Legislature(2001 - 2002)
04/04/2001 09:38 AM House EDU
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON EDUCATION
April 4, 2001
9:38 a.m.
MEMBERS PRESENT
Representative Con Bunde, Chair
Representative Brian Porter
Representative Gary Stevens
Representative Reggie Joule
Representative Gretchen Guess
Representative Peggy Wilson
MEMBERS ABSENT
Representative Joe Green
COMMITTEE CALENDAR
HOUSE BILL NO. 204
"An Act relating to the Alaska Commission on Postsecondary
Education and the Alaska Student Loan Corporation; relating to
student financial aid programs and the financing of those
programs; establishing the Alaska Advantage Loan Program and the
Alaska Supplemental Education Loan Program; increasing the
bonding authorization of the Alaska Student Loan Corporation;
providing for liens resulting from a default under AS 14.43 or
AS 14.44; relating to the duties of the recorder regarding those
liens; relating to defaults under the Western Regional Higher
Education Compact; relating to the prohibition on discrimination
regarding programs under AS 14.43; relating to fees for the
review of certain postsecondary institutions; making conforming
amendments; and providing for an effective date."
- MOVED HB 204 OUT OF COMMITTEE
HOUSE BILL NO. 203
"An Act making an appropriation to the Legislative Council for a
study of school district cost factors; and providing for an
effective date."
- MOVED CSHB 203(EDU) OUT OF COMMITTEE
HOUSE BILL NO. 105
"An Act relating to the base student allocation used in the
formula for state funding of public education; and providing for
an effective date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 71
"An Act relating to the education of children with disabilities
and of gifted children; relating to the Governor's Council on
Disabilities and Special Education; making conforming
amendments; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 204
SHORT TITLE:STUDENT LOANS/COMN. ON POSTSECONDARY ED.
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
03/22/01 0689 (H) READ THE FIRST TIME -
REFERRALS
03/22/01 0689 (H) EDU, HES, FIN
03/22/01 0689 (H) FN1: (EED)
03/22/01 0689 (H) GOVERNOR'S TRANSMITTAL LETTER
04/02/01 (H) EDU AT 8:00 AM HOUSE FINANCE
519
04/02/01 (H) <Bill Postponed to 4/4>
04/04/01 0840 (H) EDU RPT 5DP
04/04/01 0841 (H) DP: PORTER, STEVENS, JOULE,
GUESS,
04/04/01 0841 (H) BUNDE
04/04/01 0841 (H) FN2: (EED)
04/04/01 (H) EDU AT 8:00 AM HOUSE FINANCE
519
BILL: HB 203
SHORT TITLE:APPROP: STUDY OF SCHOOL COST FACTORS
SPONSOR(S): REPRESENTATIVE(S)WILSON
Jrn-Date Jrn-Page Action
03/22/01 0688 (H) READ THE FIRST TIME -
REFERRALS
03/22/01 0688 (H) EDU, FIN
03/28/01 0762 (H) COSPONSOR(S): LANCASTER
03/30/01 0794 (H) COSPONSOR(S): CISSNA, STEVENS
04/04/01 (H) EDU AT 8:00 AM HOUSE FINANCE
519
WITNESS REGISTER
DIANE BARRANS, Executive Director
Postsecondary Education Commission
Department of Education and Early Development
3030 Vintage Boulevard
Juneau, Alaska 99801
POSITION STATEMENT: Testified on HB 204.
ACTION NARRATIVE
TAPE 01-23, SIDE A
Number 0001
CHAIR CON BUNDE called the House Special Committee on Education
meeting to order at 9:38 a.m. [The minutes for the joint
meeting of the House Special Committee on Education and the
House Health, Education and Social Services Standing Committee
on SB 133 are found in the 8:08 a.m. minutes for the same date.]
HB 204-STUDENT LOANS/COMN. ON POSTSECONDARY ED.
CHAIR BUNDE announced the next order of business as HOUSE BILL
NO. 204, "An Act relating to the Alaska Commission on
Postsecondary Education and the Alaska Student Loan Corporation;
relating to student financial aid programs and the financing of
those programs; establishing the Alaska Advantage Loan Program
and the Alaska Supplemental Education Loan Program; increasing
the bonding authorization of the Alaska Student Loan
Corporation; providing for liens resulting from a default under
AS 14.43 or AS 14.44; relating to the duties of the recorder
regarding those liens; relating to defaults under the Western
Regional Higher Education Compact; relating to the prohibition
on discrimination regarding programs under AS 14.43; relating to
fees for the review of certain postsecondary institutions;
making conforming amendments; and providing for an effective
date."
Number 0042
DIANE BARRANS, Executive Director, Postsecondary Education
Commission, Department of Education and Early Development, came
forth and stated that HB 204 represents an exciting new
initiative from the [Postsecondary Education] Commission. More
than a year ago the commission's financial status and that of
its financial partner, the Alaska Student Loan Corporation
(ASLC), had been stabilized. She stated that the commission's
managers had been challenged by the corporation's board to find
ways to expand the services and increase the benefits of those
services to Alaskans. In response, she said, the commission
focused on a strategic recommendation that had been made by
[ASLC's] external audit firm to consider an expansion into
federal student aid administration. Over the past ten months
the [Postsecondary Education Commission] has analyzed customer
needs and expectations and has had extensive communication with
administrators.
MS. BARRANS stated:
House Bill 204 has been introduced by the governor to
establish the Alaska Advantage Program. Simply put,
successful implementation of the Alaska Advantage
Program will return meaningful benefits and dividends
to each of our shared stakeholder groups. Those
stakeholders include the students whose future success
rests on educational preparation; parents seeking an
economically viable means to assist their children;
higher education institutions in Alaska that [serve[
as a training resource for citizens and industry in
the state; financial aid administrators tasked with
facilitating educational financing; [legislators]
looking out for their constituents' best interest;
Alaska employers seeking a resident source of human
capital; and the commission and corporation seeking to
provide value-added benefits to borrowers and the
statewide community.
Number 0227
MS. BARRANS explained to the committee:
House Bill 204 creates the statutory framework for the
corporation and the commission to develop and
implement the premiere educational loan program in the
United States, administered in Alaska for Alaskans.
Statutory changes made by the bill will result in
lower-cost educational loans in Alaska and other
improvements to borrowers' loan terms. The
commission's success in marketing such a program will
be one means of helping Alaskans fight the high costs
of postsecondary education and hopefully ensure that
every state citizen perceives that education is
affordable and therefore accessible to them.
The bill's provisions allow us to facilitate these
changes without putting at risk the financial strength
of the corporation. The Alaska Advantage Program
provides for the integration of benefits from both the
federal and state aid initiatives, specifically for
borrowers. The Alaska Advantage Program will
guarantee the lowest possible borrowing rates; improve
aid packaging and delivering by creating a one-stop
aid shop ensuring simultaneous grant and loan
application; improve and expand borrowers' deferment
and repayment options; and provide an opportunity for
debt consolidation with an Alaska lender.
For the institutions that partner with us through
ASLNet (Alaska Student Loan Net), the commission's
web-enabled information portal, the Alaska Advantage
Program will provide a recruitment and retention tool
for Alaskan institutions through offering beneficial
interest terms. It will streamline and improve the
financial aid delivery process, easing their
administrative burden; it will eliminate unnecessary
program differences that simplify the administration
for staff and ease loan comparison by students and
their families; it will also provide specific
financial rewards for borrowers remaining in or
returning to Alaska; and it will enhance default
management support.
Number 0375
MS. BARRANS continued, stating:
For the corporation itself, it will reduce the
financial risks through the federal guaranty that will
underwrite loans made through that program. I believe
it will allow us to improve our bond rating from the
current double-A to a triple-A status, resulting in
further bond cost reductions, and improve the
corporation's cash flow as we enjoy the benefit of
federal interest subsidies and a special allowance
income. In addition, ... it will eliminate 98 percent
of the loss-risk on those federal student loans
because the federal government will offset those
losses in the event of death, disability, or default.
In time, we expect the program to allow us to offer
additional financial benefits in the form of upfront
interest rate reductions for Alaska Advantage
borrowers, timely repayment rewards, "bank pay"
rewards, other interest [offsets] that can act as
incentives, and rewards for borrowers who display good
repayment behavior.
House Bill 204 also ensures that the supplemental
state loans remain available to bridge excess costs
not met through federal aid. This bill is about
ensuring borrower savings and administrative
efficiencies and has been drafted to ensure that no
student is left behind or left out. The Alaska
Student Loan will remain available as a supplemental
loan for use at commission-authorized Alaska
vocational schools that do not currently participate
in Title IV programs.
Number 0518
MS. BARRANS concluded by stating:
The result achieved by the commission and corporation
in recent years have met significant improvement in
both program financing and servicing. These results
could not have been achieved without the
administration's initiatives to date and the broad
support of the legislature for those initiatives, the
partnering of our participating institutions, and the
support of Alaska's students for those initiatives.
At this time we collectively have a choice to make:
either we maintain the status quo or we can convert
these successes into positive momentum and take our
service to the next level. I believe that continued
and substantial improvement is only possible through
this proposed integration of programmatic and
financial strengths of federal and state student
services.
Our timeline is an aggressive one as we seek to
successfully implement the program for the 2002-2003
loan year. That means that in just nine months we
must be ready to receive and process aid applications.
Expedited consideration of passage of HB 204 will
permit the commission to immediately direct 100
percent of management and staff resources to planning,
marketing, and implementation activities. I am
convinced that success is feasible if we begin work in
earnest by May of this year; however, we cannot fully
implement that process until we understand the
statutory framework that we'll be working in. Failure
to pass this bill this year will delay full
implementation.
Number 0655
CHAIR BUNDE asked if it has been the Postsecondary Education
Commission's policy to encourage students to take federal loans
first and then seek the Alaska Student Loan as a secondary
option, because it would be to their financial advantage.
MS. BARRANS responded that there hasn't been a formal policy but
the commission has advised borrowers to be informed borrowers.
She remarked that to the extent that there may be lower-
interest-rate loans available through the federal program,
[borrowers] should seek those first. She explained that this
bill would offer a federal loan to Alaskans at a lower rate than
the federal program would stipulate, for a year. The Alaska
Student Loan, in recent years, has been strongly competitive
with the federal program because of the ability to reduce rates.
CHAIR BUNDE asked if anyone is opposed to this legislation.
MS. BARRANS replied that there is no opposition.
Number 0798
REPRESENTATIVE STEVENS asked if the [Alaska Teacher Scholarship
Loan] would be rolled into this as well.
MS. BARRANS answered that the [Postsecondary Education]
Commission] does not intend to require that the Alaska Teacher
Scholarship Loan recipients receive the federal loan first
because they would not have the same forgiveness eligibility on
the federal loan as they would with the state.
REPRESENTATIVE PORTER made a motion to move HB 204 from
committee with individual recommendations and attached fiscal
notes. There being no objection, HB 204 moved from the House
Special Committee on Education.
HB 203-APPROP: STUDY OF SCHOOL COST FACTORS
CHAIR BUNDE announced that the final order of business would be
HOUSE BILL NO. 203, "An Act making an appropriation to the
Legislative Council for a study of school district cost factors;
and providing for an effective date."
Number 0942
REPRESENTATIVE WILSON, as sponsor of HB 203, stated that this
bill is an Act appropriating money for a school district cost-
factor study. Those multipliers have not changed since 1986,
and the Alaska constitution has an obligation to fully fund
education for all students. Inherent in this mission, she said,
is to account for the diverse geographical, ethnic, and economic
changes in Alaska. She explained that this would study the
school district cost differential to see what it costs to run a
school in each district.
CHAIR BUNDY asked if this bill would task the Legislative
council to lead a contract to perform this study.
REPRESENTATIVE WILSON stated that he was correct.
REPRESENTATIVE GUESS stated that in her mind the methodology of
the study that was done during SB 36 was extremely poor. She
asked if [HB 203] addresses ensuring that this doesn't happen
again or that every two years [the state] would have to pay
$350,000 for a new formula instead of creating one that is
updateable.
REPRESENTATIVE WILSON answered that she thinks [the study needs]
to be done correctly in order to see what it costs for fuel in
each school district; what the property insurance is; or what it
costs to get a fire inspector to the school and check the fire
extinguishers. For example, with a small school like that in
Tok, someone might have to fly in or take all day to drive
there. All of these factors, she said, need to be thought
about, checked, and done carefully. She added that she has an
amendment that would add "housing," after "food," on page 1,
line 10.
Number 1137
REPRESENTATIVE PORTER made a motion to adopt Amendment 1, which
would insert "housing," after "food," on page 1, line 10.
REPRESENTATIVE GUESS objected for the purpose of discussion.
She said she has talked to some of the top educational
economists, and housing is very difficult to do from an economic
standpoint in small areas, which is why there aren't any small
area CPIs (consumer price indexes). She added that although she
thinks it is a great intent, it might not be possible to do.
She withdrew her objection.
REPRESENTATIVE STEVENS asked Representative Wilson if she is
talking about the housing costs for educators or for the
districts in providing for housing for their employees.
REPRESENTATIVE WILSON stated that she is talking about the
housing cost to the districts. In some areas, she said, [the
districts] have to provide housing for teachers in order to get
them to come [to those areas].
REPRESENTATIVE PORTER stated that he agrees with Representative
Guess that [the legislature] should try to do something to
inspire the appropriate type of examination of the cost. He
remarked that last time [the money] being spent was examined, as
opposed to what the costs were. He added that the direction to
the Legislative Council is to get somebody to study what it
costs, not what is being spent.
Number 1243
CHAIR BUNDE announced that there being no further objection,
Amendment 1 was adopted.
REPRESENTATIVE STEVENS remarked that he thinks it is a good idea
to do a study like this. He stated that he is concerned that
this is seen as being in place of an increase to a foundation
formula.
REPRESENTATIVE WILSON responded that there have been a lot of
changes in the economic climate in many areas since 1986 and
that this is just to make sure that everyone is "playing on an
even playing board." She added that this has nothing to do with
where the funding comes in the formula. She noted that there
has been a lot of comment and work put into looking at funding
for schools. When the Department of Education and Early
Development [EED] had the last study done by the McDowell Group,
it recommended that another study be done by reexamining the
methodology.
CHAIR BUNDE noted that this is a tool that the foundation
formula thought to use and in no way mitigates the need for
increasing the foundation formula.
Number 1364
REPRESENTATIVE GUESS clarified that this legislative body, not
the [EED], did the McDowell study. She stated that there are
four other states that have cost factors; all are done in
different ways. She remarked that every researcher she talks to
says there is nothing in educational research right now that
says it should be done a certain way; every system has a bias.
From her research, she said, she believes this is the worst way
to do it. She added that she would like every report that is
created to discuss the bias because there is not going to be an
unbiased study. Finally, she said she would like for any study
or system that comes back to be updateable.
Number 1460
REPRESENTATIVE PORTER made a motion to move HB 203, as amended,
from committee with individual recommendations and attached
fiscal notes. There being no objection, CSHB 203(HES) moved
from the House Special Committee on Education.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Education meeting was adjourned at 10:00
a.m. [The minutes for the joint meeting of the House Special
Committee on Education and the House Health, Education and
Social Services Standing Committee on SB 133 are found in the
8:08 a.m. minutes for the same date.]
| Document Name | Date/Time | Subjects |
|---|