 default rate increased
significantly. He asked if there is any correlation between
those two.
MS. BARRANS clarified that the [2010 default rate is the rate]
for loans that went into repayment and were in repayment for at
least a year in 2010. She told the committee that as the
students who took loans in 2009 and 2010 complete their
education and begin repayment, ACPE expects there to be
substantial improvements in those rates.
REPRESENTATIVE SEATON surmised then that [the 2010 default rate]
includes all of the previous loans that were being paid back,
and thus would likely not include credit worthy co-signer loans.
MS. BARRANS agreed, and also noted that the default rate has
been affected by the state of the economy. For example, the
default rates for the federal loan program have increased
substantially.
REPRESENTATIVE SEATON noted that student loan debt now exceeds
credit card debt, nationwide.
9:42:29 AM
REPRESENTATIVE SEATON directed attention to page 2 of the
memorandum, and asked why there was such an increase in the
Alaska Student Loan default rate for 2010.
MS. BARRANS informed the committee that the Alaska Student Loan
program is the predecessor to the Alaska Advantage loan, which
was initiated in 2002. In 2008 and 2009, ACPE instituted some
alternative repayment options that provided borrowers with
relief. However, it was determined that the relief merely
postponed the delinquency, and thus some of the options were
eliminated. She explained that the interest costs for the
borrowers was increasing when the costs were added back to their
debt after the periods of relief and the borrowers still weren't
able to address their delinquency.
REPRESENTATIVE SEATON pointed out that the default rate for
Alternative Loan Consolidation is extremely low, nearly non-
existent for 2007-2010. Therefore, he inquired as to why.
MS. BARRANS explained that in 2004 an Alternative Consolidation
Loan was instituted such that a discounted loan rate was
offered. Because borrowers had loans over a period of years and
the terms of those loans were all different, there was an
advantage to offering a lower rate to consolidate all the loans
under a single note. In the new promissory note, many of the
forbearances and deferments that existed in the underlying
original notes were eliminated. The goal was to incent
borrowers to consolidate. Therefore, a lower rate was offered
in exchange for borrowers to meet a minimum FICO score or have
made full and timely payments for two years on the underlying
loans. Ms. Barrans said the quality of those loans were some of
the best of the old Alaska Student Loan program, which resulted
in a very low default rate.
REPRESENTATIVE SEATON inquired as to how much of the Alternative
Loan Consolidation is taking place.
MS. BARRANS recalled that in the first two to three years of
operation there was $40 million worth of loan volume in the
Alternative Loan Consolidation program. At this point, she
estimated that there are close to $100 million in consolidated
loans at a 7.5 interest rate. She explained that many students
who borrowed in the early 2000s have an interest rate that's
lower than 7.5 percent, and therefore they're not motivated to
consolidate.
9:47:07 AM
REPRESENTATIVE SEATON, referring to the chart entitled
"Institutional Cohort Default Rates" on page 2 of the
memorandum, related his understanding that the top line is the
Alaska Institution rate. He also related his understanding that
ACPE doesn't believe the program proposed in SSHB 272 wouldn't
materially change the default rate on the loans.
MS. BARRANS replied yes to both. The majority of students who
default do so because they fail to complete a degree program and
are unable to be gainfully employed. A smaller proportion of
the default rate is those students who over borrowed and have
very high levels of debt. Therefore, a 3 percent principal
reduction wouldn't really impact that.
REPRESENTATIVE SEATON remarked that if the lower principal rate
motivates students to complete their degree, the default rate of
those students would be a lesser rate than other students.
Therefore, the additional earning capacity may have some impact.
MS. BARRANS agreed.
9:48:54 AM
REPRESENTATIVE FEIGE directed attention to the language on page
3 of the memorandum that read as follows:
Generally, regardless of the underlying reasons for
the lack of capacity to pay as agreed, borrowers fail
to be influenced or motivated by the consequences of
delinquency or default, so it seems reasonable to
conclude that the default rate would not be materially
impacted by this new potential benefit.
REPRESENTATIVE FEIGE then inquired as to the consequences of
delinquency.
MS. BARRANS answered that the consequences of delinquency
include ACPE's ability to garnish permanent fund dividends
(PFDs), wages, and suspend professional licenses. The ACPE also
reports a student's delinquent loans such that they are
reflected on their credit reports.
REPRESENTATIVE FEIGE surmised then that the consequences of
default are severe, and therefore he pondered what other
measures could be taken.
9:50:45 AM
MS. BARRANS, in response to Representative Seaton, explained
that the loans in question are assets of the Alaska Student Loan
Corporation. In financing the loans in the bond market and
through other types of debt for which the corporation is liable,
the corporation commits to certain income streams from those
loans. Therefore, any time the legislature creates a program to
relieve debt, such as SSHB 272, there needs to be an associated
compensation to ensure the corporation is held harmless and can
continue to make its debt payments. The fiscal note that will
be prepared for the new CS will reflect both the cost of the
interest reduction as well as a component for the interest lost
to the corporation. A principal reduction, she further
explained, will accelerate the rate at which the loans are paid
down.
9:52:35 AM
REPRESENTATIVE SEATON asked whether the Alaska Student Loan
Corporation has been constrained by the amount of principal
available to offer as loans or has that been relatively
unlimited.
MS. BARRANS told the committee that since 2008 the corporation
has been funding new loans with the assistance of the state.
The corporation entered into a relatively short-term loan from
the state in order to continue to finance. Therefore, the
corporation uses both recycled payments and the state loan to
finance new loans. The aforementioned has been the case through
the current year, but in 2013 the corporation intends to reenter
the bond market in order to issue new debt for new alternative
loans. She noted, however, that the loan volume has
substantially decreased over the last two years. Currently, the
corporation makes less than $15 million in alternative loans
annually, which she mainly attributed to changes in the federal
rules that prohibit institutions in Alaska from packaging loans
for students.
REPRESENTATIVE SEATON returned the gavel to Chair Dick.
9:53:58 AM
REPRESENTATIVE SEATON inquired as to why the state providing
principal for loan purposes is viewed as a detriment of early
payment of debt when it's being paid to the corporation and can
be used to re-loan.
MS. BARRANS announced that Version R addresses the concerns
expressed relative to the initial versions of SSHB 272, and thus
she didn't believe the negative perceptions carry through.
Version R ensures the Alaska Student Loan Corporation is held
harmless. In further response to Representative Seaton, Ms.
Barrans confirmed that under Version R the prepayment of the
principal through an appropriation by the state isn't viewed as
a significant negative so long as the corporation is held
harmless. She noted that the fiscal note will reflect the
aforementioned.
9:56:46 AM
CHAIR DICK announced that SSHB 272 would be held over.
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 9:58 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| CS for 2nd SSHB 272 Version R - Statutes listed under Section 2.pdf |
HEDC 3/19/2012 8:00:00 AM |
HB 272 |
| CS for 2nd SSHB272 Version R.pdf |
HEDC 3/19/2012 8:00:00 AM |
HB 272 |
| 2nd SS HB272-EED-ACPE-02-28-12.pdf |
HEDC 3/19/2012 8:00:00 AM |
HB 272 |
| 2nd CS SS HB272 ACPE Response to Information Request.pdf |
HEDC 3/19/2012 8:00:00 AM |
HB 272 |
| 2nd CS SS HB 272 03 02 12 Legal Memo.pdf |
HEDC 3/19/2012 8:00:00 AM |
HB 272 |