01/26/2022 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB18 | |
| HB21 | |
| HB114 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 21 | TELECONFERENCED | |
| += | HB 18 | TELECONFERENCED | |
| += | HB 114 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
January 26, 2022
8:03 a.m.
MEMBERS PRESENT
Representative Harriet Drummond, Co-Chair
Representative Andi Story, Co-Chair
Representative Tiffany Zulkosky (via teleconference)
Representative Grier Hopkins
Representative Mike Prax
Representative Mike Cronk
Representative Ronald Gillham
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 18
"An Act relating to national board certification for public
school teachers."
- HEARD & HELD
HOUSE BILL NO. 21
"An Act relating to the Board of Regents of the University of
Alaska."
- MOVED HB 21 OUT OF COMMITTEE
HOUSE BILL NO. 114
"An Act relating to the education loan program and Alaska
supplemental education loan program; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 18
SHORT TITLE: TEACHERS: NATIONAL BOARD CERTIFICATION
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS
02/18/21 (H) PREFILE RELEASED 1/8/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) STA, EDC
02/25/21 (H) STA AT 3:00 PM GRUENBERG 120
02/25/21 (H) -- MEETING CANCELED --
03/02/21 (H) STA AT 3:00 PM GRUENBERG 120
03/02/21 (H) Heard & Held
03/02/21 (H) MINUTE(STA)
03/04/21 (H) STA AT 3:00 PM GRUENBERG 120
03/04/21 (H) Heard & Held
03/04/21 (H) MINUTE(STA)
03/09/21 (H) STA AT 3:00 PM GRUENBERG 120
03/09/21 (H) Moved HB 18 Out of Committee
03/09/21 (H) MINUTE(STA)
03/10/21 (H) STA RPT 3DP 1DNP 1NR 2AM
03/10/21 (H) DP: CLAMAN, TARR, KREISS-TOMKINS
03/10/21 (H) DNP: EASTMAN
03/10/21 (H) NR: STORY
03/10/21 (H) AM: KAUFMAN, VANCE
04/30/21 (H) EDC AT 8:00 AM DAVIS 106
04/30/21 (H) Heard & Held
04/30/21 (H) MINUTE(EDC)
05/10/21 (H) EDC AT 8:00 AM DAVIS 106
05/10/21 (H) -- MEETING CANCELED --
01/21/22 (H) EDC AT 8:00 AM DAVIS 106
01/21/22 (H) Heard & Held
01/21/22 (H) MINUTE(EDC)
01/26/22 (H) EDC AT 8:00 AM DAVIS 106
BILL: HB 21
SHORT TITLE: ADD FACULTY MEMBER UNIV BOARD OF REGENTS
SPONSOR(s): REPRESENTATIVE(s) WOOL
02/18/21 (H) PREFILE RELEASED 1/8/21
02/18/21 (H) READ THE FIRST TIME - REFERRALS
02/18/21 (H) EDC, STA
04/26/21 (H) EDC AT 8:00 AM DAVIS 106
04/26/21 (H) Heard & Held
04/26/21 (H) MINUTE(EDC)
05/10/21 (H) EDC AT 8:00 AM DAVIS 106
05/10/21 (H) -- MEETING CANCELED --
01/21/22 (H) EDC AT 8:00 AM DAVIS 106
01/21/22 (H) Heard & Held
01/21/22 (H) MINUTE(EDC)
01/26/22 (H) EDC AT 8:00 AM DAVIS 106
BILL: HB 114
SHORT TITLE: EDUCATION & SUPPLEMENTAL LOAN PROGRAMS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
02/24/21 (H) READ THE FIRST TIME - REFERRALS
02/24/21 (H) EDC
04/23/21 (H) EDC AT 8:00 AM DAVIS 106
04/23/21 (H) Heard & Held
04/23/21 (H) MINUTE(EDC)
05/10/21 (H) EDC AT 8:00 AM DAVIS 106
05/10/21 (H) -- MEETING CANCELED --
01/26/22 (H) EDC AT 8:00 AM DAVIS 106
WITNESS REGISTER
REPRESENTATIVE JONATHON KREISS-TOMKINS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As prime sponsor, responded to a question
during the hearing on HB 18.
SANA EFIRD, Executive Director
Alaska Commission on Postsecondary Education
Executive Officer
Alaska Student Loan Corporation
Department of Education and Early Development
Juneau, Alaska
POSITION STATEMENT: Presented HB 114 and answered questions on
behalf of the sponsor, House Rules by request of the governor.
KERRY THOMAS, Director
Program Operations
Alaska Commission on Postsecondary Education
Department of Education and Early Development
Juneau, Alaska
POSITION STATEMENT: Provided information during the hearing on
HB 114.
LEE DONNER, Senior Managing Director
Hilltop Securities
Clifton, Texas
POSITION STATEMENT: Testified in support of the three
provisions of HB 114.
ACTION NARRATIVE
8:03:35 AM
CO-CHAIR HARRIET DRUMMOND called the House Education Standing
Committee meeting to order at 8:03 a.m. Representatives
Hopkins, Prax, Cronk, Gillham, Story, and Drummond were present
at the call to order. Representative Zulkosky arrived (via
teleconference) as the meeting was in progress.
HB 18-TEACHERS: NATIONAL BOARD CERTIFICATION
8:04:30 AM
CO-CHAIR DRUMMOND announced that the first order of business
would be HOUSE BILL NO. 18, "An Act relating to national board
certification for public school teachers."
8:04:52 AM
CO-CHAIR STORY moved to adopt Amendment 1 to HB 18, labeled 32-
LS0168\A.8, Marx, 1/24/22, which read as follows:
Page 1, line 6:
Delete "2025"
Insert "2027"
Page 1, line 10:
Delete "2026"
Insert "2028"
8:05:00 AM
CO-CHAIR DRUMMOND objected for the purpose of discussion.
8:05:06 AM
CO-CHAIR STORY noted that during the committee's hearing on HB
18 on Monday, Lisa Parady, Executive Director of the Alaska
Council of School Administrators, had suggested moving the date
for the goal of 4 percent of Alaska teachers reaching National
Board certification from 2025 to 2027, because the process is
cyclical, and the windows of entry are limited for teachers.
The change would give teachers time to enroll in [and complete]
the three-year process. She said she spoke with the bill
sponsor "to make sure that he was comfortable with this
amendment."
8:06:54 AM
CO-CHAIR DRUMMOND removed her objection. There being no further
objection Amendment 1 was adopted.
8:07:18 AM
REPRESENTATIVE PRAX asked whether "taking the standards from
what is essentially a private organization" would violate [the
last sentence of] Article 7, Section 1, which read:
No money shall be paid from public funds for the
direct benefit of any religious or other private
educational institution.
8:07:55 AM
REPRESENTATIVE JONATHON KREISS-TOMKINS, Alaska State
Legislature, as prime sponsor of HB 18, responded that in
statute, a variety of private, nonprofit organizations are cited
for various purposes, including: the Alaska Village Public
Safety Officer program, the Alaska Federation of Natives, and
others. He said these entities play a certain role others do
not play, and he indicated this applies to this issue.
REPRESENTATIVE PRAX said it seems to him this is a different
situation, and he suggested the bill sponsor "might want to
check on that."
CO-CHAIR DRUMMOND pointed out that there have been National
Board certified teachers for decades, and this issue has never
arisen.
REPRESENTATIVE PRAX indicated that a teacher may want to get the
certification, and that would be a good idea, but it is not the
decision of the legislature.
8:10:18 AM
REPRESENTATIVE HOPKINS asked whether the proposed bill would
require school districts to spend money.
REPRESENTATIVE KREISS-TOMKINS answered no.
8:10:52 AM
REPRESENTATIVE PRAX, in response to the bill sponsor, offered
further detail regarding his concern, and he said it sounded
like the committee was leaning toward consideration of providing
funds for teachers to get the certification.
8:12:08 AM
CO-CHAIR DRUMMOND emphasized that HB 18 has a zero fiscal note
and does not propose the provision of scholarships.
8:12:33 AM
REPRESENTATIVE KREISS-TOMKINS confirmed there would be no money
spent, and he said he had not looked into the constitutional
issue voiced by Representative Prax because "it does not apply
in this instance."
8:13:17 AM
CO-CHAIR STORY moved to report HB 18, as amended, out of
committee with individual recommendations and the accompanying
zero fiscal note.
8:13:40 AM
REPRESENTATIVE PRAX objected.
8:13:45 AM
The committee took an at-ease from 8:13 a.m. to 8:17 a.m.
[Due to technical difficulties, the audio at the call back to
order was not recorded but was captured in the secretary's log
notes. Just following the call back to order, Co-Chair Story
withdrew her motion to report HB 18, as amended, out of
committee with individual recommendations and the attached
fiscal notes; therefore, HB 18, as amended, was once more before
the committee.]
8:17:51 AM
CO-CHAIR DRUMMOND announced that HB 18 was held over.
HB 21-ADD FACULTY MEMBER UNIV BOARD OF REGENTS
8:18:11 AM
CO-CHAIR DRUMMOND announced that the next order of business
would be HOUSE BILL NO. 21, "An Act relating to the Board of
Regents of the University of Alaska."
8:18:44 AM
CO-CHAIR STORY moved to report HB 21 out of committee with
individual recommendations and the accompanying fiscal notes.
8:19:03 AM
REPRESENTATIVE PRAX objected. He asked whether a conceptual
amendment would be allowed on the House floor.
CO-CHAIR DRUMMOND said she would okay a conceptual amendment to
a simple concept, but she prefers amendments be drafted by
Legislative Legal Services to avoid confusion.
8:19:53 AM
REPRESENTATIVE PRAX [removed his objection]. There being no
further objection, HB 21 was reported out of the House Education
Standing Committee.
8:20:15 AM
The committee took an at-ease from 8:20 a.m. to 8:23 a.m.
HB 114-EDUCATION & SUPPLEMENTAL LOAN PROGRAMS
8:23:22 AM
CO-CHAIR DRUMMOND announced that the final order of business
would be HOUSE BILL NO. 114, "An Act relating to the education
loan program and Alaska supplemental education loan program; and
providing for an effective date."
8:23:43 AM
SANA EFIRD, Executive Director, Alaska Commission on
Postsecondary Education (ACPE); Executive Officer, Alaska
Student Loan Corporation, Department of Education and Early
Development (DEED), presented HB 114 and answered questions on
behalf of the sponsor, House Rules by request of the governor.
She said the proposed legislation addresses requests made by
Alaska's higher education institutions and student loan
borrowers. The bill provides for three changes to the current
loan program. Currently, the Alaska Refinance Loan program is
offered only to Alaska residents. Under HB 114, this would be
extended to previous borrowers of an Alaska loan - a cosigner or
beneficiary - as well as extend eligibility for applications of
refinance loans to a graduate of high school or post-secondary
institution of Alaska. She noted that loan limits had not been
lifted in some time, while tuition has increased as much as 20
percent in the last five years. The proposed legislation would
give the Alaska Student Loan Corporation the ability to set loan
limits as appropriate, with annual and lifetime limits being
removed from statute. The third change would be to add
clarifying language that a borrower's obligation to commit to
repayment may begin immediately upon disbursement of a loan but
not later than six months following the borrower's completion or
termination of a post-secondary program.
8:28:18 AM
MS. EFIRD, in response to a question from Representative
Hopkins, clarified that the Alaska Student Loan Corporation's
loans are not from the higher education investment fund but
backed by the corporation, whose investments provide the money
for the loans. The higher education investment fund has, in the
past, provided the funding for the Alaska performance
scholarship and the education grants (indisc.). In response to
another question from Representative Hopkins regarding possible
cost to the state, she pointed out that the bill has a zero
fiscal note and would provide some sustainability and financial
revenue for the corporation by allowing the expansion of loans
by increasing the revenue coming back to the corporation. She
said, "We would not expand beyond what the loan corporation
board would consider to be financially sustainable." She added
that there are provisions for the loan corporation "to also go
out for tax exempt bonds to fund the loans," and over the past
two years the corporation has implemented some additional
Federal Insurance Contributions Act (FICA) score requirements,
for example, to ensure its borrowers can repay their debt. In
response to a follow-up question, she noted that each year, at
one of its quarterly meetings, the loan corporation reviews all
loan programs and interest rates to make adjustments where
appropriate. The goal is to provide the lowest interest rates
and best terms possible.
8:32:32 AM
REPRESENTATIVE PRAX asked whether the board adheres to fiduciary
guidelines.
MS. EFIRD answered yes. She talked about the makeup of the
board. To another question regarding the default rate on
student loans, she said she could provide that statistic to the
committee once the information has been updated. To a question
from Representative Prax regarding fiscal loss, she confirmed
that the corporation had been losing money over some past years,
because in 2010, the federal loan program was taken back by the
federal government, which resulted in a drastic downturn of the
corporate portfolio. The corporation has been working for the
last 10 years to "shore up and ensure that we have a financially
viable corporation to support our state alternative loans for
students, and we have been turning the corner on that." She
said that is part of the reason the corporation sought the
changes [proposed under HB 114] for its loan program, to help
make up the difference from what was being provided from federal
loans and to expand eligibility, especially for refinance loans,
which have seen an increase in interest. She deferred to Kerry
Thomas to state the amount of the interest rate on refinance
loans.
8:38:02 AM
KERRY THOMAS, Director, Program Operations, Alaska Commission on
Postsecondary Education (ACPE), Department of Education and
Early Development (DEED), stated that the lowest rate offered
for the refinance loan is 3.55 percent.
REPRESENTATIVE PRAX offered his understanding that currently
students can opt to pay back loans immediately but are required
to do so six months post-graduation or "stopping school." He
asked if that is correct.
MS. EFIRD responded by noting that the purpose of some of the
language in HB 114 was for clarification. She said, "Our legal
counsel has said that we could offer an immediate repayment, and
so that's why we're clarifying." She explained that current
borrowers "do not have that provision," thus must begin paying
six months after completing their program or are no longer at
least a half-time student. She further explained, "This would
allow us, for new borrowers, to offer them that immediate
repayment."
REPRESENTATIVE PRAX expressed concern about the fiscal health of
the corporation and that a program not be set up that will
result in a loss of funds. He asked about the tax exempt bonds.
MS. EFIRD said tax exempt bonds are not state obligated bonds,
so "we do not have that authority." To a follow-up question,
she confirmed there are no state general funds involved for the
loan program.
8:42:25 AM
MS. EFIRD, in response to Co-Chair Story, reviewed that under
statute, the following are on the board that oversees the loan
program: the commissioner of the Department of Revenue or
his/her designee; the commissioner of the Department of
Commerce, Community & Economic Development or his/her designee;
the commissioner of the Department of Administration or his/her
designee; and two members from the commission.
8:43:54 AM
CO-CHAIR DRUMMOND opened public testimony on HB 114.
8:44:08 AM
LEE DONNER, Senior Managing Director, Hilltop Securities,
explained that Hilltop Securities has served as the financial
advisor to the Alaska Student Loan Corporation for over 10 years
and was involved with the corporation board in evaluating the
changes proposed under HB 114. He stated that all three
proposed amendments "are positives for not only the corporation
but for potential borrowers." He said the expansion of the
eligibility criteria brings in additional borrowers without
raising the risk profile for the loan program, because the
credit-based eligibility criteria for loans is not being
modified. He predicted the borrower pool would not be increased
dramatically, and those borrowers would have to meet the same
credit underwriting criteria as existing borrowers. The result,
he explained, would be some expansion of the borrower pool and
loan volume without any credit risk. Regarding loan size, he
said Hilltop Securities serves as financial advisor to 10 or 11
state agency and 501(c)(3) student loan operations around the
country. He conveyed that the only other entity that has the
loan limits embedded in legislation is the State of Texas. The
reason is because the student loan bonds issued are general
obligations of the state. In Alaska, there are revenue bonds
backed by student loans, and there is no obligation of the
state; therefore, there is not a nexus reason to have the loan
limits embedded in the law, which would create problems in terms
of the corporation's ability to be responsive to changes in cost
of education and borrowing needs. Regarding the provision that
would permit voluntary repayment during the in-school period, he
said there have been numerous studies showing this results in
lower delinquency, lower default, and better portfolio
performance. He concluded, "We would recommend adopting all
three of these changes to the enabling legislation."
8:48:09 AM
REPRESENTATIVE PRAX expressed fascination that it could be
possible for the corporation to stay in business at such low
interest rates, which he offered his understanding are
essentially unsecured loans. He asked whether there is
collateral for the loans.
MR. DONNER answered no. He said, "These are strictly signature
loans." He said that inevitably, there are defaults. He
characterized the aforementioned 3.55 percent as "the lowest
interest rate for the highest credit quality [refinance]
borrower" - the lowest interest rate the corporation offers. He
said for in-school borrowers and those with less credit than it
takes for a 3.55 refinance rate, the rates are significantly
higher to reflect the risk - to reflect the fact that there is
no collateral and that there are signature notes. He echoed Ms.
Efird that since the suspension of the federal Family Education
Loan program, the corporation has suffered some economic losses
but has taken significant steps in recent years to make up for
those losses and "is getting increasingly close to getting back
to operating in the black."
MR. DONNER, in response to a follow-up question from
Representative Prax, noted that the corporation offers both
fixed rate and variable rate loan options. He said each year
the corporation consults with Hilltop Securities and other
sources on expectations regarding interest rate behaviors in the
marketplace. Rates have been stable in the last few years, but
now is an inflationary period. He said all this will be
considered when the corporation sets interest rates in the next
few months.
8:52:22 AM
REPRESENTATIVE HOPKINS asked whether a student could use parents
as cosigner or underwriter to help lower [interest rates] on a
loan.
8:52:51 AM
MS. EFIRD deferred to Ms. Thomas.
8:53:01 AM
MS. THOMAS confirmed that a student applicant can use anyone as
a cosigner to get a lower interest rate. She explained that the
interest rate is based on whoever has the highest FICA score,
whether it be the borrower or the co-signer.
8:54:36 AM
CO-CHAIR DRUMMOND set an amendment deadline for HB 114.
8:54:55 AM
CO-CHAIR DRUMMOND announced HB 114 was held over.
8:55:13 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 8:55 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| H18 Amendment.8 Rep. Kreiss-Tomkins.pdf |
HEDC 1/26/2022 8:00:00 AM |
|
| HB 114.FN.EED.ACPE 1-7-22.pdf |
HEDC 1/26/2022 8:00:00 AM |
HB 114 |
| HB114.FN.DOR.CO 1-21-22.pdf |
HEDC 1/26/2022 8:00:00 AM |
HB 114 |
| HB 114 - Resolution to Support SB 94 & HB 114 05.13.21.pdf |
HEDC 1/26/2022 8:00:00 AM |
HB 114 SB 94 |
| HB 18 Amendment 1 HEDC.pdf |
HEDC 1/26/2022 8:00:00 AM |
HB 18 |