05/07/1997 09:09 AM Senate HES

                                                                               
        HB 256 POSTSECONDARY SCHOOLS: REGULATION & LOANS                      
                                                                              
 Number 406                                                                    
                                                                               
  CHAIRMAN WILKEN  introduced  HB 256 am  as the next order of business        
                                                                               
  REPRESENTATIVE DAVIS , Prime Sponsor, said that HB 256 should look           
 familiar in that it identifies a fee that does not cover the cost             
 of the service provided.  Currently, the Postsecondary Education              
 Commission authorizes the postsecondary education institution in              
 Alaska to operate in the state.  Postsecondary Education currently            
 has a flat $100 fee to authorize the institutions to operate which            
 generates about $2,000 per year.  HB 256 would authorize the                  
 commission to establish fees that will come closer to meeting the             
 $100,000 annual expense to operate the program.  HB 256 authorizes            
 the adoption of regulations in statute that will adjust the annual            
 fees for authorization of postsecondary institutions.                         
 Representative Davis acknowledged that there may be some concern              
 regarding the regulations and Deborah Craig is present to speak to            
 that.  HB 256 does not specify the amount of fee to be charged.               
 Representative Davis noted that there was an amendment on the House           
 floor which addressed a clarification in Section 1 resulting from             
 legislation passed last year relating to postsecondary education              
 and the default rate on student loans.  The department did not                
 object.                                                                       
                                                                               
  DEBORAH CRAIG , Director of Institutional Relations for the                  
 Commission on Postsecondary Education, informed the committee that            
 she had been an administrator of a postsecondary education                    
 institution for the past seven years.  Her current position as                
 director is new to her.  Ms. Craig emphasized that she took the               
 task of establishing a fair fee schedule very seriously due to her            
 knowledge of what that could do to a small school.  The school Ms.            
 Craig administered was very small and primarily funded by grants.             
 Ms. Craig noted that the packet should include a sample fee                   
 schedule.  After polling 25 states regarding each state's fee                 
 structure, Ms. Craig reviewed what other states were doing.  Most             
 states established a percentage of the tuition revenues that were             
 generated and then charged that percentage.  Sometimes a maximum              
 and a minimum were established.  This is what Ms. Craig is                    
 proposing.  Ms. Craig said that the proposal would be established             
 in regulation and school owners and administrators would be invited           
 to meet and provide input on the proposal.  This process would take           
 a number of months before implementation would occur.                         
                                                                               
 Ms. Craig emphasized that the fee structure would establish                   
 minimums and maximums in order to avoid discouraging schools from             
 doing business.  If the fee schedule was set at three percent of              
 the tuition revenue, that could result in a large fee for larger              
 schools; a fee similar to accrediting fees on a regional and                  
 national basis.  A maximum fee of $2,500 would be established.  If            
 a school has a tuition revenue of $100,000 a year, which over 60              
 percent of Alaska's schools do, the fee would be $3,000 based on 3%           
 of revenue; but the fee would be capped to $2,500.  HB 256 would              
 have a small impact on the smaller schools and a positive impact on           
 the larger schools.  HB 256 will not make the commission totally              
 self-supporting; that would require fees so high that it would                
 prohibit schools from doing business in Alaska.  With regards to              
 the concern that HB 256 would impact small schools, Ms. Craig                 
 pointed out the reality that requires the commission to tighten its           
 budget and generate fees for services.  This fee structure is                 
 intended to move agency towards self-sufficiency while not                    
 discouraging schools from doing business in Alaska.                           
                                                                               
  SENATOR GREEN  asked if this fee structure would encourage anyone to         
 alter the tuition revenue.   DEBORAH CRAIG  said that the fee                 
 structure might encourage some to manipulate the reporting of the             
 fee revenues.  However, Ms. Craig informed the committee that the             
 commission has an audit review process that is separate from the              
 authorization process.  The audit review process audits schools for           
 Alaska student loan participation and therefore, have oversight               
 over the management of the Alaska student loan which is of primary            
 concern.  Ms. Craig explained that the current fee of $100 is set             
 in statute.  HB 158 would establish those fees in regulation.  The            
 schedule in the committee packet was a proposed fee schedule based            
 on research from other states.                                                
                                                                               
  CHAIRMAN WILKEN  inquired as to the wishes of the committee.                 
                                                                               
  SENATOR GREEN  moved to report HB 256 am out of committee with               
 individual recommendations and accompanying fiscal notes.  Without            
 objection, it was so ordered.