Legislature(2001 - 2002)
04/17/2002 08:00 AM House EDU
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 478-TEACHER LOAN ASSUMPTION PROGRAM CHAIR BUNDE announced that the first order of business would be HOUSE BILL NO. 478, "An Act relating to the Alaska teacher recruitment loan assumption program; and providing for an effective date." REPRESENTATIVE GUESS, Alaska State Legislature, speaking as the sponsor of HB 478, explained that HB 478 is a loan assumption program that was requested by the Department of Education and Early Development (EED). This loan assumption program would provide the freedom of a teaching incentive program regardless of the postsecondary school where the education was received and regardless of the entities from which the student loan was borrowed. She pointed out that the Alaska Commission on Postsecondary Education (ACPE) now attempts to obtain the best loan possible for people and thus the loans aren't always ACPE loans. CHAIR BUNDE asked if this legislation applied only to Alaska residents. REPRESENTATIVE GUESS deferred to the department. Number 0224 ED McLAIN, Ed.D., Deputy Commissioner of Education, Office of the Commissioner, Department of Education and Early Development, announced the department's support of HB 478 because it views HB 478 as another tool to attract teachers to Alaska. The legislation is of a relatively modest cost with a relatively high return. In response to Chair Bunde's earlier question, Dr. McLain said that the department didn't conceive of the legislation only applying to Alaska residents. The desire is to be attractive to teachers from all over, he said. Currently, Alaska doesn't turn out the number of teachers necessary to fill the vacancies. REPRESENTATIVE STEVENS requested an explanation of the financial elements of HB 478. Number 0505 DIANE BARRANS, Executive Director, Postsecondary Education Commission, Department of Education and Early Development, explained that while this legislation would provide a benefit that could attract nonresidents to the state, the benefit wouldn't be received until completion of a year of teaching in Alaska. Therefore, she presumed such individuals would've established residency in the state. With regard to the costs, the fiscal note she submitted has a zero fiscal impact for operating expenses. She explained that the commission would basically be a dispersing agent, which the commission believes can be done in a fairly automated manner and thus there are no plans to add staff. With respect to the actual benefit expense, the fiscal note is indeterminate because it would depend upon the amount of money available through appropriation to fund the benefits. The legislation, through its structure, suggests that the student loan corporation's return of capital payment might be a source of future funding. Although in the last three years those funds returned to the state have been expended in a variety of ways, the funds have typically been expended on educational programs. Ms. Barrans said she expects the return to be relatively flat and in the amount of $4-$5 million each year. Number 0700 CHAIR BUNDE informed the committee that the student loan program was, at one time, funded out of the general fund, which he characterized as burdensome. Therefore, the state gave the commission the loan portfolio. He inquired as to the amount the corporation would've capitalized. MS. BARRANS answered that the student loan corporation was capitalized to approximately $306 million in the form of outstanding loans. CHAIR BUNDE highlighted that then ACPE became self-sustaining, and made a profit. MS. BARRANS said the commission likes to think of it as reducing income. She informed the committee that this will be the third year in which the commission has had a return to the state. Including fiscal year 2003, the total return amounts to about $12 million. CHAIR BUNDE surmised that if HB 478 were passed there would be a suggestion that the [returns from ACPE] would be used to fund this legislation, although there would be no requirements to that effect due to the inability to have dedicated funds. REPRESENTATIVE STEVENS commented that anything that can be done to help address the teacher shortage in Alaska should be done. Representative Stevens inquired as to the debt an average new teacher coming into Alaska would owe. He also inquired as to whether districts may have room to provide assistance with loan forgiveness as well. MS. BARRANS informed the committee that the average debt someone leaving school with a four-year degree has is approximately $16,000. Of course, that amount is increasing. Ms. Barrans related her understanding that HB 478 offers a way in which Alaska can keep pace in terms of the tools available to recruit students. Number 1152 CHAIR BUNDE inquired as to the average loan obligation for those who have attended school in Alaska and used the student loan to the maximum. MS. BARRANS said that such specific analysis hasn't been done. However, she suspected that the average loan obligation for those who have attended school in Alaska and used the student loan would be between $18-$22,000. She related that anecdotally she understands that often education majors don't, upon entering college, know that education is their major and thus they may attend college for an additional year or more. Therefore, there may be five or more years of educational debt. Although a four- year degree is achievable, typically students are taking longer to obtain a degree. REPRESENTATIVE STEVENS asked if this legislation works with the existing teacher forgiveness student loan program. MS. BARRANS clarified that the program is the teacher education loan, which has been in place for about 15 years. The objective of the teacher education loan was to attract students from Alaska to teaching careers in rural schools. The teacher education loan provides up to 100 percent forgiveness of the loan plus interest if the student teaches in a rural school. She informed the committee that the aforementioned program has about a 20 percent success rate. The program is funded by about $1.2 million a year from corporation receipts. Although both programs work toward different objectives, both assist in meeting the demand for teachers. CHAIR BUNDE inquired as to the actual number of people who successfully use the program. MS. BARRANS offered to provide that information to the committee. She informed the committee that perhaps 120 students are funded per year. She noted that the program has a fairly high attrition rate. CHAIR BUNDE pointed out that were HB 478 to pass it would be dependent upon future legislative appropriations and thus could not be funded at any time. MS. BARRANS interjected that she views one of the commission's responsibilities under HB 478 to be a fiscal agent to monitor the number of program beneficiaries and the amount of funding available. Therefore, she recommended that the primary commitment be to those who have already entered the program and who are working with some commitment. She further recommended that sufficient funds be reserved in order to make good on the benefit to those in the program and alert incoming participants that funding is based on appropriation. Number 1802 CHAIR BUNDE inquired as to why not continue the old student loan forgiveness program under which all or half of the loan was forgiven simply by staying in Alaska. MS. BARRANS explained that through 1987 the state provided general funds to finance the program. The program included the feature in which someone who graduated from the state and taught in the state could have up to half the loan forgiven. However, when the state was unable to continue to finance at that level, the corporation was created and capitalized with the outstanding loans. The commission was expected to issue and repay those bonds plus interest. Therefore, the corporation was placed in a position such that in 1993 it faced an equity deficit of almost $50 million. That particular construction of loan forgiveness and the commitment on the loan contract wasn't financed and brought the student loan program within a year or two of having to close because additional debt couldn't be incurred unless cash flow and asset support to pay the debt materialized. In 1993, the legislature authorized changes to the program that allowed the loans to pay for themselves. Today, the forgiveness benefit continues to be paid out, although it has dwindled to a few million a year which can be absorbed as a reduction of net income. REPRESENTATIVE STEVENS agreed that HB 478 is better than nothing, although $2,000 a year doesn't seem to place Alaska in a competitive position in the future. Therefore, he inquired as to how Alaska could be in a position of competing with other states for this limited supply of teachers. MS. BARRANS related that other states are developing multiple strategies, which she recalled was the approach taken by last year's task force. Number 2210 REPRESENTATIVE GREEN turned to the indeterminate fiscal note and inquired as to the number of people Ms. Barrans envisioned taking advantage of this. MS. BARRANS answered that the fiscal note is truly indeterminate. She suggested that the department could provide the committee with the number of expected vacancies that it can project going forward. One would assume that half of those would be new teachers with existing educational debt. If experienced teachers can be recruited then their debt may have been paid off already. Therefore, it would be a blend of new teachers with debt and experienced teachers with little to no debt. Ms. Barrans said she suspected that several million dollars could be spent on this program alone. CHAIR BUNDE asked if he was correct in that the bill says that $2 million of ACPE's dividend would be allotted to this program. REPRESENTATIVE GUESS, in response, directed attention to page 2, lines 21-23. CHAIR BUNDE surmised that if the $2 million is achieved, then the dividend deemed appropriate would be given. He recalled from earlier testimony that over the past few years there has been a $4 million dividend on average. Number 2450 DEBBIE OSSIANDER, Legislative Chair, Anchorage School Board, Anchorage School District, testified via teleconference. Ms. Ossiander informed the committee that the Anchorage School Board is generally supportive of HB 478. Ms. Ossiander, in response to Chair Bunde, said that she would work on obtaining the number of new teachers who might take advantage of this program this year if it were available. CHAIR BUNDE said that he could foresee equal protection concerns with existing teachers who already have loans. REPRESENTATIVE GUESS clarified that this legislation only pertains to newly hired teachers. REPRESENTATIVE GREEN asked if this legislation would apply to a student in his/her second year [of teaching]. REPRESENTATIVE GUESS answered that this legislation would only apply to newly hired teachers. CHAIR BUNDE posed a situation in which a teacher in Anchorage goes to a new school, such as a rural school. He asked if a teacher in such a situation would be a newly recruited teacher. REPRESENTATIVE GUESS replied that she didn't believe so. MS. BARRANS related her understanding that this legislation specifies that [it applies] to employment beginning on or after a certain date. However, the Board of Education is given the authority to create the details by regulation. Ms. Barrans also related that she understood the legislation to be a recruitment incentive, not simply a reward for existing employment. REPRESENTATIVE GUESS, before leaving for caucus, pointed out that the committee packet includes an amendment should would like offered. She explained that the amendment merely clarifies which board, the ACPE Board or the Board of Education and Early Development, is referenced in the legislation. CHAIR BUNDE returned to the question of whether leaving one district and going to another is beginning employment and related his suspicion that individuals in such a situation would qualify for this loan assumption program. REPRESENTATIVE STEVENS pointed out that the legislation refers to a "newly hired teacher". CHAIR BUNDE explained that a teacher with 20 years in one district can be hired in another district and be considered a newly hired teacher. Number 2939 LOUISE PARRISH, testifying via teleconference, related that her daughter, who is currently a junior, is taking education classes because she is interested in becoming an elementary math teacher. She noted that her daughter is currently attending school out of state, but due to her debt load she is reviewing other schools. Ms. Parrish said that a loan forgiveness program could certainly help her daughter decide to finish her education in Alaska and teach in Alaska. CHAIR BUNDE informed Ms. Parrish that he understood the legislation to apply to individuals who attend school outside Alaska so long as they return to the state to teach. MS. PARRISH said that would widen her daughter's options. In response to Representative Stevens, Ms. Parrish told the committee that she would estimate that her daughter would be about $30,000 in debt by her junior year. Number 3204 CARL ROSE, Executive Director, Association of Alaska School Boards (AASB), testified in support of loan assumption programs and HB 478. However, he related AASB's belief that HB 478 will be insufficient for what is necessary [to recruit teachers to Alaska]. For instance, Montana is a state that educates individuals in education; however, those individuals are going elsewhere to work because of the incentives. Mr. Rose mentioned that he served on the task force which reviewed how a loan assumption program would be used. The task force reviewed a 50 percent assumption with 10 percent per year for five years, which it believed to be reasonable. However, that figure was changed. Mr. Rose reiterated that AASB supports HB 478, although it believes the legislation is insufficient in comparison to what other states offer, particularly California. CHAIR BUNDE questioned, then, whether it's worth doing. He asked if the money would be better spent in the foundation formula. MR. ROSE said he really couldn't make that judgment, although he did say that if this legislation was sufficiently funded it would be helpful. Mr. Rose said, "I think the reason we're here is because of the way we've addressed the foundation formula over the last dozen years." CHAIR BUNDE, upon determining that no one else wished to testify, closed public testimony. Number 3420 CHAIR BUNDE moved that the committee adopt Amendment 1, which read: Page 5, line 12, following "program": Delete "." Insert ";" Page 5, following line 12: Insert a new [paragraph] to read: "(5) "board" means the Board of Education and Early Development." REPRESENTATIVE GREEN inquired as to how the Board of Education and Early Development would [define] a newly hired teacher who would be eligible for this loan assumption program. DR. McLAIN answered that it would be his recommendation that the reference to a an applicant first hired as a classroom teacher wouldn't refer to someone in the second or third year of an ongoing contract. With regard to moving from one district to another, Dr. McLain said he wouldn't consider someone moving to another district as a new hire. Dr. McLain argued that someone with experience in the Lower 48 who comes to Alaska for the first time to teach would fall under this legislation. In response to Representative Green, Dr. McLain said he understood the legislation to focus on the date first hired as a classroom teacher and the postsecondary expenses. Therefore, it wouldn't matter whether the individual changed majors during the second or third year of school. REPRESENTATIVE GREEN asked if this legislation is significant enough. DR. McLAIN agreed with earlier comments that this legislation is one more tool, and in that context AASB supports the legislation. However, he said that he would like to see additional dollars. Number 3900 CHAIR BUNDE directed attention to the language "newly hired teachers" and inquired as to Dr. McLain's thoughts on adding the language referring to newly hired teachers when first hired in Alaska. DR. McLAIN said he understood the legislation to apply to newly hired teachers when first hired in Alaska and thus he appreciated Chair Bunde's clarification. CHAIR BUNDE highlighted that this is a policy decision in which the committee must determine whether the legislation should apply to first time hires only or those teachers who move to a new district, particularly an underserved district. REPRESENTATIVE PORTER said that he didn't believe it is appropriate for state law to establish an advantage in the state of one district over another. CHAIR BUNDE agreed. However, he pointed out that the language "first hired in Alaska" would be equal whereas "newly hired" would allow a teacher moving from one district to another to qualify for the program. REPRESENTATIVE PORTER opined that allowing teachers who moved [to a new district] to qualify for this program wouldn't be a good state policy. CHAIR BUNDE asked if the committee wanted the legislation to apply only to first-time hired teachers in Alaska or newly hired teachers, which would include teachers who move from one district to another. Number 4222 REPRESENTATIVE STEVENS asked if districts have the latitude to do this on their own, that is provide additional funds to new teachers. DR. McLAIN explained that through the teachers' negotiated agreement, teachers have a variety of ways to enhance their particular district. Therefore, a teacher could increase his/her salary due to the district's flexibility with the salary scale. REPRESENTATIVE STEVENS said he would be comfortable with the reference to first hired in Alaska with the realization that the districts have other options. REPRESENTATIVE PORTER inquired as to the sponsor's intent with regard to who this legislation would apply. DR. McLAIN answered that he understood the legislation to encourage qualified teachers to come into the state versus into the district. Barring other direction, Dr. McLain said that's how he would interpret this legislation. CHAIR BUNDE requested that Dr. McLain develop language to the above intent to insert on page 1, line 10. He then rolled HB 478 to the bottom of the calendar. HB 478-TEACHER LOAN ASSUMPTION PROGRAM CHAIR BUNDE returned to HOUSE BILL NO. 478, "An Act relating to the Alaska teacher recruitment loan assumption program; and providing for an effective date." ED McLAIN, Ed.D., Deputy Commissioner of Education, Office of the Commissioner, Department of Education and Early Development, suggested, in order to clarify the intent of the legislation, the following change: Page 1, line 10, following "teachers": Insert "upon their first hire in the state" Page 1, line 12: Delete "in those schools" Insert "in the state" CHAIR BUNDE moved that the committee adopt [Amendment 2] as specified by Dr. McLain. There being no objection, it was so ordered. Number 0950 REPRESENTATIVE WILSON moved that the committee adopt Amendment 3, which reads as follows: Page 1, line 1, following "program": Insert ", the nurse recruitment loan assumption program" Page 1, line 9, following "program": Insert "and the nurse recruitment loan assumption program" REPRESENTATIVE WILSON explained that Amendment 3 addresses the nurse shortage in the state, which is worse than the teacher shortage. She noted that [Amendment 3] includes language changes as appropriate throughout the legislation. CHAIR BUNDE objected because he believes that if the legislation was expanded to include nurses more additions could occur. For instance, there is a shortage of aircraft mechanics. He indicated that additions to legislation can often be its demise. A roll call vote was taken. Representatives Wilson and Stevens voted in favor of Amendment 3. Representatives Porter, Green, and Bunde voted against it. Therefore, Amendment 3 failed by a vote of 2-3. Number 0710 REPRESENTATIVE PORTER moved to report HB 478 as amended out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 478(EDU) was reported from the House Special Committee on Education.
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