Legislature(2001 - 2002)

01/31/2001 08:04 AM EDU

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 37 - STUDENT LOAN FORGIVENESS                                                                                              
CHAIR BUNDE  announced the next  order of business as  HOUSE BILL                                                               
NO.  37, "An  Act relating  to reimbursement  of certain  student                                                               
loans; and providing for an effective date."                                                                                    
Number 0491                                                                                                                     
REPRESENTATIVE  STEVENS  explained  Amendment  1,  22-LS0287\A.3,                                                               
Ford, 1/22/01, which read:                                                                                                      
     Page 1, line 7, following "undergraduate":                                                                                 
             Insert "or graduate"                                                                                               
Number 0593                                                                                                                     
REPRESENTATIVE PORTER made a motion to adopt Amendment 1.  There                                                                
being no objection, Amendment 1 was adopted.                                                                                    
REPRESENTATIVE STEVENS explained Amendment 2, 22-LS0287\A.5,                                                                    
Ford, 1/25/01, which read:                                                                                                      
     Page 1, line 1:                                                                                                            
          Delete "reimbursement"                                                                                              
          Insert "forgiveness"                                                                                                
     Page 1, line 5:                                                                                                            
          Delete "Reimbursement of"                                                                                           
          Insert "Loan forgiveness of loans made to"                                                                          
     Page 1, line 6:                                                                                                            
          Delete "reimburse"                                                                                                    
          Insert "forgive a loan made to"                                                                                       
     Page 1, line 9:                                                                                                            
          Delete "reimbursed"                                                                                                   
          Insert "forgiven"                                                                                                     
     Page 1, line 10, following "payments":                                                                                     
          Insert "to be"                                                                                                        
     Page 2, line 4:                                                                                                            
          Delete "reimbursed to the borrower"                                                                                   
          Insert "forgiven the borrower under this section"                                                                     
     Page 2, line 6:                                                                                                            
          Delete "reimbursed"                                                                                                   
          Insert "forgiven"                                                                                                     
     Page 2, lines 8 - 11:                                                                                                      
          Delete all material.                                                                                                  
REPRESENTATIVE  STEVENS  explained   that  this  amendment  would                                                               
forgive  a portion  of  the student  loan and  would  never be  a                                                               
Number 0669                                                                                                                     
REPRESENTATIVE  GREEN made  a motion  to adopt  Amendment 2,  22-                                                               
LS0287\A.5, Ford,  1/25/01.  There being  no objection, Amendment                                                               
2 was adopted.                                                                                                                  
REPRESENTATIVE  STEVENS reiterated  that this  is a  program that                                                               
would encourage Alaskans to stay and  teach in Alaska.  At a time                                                               
when students  are required to  take exit exams, the  state needs                                                               
to  have  quality  teachers  available.   There  is  a  statewide                                                               
shortage  of teachers,  and there  is no  incentive to  return to                                                               
Alaska.  Other states are doing  a lot to attract teachers.  This                                                               
bill is  not complete forgiveness of  the student loan; it  is 10                                                               
percent a  year up to five  years, and the students  have to stay                                                               
for  that  entire  period  of   time  before  they  receive  that                                                               
Number 0777                                                                                                                     
REPRESENTATIVE GUESS  asked Representative  Stevens if  a teacher                                                               
only stayed three years, would he/she receive any forgiveness.                                                                  
REPRESENTATIVE STEVENS  explained that  the teacher has  to teach                                                               
one full year and apply for  forgiveness at the end of that year.                                                               
It is a year-for-year basis.                                                                                                    
REPRESENTATIVE GUESS asked  him if a student taught  two years in                                                               
Alaska and then left the  state, would he/she get the forgiveness                                                               
for only two years.                                                                                                             
REPRESENTATIVE STEVENS agreed that was true.                                                                                    
Number 0920                                                                                                                     
CHRISTOPHER L. ROBINSON  testified via teleconference.   He is an                                                               
Alaskan educator and  has been recruiting teachers  to Alaska for                                                               
the  past 19  years.    He reminded  the  committee that  teacher                                                               
recruiting in  the Lower 48  has become  intense in the  last few                                                               
years.   Alaska has  been competing in  this market  with posters                                                               
that read:  "Alaska, take us or  leave us, but if you come, bring                                                               
your  checkbook."    In  the   last  decade,  teacher  retirement                                                               
benefits  have  been reduced  and  become  distinctly average  in                                                               
adjusted compensation and require most  new hires to come up with                                                               
perhaps $2,000 in fees and expenses  their first two years in the                                                               
state.     Interested  prospects  put   out  $100  just   to  get                                                               
information from the state recruiting  service.  If they do, they                                                               
are told  if they  really want  a job  they should  spend another                                                               
$1,000  or  so to  come  to  the  job  fair.   The  informational                                                               
booklets are  only $113, but  "we do pay  the postage."   If they                                                               
were a used-car lot, the state would shut them down.                                                                            
MR. ROBINSON said  that though he does support HB  37 as amended,                                                               
he suggested  two changes.   First, he  feels it takes  too long.                                                               
Borrowers  who  complete  training  in  spring  2002  will  begin                                                               
teaching in Alaska in a year and  a half would have only one year                                                               
of forgiveness incentive.   A new teacher  graduating this spring                                                               
and deciding  where to  work gets no  incentive from  the current                                                               
bill.   He  suggested  that the  bill  be effective  immediately,                                                               
provide  full incentive  beginning with  this spring's  graduates                                                               
and for  former Alaskan borrowers  who now teach  out-of-state by                                                               
forgiving loans  for those  entering their  first year  of Alaska                                                               
teaching.   Second,  the shortage  of special  education teachers                                                               
and  related  service personnel  is  even  more severe  than  the                                                               
teacher  shortage.   Related service  providers are  non-teaching                                                               
specialists  who  work  in   school  district  special  education                                                               
programs providing mandated services  such as speech and language                                                               
pathology,  physical and  occupational therapy,  and interpreting                                                               
for  the  deaf.    Special education  related  service  personnel                                                               
should be included in this bill.                                                                                                
MR. ROBINSON referred  to the fiscal note and said  it could only                                                               
be  a best  guess at  actual  utilization.   It appears  to be  a                                                               
policy  decision more  than an  economic decision;  the economics                                                               
are simply too  uncertain.  He wondered where the  fiscal note is                                                               
in dollar  costs, political  costs, social  costs for  the status                                                               
quo.  If  the committee feels there  needs to be a  cost limit to                                                               
move this  bill out of committee  and through the two  houses, he                                                               
urged the  committee to consider  50 percent of  loan forgiveness                                                               
up to an  individual dollar cap.  He reminded  the committee that                                                               
the incentive  needs to be  persuasive in  this market.   He said                                                               
that 50  percent loan forgiveness  for Alaskans  barely scratches                                                               
the surface  of what is needed.   However, HB 37  as designed, if                                                               
it doesn't  work, costs  the state  nothing; if  it does  work it                                                               
will cost the state only to  the extent that it also benefits the                                                               
Number 1144                                                                                                                     
DALE NELSON  testified via  teleconference.   He is  a registered                                                               
professional  civil engineer  in  Anchorage, is  in business  for                                                               
himself, and has been an Alaskan  resident since 1967.  He is not                                                               
opposed  to HB  37, but  he wanted  to suggest  that the  bill is                                                               
limited  because  teachers  are  not the  only  ones  faced  with                                                               
shortages.    Scientists  and  engineers   are  also  faced  with                                                               
shortages.  There  is a continual shortage  of graduate engineers                                                               
and high school  students are leaving the state.   He referred to                                                               
the Alaska  Science and  Technology Foundation's  (ASTF) November                                                               
2000 report.  This can be found  on its web site.  There needs to                                                               
be a similar  consideration for engineers and  scientists, and he                                                               
requested that  that be considered in  the bill.  He  noted a few                                                               
things contained in the ASTF report.                                                                                            
Number 1265                                                                                                                     
BETH  NORDLUND, Special  Assistant, Office  of the  Commissioner,                                                               
Department  of  Education  and   Early  Development  (EED),  came                                                               
forward to testify.   She reviewed some of the  highlights from a                                                               
resolution in  the committee's  packets from  the State  Board of                                                               
Education & Early  Development on Teacher Loan  Forgiveness.  The                                                               
Board sees  the teacher shortage  as a  very serious issue.   She                                                               
     Quality  teachers  and  administrators  are  a  crucial                                                                    
     component for raising student achievement;                                                                                 
     Alaska   is  experiencing   a  statewide   shortage  of                                                                    
     teachers and administrators;                                                                                               
     Teacher   and  administrator   turnover   is  at   best                                                                    
     disruptive and at worst  disabling to education reform,                                                                    
     and an especially acute problem in rural Alaska;                                                                           
     States all  across America are  going to  great lengths                                                                    
     to  attract  and  retain teachers  and  administrators,                                                                    
     offering a wide variety of incentives; and                                                                                 
     Alaska educational  institutions currently  only supply                                                                    
     Alaska's public  K-12 schools with about  30 percent of                                                                    
     the teachers they need.                                                                                                    
MS.  NORDLUND referred  to the  document  "Public School  Funding                                                               
Formula  Educational Adequacy"  that  was in  the  packets.   She                                                               
highlighted the following portion under "Teachers":                                                                             
     Many states  and outside school districts  are offering                                                                    
     incentives such as:  signing  bonuses, down payments on                                                                    
     homes, mortgage  subsidies, and student  loan repayment                                                                    
     programs.   Due  to  limited  resources, Alaska  school                                                                    
     districts continue  to struggle to be  competitive with                                                                    
     other   states  and   outside  school   districts  when                                                                    
     recruiting teachers.                                                                                                       
MS. NORDLUND noted  there is a listing in the  packet of Examples                                                               
of Teacher  Incentives Offered in  Other States.   Some of  it is                                                               
loan forgiveness,  but there is a  wide variety of options.   She                                                               
mentioned  that the  committee has  already heard  of the  rumors                                                               
that are  actually true.   Certain states  have come  to Alaska's                                                               
job  fairs  looking  to recruit  Alaskan  teachers  with  signing                                                               
bonuses.   Alaska is  in a  severely competitive  situation right                                                               
MS. NORDLUND  referred to  page 9 of  the "Public  School Funding                                                               
Formula, Educational Adequacy" and read:                                                                                        
     Demand  for teachers  in  Alaska  has already  exceeded                                                                    
     supply, leaving unfilled positions  across the state in                                                                    
     math,  special education,  and speech  pathology.   For                                                                    
     the  1999-2000 school  year,  1.335  new teachers  were                                                                    
     hired  in  Alaska.   On  the  first  day of  school  84                                                                    
     teaching  positions  were   still  unfilled,  and  some                                                                    
     remained  unfilled for  up to  two  months.   Districts                                                                    
     have  actually   been  forced   to  hire   teachers  on                                                                    
     emergency certificates and  teachers with minimal paper                                                                    
Number 1419                                                                                                                     
CHAIR BUNDE asked Ms. Nordlund  if the majority of teachers being                                                               
hired are non-residents.                                                                                                        
MS. NORDLUND  replied that Alaska's educational  institutions are                                                               
only able to  create about 30 percent of the  teachers needed for                                                               
the work force,  so the state has to rely  on teacher preparation                                                               
programs  from other  states to  supply Alaska  with an  adequate                                                               
amount of teachers.                                                                                                             
CHAIR BUNDE  asked if that  meant if every Alaskan  who graduated                                                               
was hired, would that still only be 30 percent of the need.                                                                     
MS. NORDLUND  answered exactly.  If  the educational institutions                                                               
are able  to increase that  capacity in  the near future,  at the                                                               
maximum, they  will be able  to increase it to  provide one-third                                                               
of the teachers needed.                                                                                                         
Number 1550                                                                                                                     
REPRESENTATIVE  GREEN  asked,  "How  many   did  we  get  of  the                                                               
graduating class from Alaska?"                                                                                                  
MS.  NORDLUND  said  she  didn't have  those  exact  numbers  but                                                               
thought the committee had heard testimony on that last week.                                                                    
CHAIR  BUNDE noted  he  was  really trying  to  ask  how many  of                                                               
Alaska's teaching graduates are leaving the state.                                                                              
REPRESENTATIVE STEVENS said another  important figure would be to                                                               
know how  many Alaskan students  went to institutions  outside of                                                               
Alaska and returned to teach.                                                                                                   
REPRESENTATIVE  WILSON  pointed  out  that  it  is  important  to                                                               
realize that  the salaries in  Alaska are approximately  equal to                                                               
those in  the Lower  48.   Eight years ago  at the  Fairbanks job                                                               
fair, there were 700 applicants; this  year at that same job fair                                                               
there were only 70.  Teachers  aren't coming up from the Lower 48                                                               
like they used to.                                                                                                              
CHAIR BUNDE commented that the  majority of new teachers hired in                                                               
the smaller and rural schools are often non-residents.                                                                          
Number 1638                                                                                                                     
REPRESENTATIVE  JOULE said  another piece  of useful  information                                                               
would  be to  find out  what  percent of  the [rural]  districts'                                                               
teaching staff are from the local area.                                                                                         
REPRESENTATIVE DAVIES remarked  that there is also  a shortage of                                                               
principals around the  state.  He wondered if  they were included                                                               
in HB 37.                                                                                                                       
Number 1703                                                                                                                     
REPRESENTATIVE  STEVENS  explained  that  HB  37  does  say:  "is                                                               
employed at  a public elementary  or secondary school  within the                                                               
state as  a teacher," and he  would interpret that as  anyone who                                                               
is a certificated teacher, so  that would include principals.  It                                                               
would  be   full-time,  certificated  teachers,   not  substitute                                                               
teachers, whether they were serving  as a classroom teacher or in                                                               
a  special education  situation or  as  a principal.   He  didn't                                                               
think it  would apply to  a lot of principals;  normally students                                                               
who  come back  and get  the  student loan  forgiveness would  be                                                               
younger students entering  the profession.  Maybe  it would apply                                                               
to a  principal going back to  graduate school, but he  can't see                                                               
it applying to a large number.                                                                                                  
CHAIR  BUNDE  suggested  that if  Representative  Stevens  wanted                                                               
administrators  included,  he should  do  some  more research  to                                                               
decide if that needed to be delineated more.                                                                                    
Number 1784                                                                                                                     
DIANE   BARRANS,  Executive   Director,   Alaska  Commission   on                                                               
Postsecondary  Education  (ACPE),  Department  of  Education  and                                                               
Early Development (EED),  came forward to answer  questions on HB
37.   On behalf of  the commission  she applauded the  efforts of                                                               
the  members spending  time  on this  issue.   The  ACPE is  very                                                               
cognizant of  this worker shortage  in Alaska.  She  commented on                                                               
behalf of the  Alaska Student Loan Corporation  that is concerned                                                               
about any  bill that would  imply any obligation of  the finances                                                               
of the corporation.  As she  understands the bill, the program is                                                               
subject to appropriation,  and the corporation would  be happy to                                                               
administer any funding  that is available for  a loan forgiveness                                                               
MS.  BARRANS provided  some information  on the  past forgiveness                                                               
program for  the general  Alaska Student  Loan (ASL)  Program and                                                               
the current Teacher Scholarship Loan  (TSL) Program.  The ACPE is                                                               
currently preparing a brief report on  the status of the TSL that                                                               
should be  available within a  week or  so, and she  will deliver                                                               
that to  the committee members.   However, there are  two notable                                                               
statistics in  looking at the  Teacher Scholarship  Loan Program:                                                               
1) over the  15 years that the program has  existed and for those                                                               
participants  who have  left school,  only 22.4  percent of  them                                                               
have actually  claimed one or  more of the  forgiveness benefits.                                                               
The Teacher  Scholarship Loan Program that  currently exists does                                                               
target rural schools.  In  order to qualify, program participants                                                               
have  to earn  their  credential  and then  return  to the  rural                                                               
schools to  teach.  The  22.4 percent  that have returned  for at                                                               
least  one  year would  represent  the  "success rate"  for  that                                                               
Number 1898                                                                                                                     
REPRESENTATIVE GREEN  asked Ms.  Barrans if that  means it  is 22                                                               
percent of  those who are  in that program  or 22 percent  of the                                                               
total program.                                                                                                                  
Number 1907                                                                                                                     
MS BARRANS answered  that the 22.4 percent is  that percentage of                                                               
participants who  are no  longer in  school, so  the participants                                                               
who are  still in  school are  not counted.   Basically  a little                                                               
more than one-fifth  of those who have left  school have actually                                                               
taught in a qualifying position.  It is total program.                                                                          
MS. BARRANS  explained that  the schools  that qualify  for [TSL]                                                               
forgiveness benefits  are those defined  in statute as  rural; it                                                               
is  a certain  size community  that  is not  on road  or rail  to                                                               
Anchorage  or  Fairbanks.    Juneau,  Ketchikan,  Haines,  Sitka,                                                               
Fairbanks, and Anchorage do not  qualify.  All other districts in                                                               
the state qualify if they hire these teachers.                                                                                  
Number 1952                                                                                                                     
REPRESENTATIVE GREEN  asked:  If  this applies to the  people who                                                               
are no  longer in  the program,  is there a  period of  time they                                                               
have to teach in a rural school to qualify.                                                                                     
MS. BARRANS explained that to  receive 100 percent forgiveness of                                                               
the  loans, they  have to  teach for  five years,  but it  is pro                                                               
MS. BARRANS  said that  another statistic that  is of  concern is                                                               
that  cumulatively,  30  percent  of  the  participants  in  this                                                               
program  have defaulted  on their  loans.   Why people  don't pay                                                               
isn't  often  known; the  participants  have  entered into  their                                                               
contracts with  a perception  that they're not  going to  have to                                                               
pay back the loan.   They may not do the  analysis that they need                                                               
to  or  that can  be  expected  from  an 18-year-old  to  perform                                                               
whether  or  not they're  really  ready  to succeed  in  college,                                                               
whether or not  teaching is the only career  that interests them,                                                               
and whether or not they're willing  to return to a rural area and                                                               
teach.  When passed through those  three steps, the end result is                                                               
that  22  percent  are  prepared, do  complete,  and  do  return.                                                               
Anecdotally there are  stories that it was very  successful or it                                                               
wasn't successful, but those are the numbers.                                                                                   
CHAIR  BUNDE  referred  to  the time  when  there  was  universal                                                               
forgiveness  for student  loans  if the  person  remained in  the                                                               
state and said there was  also an extremely high default problem.                                                               
The loan program had some other  problems then, but from what Ms.                                                               
Barrans  said,  there  appears   to  be  a  relationship  between                                                               
forgiveness and the default problem.                                                                                            
MS. BARRANS said  she thinks there is, and it  is the expectation                                                               
of the borrower at  the time of incurring the debt.   A number of                                                               
problems  contributed  to  that  high default  rate.    She  also                                                               
reported that the  annualized rate calculated this  month for the                                                               
Teacher  Scholarship Loan  has  dropped to  less  than 8  percent                                                               
defaulting.    The measures  that  the  commission has  taken  to                                                               
address the  default rate  globally with  student loans  from the                                                               
state have also had an impact on these.   A lot of that has to do                                                               
with the  ability to collect through  involuntary means including                                                               
the permanent fund dividend.   She added that the general default                                                               
rate is just under 10 percent  for the entire Alaska Student Loan                                                               
CHAIR  BUNDE asked  if the  Teacher Scholarship  Loan Program  is                                                               
doing better than the general student loan program.                                                                             
MS. BARRANS replied that that was correct.                                                                                      
Number 2092                                                                                                                     
REPRESENTATIVE JOULE  asked:   If very many  people who  have had                                                               
previous work  experience apply for  the scholarship  program, is                                                               
there the same default rate with those people.                                                                                  
MS.  BARRANS  answered  that  the   ACPE  doesn't  have  a  "bio-                                                               
demographic" statistic  on these students.   There hasn't  been a                                                               
lot of  time and  effort put  in on developing  a data  base that                                                               
"parses" them  out in  various degrees, so  she can't  respond to                                                               
that.   The  criteria for  being in  this program  are graduating                                                               
from  an  Alaska high  school  and  being  nominated by  a  rural                                                               
district.   In the  early 90s  when the  commission saw  the high                                                               
dropout  rate from  this program,  it did  make some  connections                                                               
between  the education  departments at  the University  of Alaska                                                               
and the  districts that nominate  students.   That may be  one of                                                               
the contributing factors  to the improving default  rate with the                                                               
Teacher Scholarship Loan,  but she can't precisely  point to that                                                               
as one of the defining changes.                                                                                                 
Number 2161                                                                                                                     
REPRESENTATIVE  STEVENS clarified  that his  bill is  not talking                                                               
about  the Teacher  Scholarship Loan  Program.   He noted  it was                                                               
important to  him to know  that often in the  Teacher Scholarship                                                               
Loan Program it  is 17-year-olds who make that  decision in their                                                               
junior year  of high school  to commit  to four years  of college                                                               
and a fifth year of graduate  school to become teachers, so there                                                               
is a high default rate.  He is  not sure that the default rate of                                                               
the  Teacher Scholarship  Loan Program  necessarily transfers  to                                                               
the teachers  under the  regular student loan  program in  HB 37.                                                               
He  said he  didn't think  there was  any connection  between the                                                               
22.4 percent  rate of  the Teacher  Scholarship Loan  Program and                                                               
what he is proposing.                                                                                                           
CHAIR BUNDE noted that there  is a broader issue that forgiveness                                                               
may  encourage  a mindset,  and  the  committee  just has  to  be                                                               
mindful of that.                                                                                                                
MS.  BARRANS  told the  committee  that  the question  about  the                                                               
efficacy of forgiveness  is motivating behavior.   When there was                                                               
50  percent forgiveness  in the  general program,  only about  20                                                               
percent of  the borrowers ended  up benefiting from that.   There                                                               
was an  $84 million  price tag  for that 20  percent.   Her point                                                               
would  be  if  the  objective is  recruitment  and  retention,  a                                                               
blanket loan forgiveness may not be the most effective approach.                                                                
Number 2262                                                                                                                     
TARAN KEELER  read via teleconference from  Fairbanks the written                                                               
testimony of Melissa Hill, Alaska Teacher Placement:                                                                            
     Thank you  for allowing me the  opportunity to testify.                                                                    
     Any effort  the state  can take  that will  increase in                                                                    
     the teacher recruitment effort is a positive one.                                                                          
     With  NCATE  [National  Council  for  Accreditation  of                                                                    
     Teacher  Education]  accreditation standards  still  in                                                                    
     progress and implementation of  new degree programs not                                                                    
     yet  in place,  the "potential  increase" of  educators                                                                    
     will not adequately impact Alaska  for at least another                                                                    
     3 to 4 years.                                                                                                              
     With the  limited number of  UA [University  of Alaska]                                                                    
     teachers contributing to Alaska's  hiring pool, I would                                                                    
     recommend  that the  committee consider  implementing a                                                                    
     two-  to   three-year  loan  forgiveness   program  for                                                                    
     teachers coming  from the Lower 48.   Preference should                                                                    
     be given to those willing to teach in rural Alaska.                                                                        
     Many people  remember when  the Santa  Clara California                                                                    
     School District attended the Anchorage  job fair.  They                                                                    
     were  offering   signing  bonuses  of  $3,000   to  any                                                                    
     applicants willing to sign a letter of intent.                                                                             
     Many Alaskan  residents and  UA graduates  with special                                                                    
     education  endorsement  ended   up  leaving  the  state                                                                    
     specifically  for that  bonus  to  apply towards  their                                                                    
     current loans.                                                                                                             
     As   the   statewide  clearinghouse,   Alaska   Teacher                                                                    
     Placement  serves as  the first  point  of contact  for                                                                    
     teachers seeking  information on jobs in  Alaska.  Very                                                                    
     often the  first questions  we get are:   What  are the                                                                    
     incentives like?   Does Alaska have  a loan forgiveness                                                                    
     program?    Many  first year  teachers  are  more  than                                                                    
     willing to  relocate to rural  Alaska but  are shopping                                                                    
     around for the best deal.                                                                                                  
     By  district  requests and  the  state's  need to  fill                                                                    
     vacancies, our  services have been expanded  to include                                                                    
     recruiting  teachers  in  the  Lower  48.    ATP  would                                                                    
     greatly benefit  from the ability  to market  a program                                                                    
     that included teachers from the  Lower 48.  As a nearly                                                                    
     self-supported  organization  that relies  on  district                                                                    
     and registrant  funding to maintain  our budget,  it is                                                                    
     essential that  we have some marketing  incentives such                                                                    
     as HB  37 to recruit  educators for Alaska.   Ten years                                                                    
     ago  the incentives  were:   great salaries,  excellent                                                                    
     retirement packages,  and the  adventure.  Now  we rely                                                                    
     on marketing the  [permanent fund] dividend, adventure,                                                                    
     rich culture, and the beauty.                                                                                              
     The facts  are UA grads  are producing only  a fraction                                                                    
     of the  need, and  of that number  only a  fraction are                                                                    
     contributing  to   the  hiring   pool.     In  addition                                                                    
     endorsements  in  high  demand areas,  such  as  speech                                                                    
     pathology,  are  not  offered  through  the  university                                                                    
     system.   We  know the  University is  working hard  to                                                                    
     expand programs  and increase funding, but  unless they                                                                    
     add additional  programs such as speech  pathology, the                                                                    
     state will  have to  continue to  rely on  students and                                                                    
     applicants from the Lower 48.                                                                                              
     The  need for  teachers is  now,  and that  is [why]  I                                                                    
     strongly encourage  you to consider extending  the loan                                                                    
     forgiveness  program, even  if for  a limited  time, to                                                                    
     the students from the Lower 48.                                                                                            
REPRESENTATIVE PORTER  commented that he thought  Ms. Barrans was                                                               
politely trying  to say:   After  diligence and  perseverance and                                                               
finally  getting  the [student  loan]  fund  into the  black,  if                                                               
you're going to do this again, for heaven's sakes, fund it.                                                                     
TAPE 01-4, SIDE B                                                                                                               
Number 2378                                                                                                                     
MS. BARRANS said she certainly wouldn't disagree with that.                                                                     
CHAIR BUNDE asked Ms. Barrans  to expand on the comment "previous                                                               
forgiveness  programs  seem  to  more  reward  those  people  who                                                               
already have chosen to stay in  Alaska than it did recruit people                                                               
who had  chosen to  leave or  had already  left and  brought them                                                               
back to Alaska."                                                                                                                
MS. BARRANS said having thought  about the rather low forgiveness                                                               
rate  of  20 percent,  people  could  have  half of  their  loans                                                               
forgiven  There  are people with huge debts who  didn't return to                                                               
Alaska.  It strikes her that  the things that motivate a person's                                                               
behavior,  especially in  a strong  economy,  are salary,  living                                                               
conditions,  and family  connections.   Her concern  was that  if                                                               
even modest  amounts of  funds are being  put into  programs that                                                               
would motivate  behavior, it should be  done in a way  that would                                                               
affect  that  behavioral change.    That  was  one piece  of  the                                                               
conversation with  Chair Bunde.   The other  was that  the people                                                               
who do default are the ones who  can't afford to repay.  They are                                                               
the ones who  didn't complete their education, they  are the ones                                                               
who, for whatever  reason, did not achieve  the credential, don't                                                               
have the economic power that those with degrees do.                                                                             
MS. BARRANS  indicated that the  corporation and  commission have                                                               
been  working  to  reinvest  resources   to  lower  the  cost  of                                                               
borrowing  for  all  individuals.   That  has  been  their  focus                                                               
because they do  understand that as the cost of  the program went                                                               
up for  those people less  able to pay, they  became increasingly                                                               
less able to pay.   In five years the lending  rate has come down                                                               
over a  full percent from  9 to 7.8  percent, and ways  are being                                                               
looked at to reduce costs for some of the existing loans.                                                                       
Number 2249                                                                                                                     
REPRESENTATIVE  PORTER   asked  Ms.  Barrans  if   there  is  any                                                               
correlation  in  the  failure   rate  between  the  students  who                                                               
attended school outside and the ones who attended inside.                                                                       
MS.  BARRANS  replied  that  the ACPE  doesn't  have  a  research                                                               
section  but does  periodic reviews  so there  isn't great  data.                                                               
However,  those  that  attended  out-of-state  default  at  lower                                                               
rates.  She said she thinks  there may be significant reasons for                                                               
that.   If  there was  "bio-demographic" information,  she thinks                                                               
they would  find that those who  are more mobile and  are able to                                                               
go  out-of-state  are  probably  students from  middle  to  upper                                                               
income;  it's more  expensive to  go out-of-state.   Many  of the                                                               
schools  they go  to  are extremely  selective,  so the  academic                                                               
credentials  of  those  students  may  statistically  be  higher,                                                               
therefore leading to success.                                                                                                   
MS.  BARRANS noted  that those  students also  tend to  be "lock-                                                               
step" students who  have gone right from high  school to college,                                                               
which  means that  probably one  or both  parents graduated  from                                                               
college, and they are able to  commit four or five years of their                                                               
lives  to getting  through.    The average  age  of students  who                                                               
attend the University  of Alaska is somewhere in the  late 20s to                                                               
early 30s, so  these are people with other lives.   Their ability                                                               
to  go  through  a  continuous education  process  is  much  more                                                               
limited.  She emphasized that  she doesn't want that statistic of                                                               
higher  default  rate to  reflect  poorly  on the  students  that                                                               
attend in Alaska.                                                                                                               
REPRESENTATIVE STEVENS said  he wasn't sure he  is hearing enough                                                               
information.   He referred to what  the chairman had said:   that                                                               
previous plans  have rewarded  those who decide  to stay  and not                                                               
rewarded those who come in from the outside.                                                                                    
Number 2127                                                                                                                     
CHAIR  BUNDE rephrased  this  thought.   His  impression is  that                                                               
previous forgiveness  programs were  a reward  for those  who had                                                               
already decided to  stay in Alaska and weren't a  major factor in                                                               
influencing the decision to stay in Alaska.                                                                                     
REPRESENTATIVE  STEVENS said  he didn't  know how  that could  be                                                               
proved.   He would  like some quantification  of why  Chair Bunde                                                               
would agree with that.  He  wondered if there were any statistics                                                               
that would agree with that statement.                                                                                           
MS. BARRANS noted  that she agrees with  Chair Bunde's statement.                                                               
"You  can  talk to  a  half  dozen  Alaskans who  received  these                                                               
benefits and perhaps  get a half dozen different  responses as to                                                               
how much that  played a part in their decision  to stay or return                                                               
to Alaska."   She indicated that  it was not a  motivating factor                                                               
for her  personally.  The  statistic she  would point to  is that                                                               
only one  in five of the  borrowers who had an  option to receive                                                               
forgiveness benefits  actually did during  the years that  it was                                                               
Number 2068                                                                                                                     
REPRESENTATIVE STEVENS  said he just doesn't  see the connection,                                                               
and maybe  he is missing a  fundamental point.  He  knows just as                                                               
many Alaskans who were educated  outside and decided to come back                                                               
to  teach in  Alaska  because  of the  forgiveness  program.   He                                                               
doesn't see  how that  can be  quantified.  He  is not  sure that                                                               
Chair Bunde's  statement is true,  and his experience  would tell                                                               
him that it is not true.                                                                                                        
CHAIR BUNDE said  if only 20 percent are returning  to Alaska and                                                               
there is a financial reward, he  guesses it has limited impact on                                                               
people's choices  where they  live.  It  would be  interesting to                                                               
know  what percentage  of  loan recipients  choose  to locate  in                                                               
Alaska after  the forgiveness program  went away, and  maybe that                                                               
would show some level of effectiveness.                                                                                         
MS.  BARRANS  mentioned that  the  number  of Alaskans  who  have                                                               
returned or remained  in Alaska since the end  of forgiveness has                                                               
actually increased.   There are  just other issues  that persuade                                                               
where  people  locate.   She  is  gathering that  information  in                                                               
response to questions  from the House Finance  Committee, and she                                                               
will share that information with this committee.                                                                                
CHAIR BUNDE  added he is  certainly not anti-teacher.   His point                                                               
is there are limited educational  funds, and he'll make sure they                                                               
are  spent where  they have  the greatest  impact.   The research                                                               
that he  has looked  at and his  legislative experience  show him                                                               
that the one  factor that has the greatest  impact on educational                                                               
success for  young people is  a caring and talented  teacher, way                                                               
beyond  class size  and computers.   He  wants to  encourage good                                                               
teachers, and his questions are just  focused on what is the best                                                               
way to invest the limited resources.                                                                                            
Number 1935                                                                                                                     
REPRESENTATIVE  GREEN wondered  if there  is  a way  to find  the                                                               
number of people  who are staying and also plot  that against the                                                               
comparative salary for Alaska teachers  and outside teachers.  Is                                                               
it  the incentive  of loan  forgiveness,  or is  it the  relative                                                               
degree  of  compensation?   At  one  time  Alaska had  among  the                                                               
highest paid teacher  salaries and now does not.   Is it going to                                                               
change   because   of  this   incentive,   or   is  it   strictly                                                               
MS. BARRANS  answered that this is  getting out of her  arena and                                                               
she deferred  to the  people at  EED.   She commented  that since                                                               
these  issues  have  come  up nationwide,  she  has  been  paying                                                               
attention to the types of  strategies that states are developing.                                                               
There is not a single element;  there are strategies that look at                                                               
what teachers want.  Do they  want assured housing?  Do they want                                                               
assistance buying  a home?   Do they want  a salary at  a certain                                                               
level?   Certainly loan assumption  or forgiveness is a  piece of                                                               
that, but  it is  one piece  of a package  that's aimed  at being                                                               
effective.   She  doesn't want  her comments  to be  perceived as                                                               
negative.   They  are just  questioning whether  or not  a single                                                               
piece can  have the  effect.  If  a single piece  is going  to be                                                               
invested  in and  there  isn't  some assurance  that  it will  be                                                               
effective, how valuable is that investment?                                                                                     
Number 1814                                                                                                                     
MS.  NORDLUND  came  forward to  address  Representative  Green's                                                               
question.   She referred  to the  "Public School  Funding Formula                                                               
Educational Adequacy"  handout and  said there is  an interesting                                                               
analysis  of teacher's  salaries  in  that report.    She read  a                                                               
paragraph on page 10:                                                                                                           
     As recently  as 1989  Alaska was  reported to  have the                                                                    
     highest  average   teacher  salaries  in   the  nation.                                                                    
     According to the  NEA [National Education Association],                                                                    
     Alaska's average  teacher salary  in 1989  was $42,818.                                                                    
     In 1999, Alaska  is reported to have  slipped to number                                                                    
     eight in the  nation with an average  teacher salary of                                                                    
     $48,085.   The  average  teacher salary  in Alaska  has                                                                    
     increased about  12.3 percent for  the past  ten years,                                                                    
     but  when   stated  in  constant  dollars   to  reflect                                                                    
     inflation  it  has   decreased  by  approximately  11.7                                                                    
MS. NORDLUND explained that there is  a table in this report that                                                               
talks about the  increases in teacher salaries,  she believes, in                                                               
constant dollars  in the  Lower 48.   There  has been  a dramatic                                                               
change  in teacher  salaries.   What  other states  are doing  to                                                               
recruit teachers and the competitiveness  of Alaska has certainly                                                               
decreased in that area.                                                                                                         
REPRESENTATIVE  GREEN commented  that he  would assume  that this                                                               
same  decrease  through  cost in  current  dollars  has  affected                                                               
teachers in the rest of the nation.                                                                                             
MS. NORDLUND referred to the chart  in the report and pointed out                                                               
that  teacher  salaries  have increased  substantially  in  other                                                               
states due to the teacher shortage.                                                                                             
Number 1728                                                                                                                     
REPRESENTATIVE  GREEN wondered  if that  is comparing  across the                                                               
board about total salaries then  those would probably have had to                                                               
been reduced by inflation just like the Alaska salaries.                                                                        
MS. NORDLUND answered that she  thinks it is comparing "apples to                                                               
apples."   Even in constant  dollars there has been  an increase.                                                               
She suggested  that the committee go  back and look at  the chart                                                               
to see  what is happening in  other states, but to  her knowledge                                                               
there has  actually been  a significant increase.   She  has some                                                               
anecdotal information.  It is  reported that in the school reform                                                               
efforts this year, California is  going to spend $30 million just                                                               
to  attract  algebra  teachers  to  the profession.    A  lot  of                                                               
innovative things  are happening especially as  schools embark on                                                               
REPRESENTATIVE  PORTER mentioned  that this  same phenomenon  has                                                               
happened  in the  Anchorage Police  Department  and Alaska  State                                                               
Troopers, which used  to be the two highest  paid law enforcement                                                               
agencies in  the United States; they  are not anymore.   "When we                                                               
had that amount of money, we paid it; when we don't, we can't."                                                                 
Number 1629                                                                                                                     
REPRESENTATIVE STEVENS  expressed concern that  it is so  easy to                                                               
make a  statement that could hang  in the air forever  and poison                                                               
any  further consideration  of this.   The  one statement,  "this                                                               
program will  reward those  who already decided  to come  back to                                                               
Alaska,"  he  doesn't  think  is  true,  and  he  thinks  if  the                                                               
department does, he would like  to see something in writing, some                                                               
specifics, not  just a  generalization.   "We all  have anecdotal                                                               
information; we can all say people  we know have or have not made                                                               
the decision, but  yet you have made that statement,  and I would                                                               
like to see  something in writing to  show that it is  true."  He                                                               
asked if that was possible.                                                                                                     
MS. BARRANS  replied that she  will have  to look at  the numbers                                                               
that are  available.  She  repeated that her office  doesn't have                                                               
research  staff,  so  it  means  taking  staff  off  programmatic                                                               
projects to  put them  on that sort  of data  collection project.                                                               
She can  characterize that [statement]  as being  her experience.                                                               
If  she needs  to  put  some borders  around  that  to limit  its                                                               
impact,  she can  do that.   She  is not  certain her  office has                                                               
statistics.    There  is  very  little  unit  tracking  of  these                                                               
individuals.   One way  to look at  it is to  say the  reason the                                                               
borrowers  didn't claim  forgiveness  is it  isn't known  whether                                                               
they got their degree or not.   There are two criteria:  they had                                                               
to complete their program and return to Alaska.                                                                                 
MS. BARRANS  said her point would  be that if somebody  had to do                                                               
just these  two things to get  the cash benefit, and  only one in                                                               
five did,  it was only  motivating 20  percent of the  people who                                                               
had  that motivation  available to  them.   She can  provide that                                                               
statistic in  writing and would be  happy to do that,  but as far                                                               
as having detailed  surveys of these people to find  out why they                                                               
did what they did, that's  probably not readily available without                                                               
investment of time and money.                                                                                                   
REPRESENTATIVE  STEVENS said  he understood  what she  was saying                                                               
and he is not asking her to go to  a lot of work for this.  It is                                                               
probably something that is not provable.   It seems to him it's a                                                               
new world  out there,  entirely different  than it  was 20  or 30                                                               
years  ago.   There has  been testimony  that young  teachers are                                                               
shopping  around for  the best  deal, which  is absolutely  true.                                                               
They have  large bills  to pay,  so they need  to look  at things                                                               
like loan  forgiveness and the  cost of living and  other things.                                                               
This is just a piece of the package; it's not the whole answer.                                                                 
Number 1466                                                                                                                     
REPRESENTATIVE  JOULE  referred  to   the  "Examples  of  Teacher                                                               
Incentives  Offered  in  Other   States"  and  wondered  if  this                                                               
information  was compiled  by  districts.   He  wondered what  it                                                               
would take for Alaska to be competitive in this market.                                                                         
MS. NORDLUND answered  that in looking at  the incentives offered                                                               
in  other  states,  it  looks generalized,  but  it  isn't  known                                                               
whether  any  of these  are  purely  district initiatives.    She                                                               
imagined that other state legislatures  are really going to these                                                               
types  of measures  and making  statewide  policies.   It is  not                                                               
reflected  in this  list, and  she cannot  actually speak  to the                                                               
details.  She believes that they  are state policies, and that is                                                               
why they are listed this way.                                                                                                   
CHAIR BUNDE  indicated that  the committee  may want  to consider                                                               
how  much difference  will  it take  to make  a  difference.   He                                                               
asked:   What  kind of  reasonable return  can we  expect on  the                                                               
MS. NORDLUND added that the  State Board of Education doesn't see                                                               
loan forgiveness as  the one answer to the teacher  shortage.  It                                                               
has embarked upon  other initiatives to try  to attract teachers,                                                               
but this one  is especially in their minds as  part of a package.                                                               
The board  has decreased  teacher certification  fees by  half in                                                               
the  past few  months.    The board  has  also  sought out  those                                                               
teachers around the nation who  have national board certification                                                               
to  try to  get  them to  come  to Alaska;  those  are very  high                                                               
quality  teachers  and  the  board   would  like  to  offer  free                                                               
certificates to  those people.   The board  is also working  on a                                                               
number of  other initiatives,  but this one  is obviously  a nice                                                               
financial one.                                                                                                                  
CHAIR  BUNDE commented  that many  people came  to Alaska  in the                                                               
past to  see the other  side of the  world, and now  the children                                                               
want to  see other  parts of  the world  and leave.   He  said he                                                               
doesn't see  the fact  that the  children choose  to leave  as an                                                               
indictment  of  Alaska's  educational   system;  it's  more  just                                                               
REPRESENTATIVE PORTER related  that his family is  a good example                                                               
of  the  local  versus  non-local   phenomenon.    He  has  three                                                               
children,  two of  whom  went  to college  outside  and now  live                                                               
outside; the  third attended the  University of  Alaska Anchorage                                                               
and  now lives  in  Anchorage.   He  believes  that  is the  most                                                               
significant statistic.                                                                                                          
Number 1230                                                                                                                     
REPRESENTATIVE JOULE referred to the document from EED and read:                                                                
     A  tax exemption  or  signing bonuses  may  not be  the                                                                    
     right answer  here.  But  when states from New  York to                                                                    
     California are  wading into a  teacher bidding  war, we                                                                    
     [Oregon] had better offer something more than scenery.                                                                     
He  commented  that  statement  was  from  Oregon,  but  it  does                                                               
highlight the whole situation as it  relates to trying to draw in                                                               
MS.  BARRANS   asked:    If   a  loan  forgiveness   program  was                                                               
established,  would   the  commission   have  authority   to  set                                                               
prioritization  for  the  funds  in times  when  funding  may  be                                                               
inadequate to forgive all the  loans that may have people seeking                                                               
forgiveness, or  would that  be something that  the EED  could be                                                               
charged with since that is its area of expertise?                                                                               
CHAIR BUNDE  agreed that was  an excellent question.   He guessed                                                               
that  the legislature  would want  to "get  their hands  all over                                                               
it."   Another response to "there  isn't enough money" is  to ask                                                               
for a  supplemental.  "If the  interest is that intense  and then                                                               
we in our wisdom  can say no, you don't get  anymore and then you                                                               
have to  prioritize on first come,  first served.  I  guess you'd                                                               
get 60 different answers from 40 different legislators."                                                                        
Number 1073                                                                                                                     
REPRESENTATIVE STEVENS clarified that  it wasn't the intention of                                                               
his bill to  gut the Teacher Scholarship Loan Program  or to make                                                               
it no longer available.  He sees  this as a change to the regular                                                               
student  loan   program,  but  the  teacher   loan  program  will                                                               
continue.  This would have no  impact on that, so still the rural                                                               
students could apply for the teacher  loan program.  He asked Ms.                                                               
Barrans  if she  saw  this  in any  way  a  deterioration to  the                                                               
Teacher Scholarship Loan Program.                                                                                               
MS.  BARRANS replied  no,  not at  all.   Her  concern  was in  a                                                               
shortage  of funding  in this  particular program,  if there  are                                                               
teachers who  are not TSL  participants but who borrowed  the ASL                                                               
and  they are  willing with  some incentive  to go  into some  of                                                               
these areas, but there isn't  sufficient funds, how is it decided                                                               
which  teachers receive  the forgiveness  benefit  when there  is                                                               
$50,000 available and the demand is $200,000.                                                                                   
CHAIR  BUNDE asked:   Should  we simply  reward those  people who                                                               
choose to go there or shall we try  to pay them enough to want to                                                               
go there?                                                                                                                       
Number 0996                                                                                                                     
REPRESENTATIVE STEVENS  said that has  not been addressed  in his                                                               
bill, and he doesn't attend to address  it.  He thinks the TSL is                                                               
a  good program  that will  encourage  students to  teach in  the                                                               
rural  areas.   This is  a  way to  level the  playing field  and                                                               
encourage not only people to teach  in the Bush but also to teach                                                               
in urban areas as well.                                                                                                         
CHAIR  BUNDE announced  the  committee would  take  up the  three                                                               
bills  on student  loan forgiveness  next Wednesday  and look  to                                                               
find the appropriate thing to do.  [HB 37 was heard and held.]                                                                  

Document Name Date/Time Subjects