Legislature(1995 - 1996)
02/07/1995 03:03 PM HES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.