Legislature(1995 - 1996)
02/07/1995 03:03 PM House HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HHESS - 02/07/95
Number 069
HB 135: STUDENT LOANS
DR. JOE McCORMICK, Executive Director of the State of Alaska
Commission on Postsecondary Education (ACPE), Department of
Education, presented HB 135 to the Health, Education and Social
Services (HESS) Committee members. He explained that the bill
contains transition language which accompanies HB 506, which was
passed by the legislature last year.
DR. McCORMICK explained that the transition language will simply
allow the ACPE to promote and finalize regulations required to
fully implement HB 506 by July 1, 1995. The regulations put forth
will call for the calculation of the appropriate interest rate on
student loans awarded for the 1995-96 school year. Without the
authority granted by HB 135, the ACPE cannot offer any loans after
July 1. Therefore, Dr. McCormick requested that the bill be moved
quickly so the ACPE can begin the regulatory process.
REPRESENTATIVE TOM BRICE requested clarification on the fact that
a bill was passed last year, but the legislature failed to give the
ACPE authority to implement the bill. DR. McCORMICK answered that
Representative Brice was correct. Representative Brice restated
that all HB 135 does is give the ACPE regulatory authority to
implement a bill passed last year.
Number 180
CO-CHAIR BUNDE asked what could be done to prevent such a mix up in
the future. DR. McCORMICK answered that last year he was not
familiar with Alaska's legislative process. The term "transition
language" was new to him. He assumed when the bill was drafted
that it contained all the necessary elements. It was not until the
new regulations were sent over to the Department of Law for
approval that the Department of Law said that the ACPE could not do
anything because there was no transition language in the bill. Dr.
McCormick would be very happy if the HESS Committee members could
figure out a way to prevent this from happening in the future.
Number 250
CO-CHAIR BUNDE stated that his previous question was not to be
construed as criticism. Co-Chair Bunde also was inclined to
believe that when something is received from the Department of Law
that it will be drafted in an appropriate form.
CO-CHAIR BUNDE addressed the committee members and reiterated that
the bill was passed last year, changing the interest rate on the
student loans made at a variable interest rate. HB 135 gives the
ACPE regulatory authority to set the interest rate.
Number 293
REPRESENTATIVE BRICE asked since the bill was passed last year and
is now in statute, is it necessary to place Sections 1 and 2 of HB
135 in to statute or can they be placed into the Session Laws of
Alaska (SLA) and be enacted. DR. McCORMICK answered that it is his
understanding that HB 135 is the exact language the Department of
Law says is necessary to enact HB 506.
REPRESENTATIVE BRICE stated that HESS Committee members were told
that the exact language was in HB 506. He confirmed he was not
being critical, but his understanding is that statutory authority
is needed in certain areas to implement regulations.
DR. McCORMICK replied that apparently the section of primary
importance in HB 135 is Section 2. REPRESENTATIVE BRICE said he
did not know if the section needed to be enumerated or not.
Number 370
REPRESENTATIVE GARY DAVIS said that he had the same concerns as
Representative Brice because there are no statutes cited. He
deduced that the SLA is being affected. He read a memorandum from
Teresa Williams, Assistant Attorney General, Department of Law,
which stated, "I am writing to explain the necessity for the
legislature to immediately adopt transition provisions regarding
ch. 112, SLA 1994." Representative Davis, therefore, decided that
it must not be statutes, but SLAs that are being effected by this
bill.
Number 410
CO-CHAIR BUNDE asked if there was a representative from the
Department of Law present. There was not.
REPRESENTATIVE GARY DAVIS asked if the HESS Committee members were
again relying on the legal department to provide the proper
language. CO-CHAIR BUNDE was inclined to feel that once an initial
mistake was pointed out, Legal Services would be more diligent.
CO-CHAIR TOOHEY moved that HB 135 be passed out of committee and
sent to the Finance Committee because of time constraints. She
stated that the bill can be checked for exact wording and can be
killed in the Finance Committee if the wording is incorrect.
Number 479
REPRESENTATIVE CAREN ROBINSON expressed concern that since the bill
has a zero fiscal note, it may simply be waived out of the Finance
Committee. She asked if it must go to the Finance Committee. CO-
CHAIR BUNDE answered that the bill was scheduled to be heard by the
Finance Committee unless the chair of that committee makes an
extraordinary effort to have it waived.
REPRESENTATIVE ROBINSON said that many times when a bill has a zero
fiscal note the Finance Chair is petitioned. She wondered if this
bill would further hinder the Finance Committee, and if perhaps it
would not be better to contact Legal Services and get their
questions answered immediately. The HESS Committee members then
could hear other bills and come back to HB 135 at the end of
today's meeting.
Number 519
REPRESENTATIVE BRICE asked if the money to adopt regulations was
within the fiscal note for HB 506. DR. McCORMICK answered "yes."
REPRESENTATIVE NORMAN ROKEBERG asked what student loan interest
rates might be for this coming year. He said that there seems to
be a problem with the state government providing loans at a five
percent interest rate.
Number 570
DR. McCORMICK answered that the main purpose of HB 506 was to tie
the interest rate to the cost of money and to the cost of
administering the loan program. It would be illegal to charge a
five percent interest rate because the cost of money was in excess
of five percent for the past year. The cost of administering the
loan program is not to exceed a 2.5 percent cap. Therefore, the
interest rate is based on the cost of money plus no more than 2.5
percent. The interest rate, therefore, will probably be in the
range of 7.5 percent to nine percent for the coming year. The
exact rate has not been calculated yet.
REPRESENTATIVE ROKEBERG asked about the cost of the last bond
issue. DR. McCORMICK said he did not have that information, he
would have to look it up.
Number 655
CO-CHAIR BUNDE told Representative Robinson that in light of her
concerns, he will communicate with the Finance Committee chair to
make sure the fiscal note questions are taken care of. He then
stated that the motion to move HB 135 was before the HESS
Committee. Hearing no objection, the bill was passed out of
committee.
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