Legislature(2011 - 2012)HOUSE FINANCE 519
04/07/2011 08:30 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB118 | |
| HB104 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 104 | TELECONFERENCED | |
| + | HB 118 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 7, 2011
8:39 a.m.
8:39:09 AM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 8:39 a.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Mike Hawker (alternate)
Representative Reggie Joule
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Susan K. Bell, Commissioner, Department of Commerce,
Community and Economic Development; Curtis Thayer, Deputy
Commissioner, Department of Commerce, Community, and
Economic Development; Johanna Bales, Acting Director, Tax
Division, Department of Revenue; Mike Hanley, Commissioner,
Department of Education and Early Development; Diane
Barrans, Executive Director, Alaska Commission on
Postsecondary Education, Department of Education and Early
Development.
PRESENT VIA TELECONFERENCE
Dan White, Associate Vice Chancellor of Research,
University of Alaska Fairbanks; Allan Johnston, Encore
Career, TEAM Network; Christi Bell, Director, University of
Alaska Center for Economic Development; Peter Stitzel,
Sitka Meal, Oil, and Gelatin; Bill Popp, President and
Chief Executive Officer, Anchorage Economic Development
Corporation; Karen Eeks, Self, Ketchikan.
SUMMARY
HB 104 ALASKA PERFORMANCE SCHOLARSHIPS
HB 104 was HEARD and HELD in committee for
further consideration.
HB 118 RESEARCH AND DEVELOPMENT TAX CREDIT
HB 118 was HEARD and HELD in committee for
further consideration.
HOUSE BILL NO. 118
"An Act relating to a tax credit for corporate income
taxes paid for qualified research and development
expenditures; and providing for an effective date."
8:40:00 AM
SUSAN K. BELL, COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT (DCCED), relayed that HB
118 worked to stimulate private sector investment, and
business activity and expansion. She discussed that the
bill would allow Alaskan corporate taxpayers to receive a
20 percent tax credit that would not exceed $10 million per
tax payer per year. The bill required either research and
development activity or the payroll of employees to take
place in Alaska. There was a "three year look-back" to
ensure that the credit was applied only to expenditures
above a base-line. The bill mirrored the federal definition
related to research, development, and allowable activities,
including, the discovery of technological information and
the development of new or improved business components
through a process of experimentation. Qualifying activities
included the development of new prototypes, processes, or
formulas; building or improvements of manufacturing
facilities; and the development of new technologies or
patents, etc. Customary market research and data collection
were excluded. Exploration activity used to determine the
existence or quality of any ore or mineral deposits was not
allowable and included mining and oil and gas exploration;
however, the industries were eligible for processes,
manufacturing, and patents under the legislation.
Entrepreneurial successes in the state included Alaska
berry growers that had been exploring the antioxidant rich
nutraceutical value of berries and sawmills that had been
turning mill waste into fuels. She discussed biofuels and
that the tax credit would help solve the high moisture
content that existed particularly in Southeast Alaska.
Other examples included the use of tidal energy to create
ice at sea that was currently being done at a university
outside of Alaska, and turning seafood processing
byproducts into valuable products. Forty other states had
established a similar tax credit, including North Dakota
that had one of the most aggressive tax credits in the
nation. She communicated that Alaska's universities had not
been as engaged.
Ms. Bell relayed that the University of Alaska Fairbanks
chancellor Brian Rogers had submitted a letter of support
for HB 118 and the university looked forward to increasing
its engagement on issues that faced Alaska and had created
an office of Intellectual Property and Commercialization.
8:44:44 AM
Vice-chair Fairclough asked whether the tax credit was in
the amount of $10 million. Ms. Bell responded that the
credit was up to $10 million per tax payer. She noted that
in many of the examples she had provided that the
applicable uses would be much less. Industries, including
aerospace, had indicated that their scale of research was
far above the $10 million limit; however, they encouraged
the passage of the legislation.
Vice-chair Fairclough wondered how the state would project
whether it had the funds to offer the credit in the future.
She discussed that the film credit had a cap of $100
million. Ms. Bell replied that the fiscal note from the
Department of Revenue was indeterminate. She suggested that
the committee could consider setting a ceiling. She noted
that DCEED did not anticipate any operational expenses.
Vice-chair Fairclough conveyed that the credit could
represent a substantial amount of money that the state may
have trouble forecasting. She thought that the committee
may want to consider a ceiling. She added that it would be
helpful to use other states as an example regarding a
potential ceiling and the use of the credit. She cited
concern that the ability to carry the credit forward for
seven years increased the state's liability. She also
wondered about language that did not allow the use of a
federal credit (Page 2, Line 10).
Co-Chair Stoltze noted that Vice-chair Fairclough's
questions would be addressed during the fiscal note
discussion.
Representative Wilson wondered how the $10 million figure
had been determined. Ms. Bell replied that the department
had mirrored the federal law in order to keep the concept
simple.
Representative Wilson asked for verification that a company
could not sell its tax credit. Ms. Bell answered in the
affirmative. She detailed that the credits were not
transferrable and had to be used by the company conducting
research and development.
Representative Gara wondered whether those conducting
explorational drilling would receive over 100 percent of
their cost with credits that included the 20 percent
taxpayer credit, a 20 percent capital expenditure credit, a
40 to 50 percent deduction, and a federal research and
development credit. He discussed that directional drilling
could be considered a new or improved component that would
apply under the research and development definition of the
credit. He explained that improvements were made on the
North Slope on a daily basis in order for the oil industry
to remain competitive. The legislature had devised
legislation that contained numerous credits and deductions
to impact the industry. He referred to charts that had
shown that with the combination of deductions, credits, and
oil prices above $80 a barrel that the state was paying
between 70 to 80 percent of the activity cost. He expressed
doubt that the taxpayer credit should be added to the list
of credits that the oil industry would potentially receive.
8:50:56 AM
CURTIS THAYER, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE,
COMMUNITY, AND ECONOMIC DEVELOPMENT, replied that a company
would not receive both a federal tax credit and the state
tax credit for resource development. The bill had a three-
year look-back and the resource and development would be
over and above the normal resource and development that a
company would expend.
Representative Gara wondered why it would be a good idea
for the state to pay for the tax credit in addition to the
other credits and deductions that existed under the oil tax
law. He reiterated that a company could obtain an improved
component through directional drilling expansion. He stated
that the three-year look-back would be solved because costs
went up every year on the North Slope and the most recent
year would always be more expensive.
Mr. Thayer responded that the "exploration activity for the
ascertation of existence, location, extent, or quality of
ore or mineral deposit" did not qualify.
Representative Gara responded that some of the activity was
not related to exploration and there were many things that
happened on the North Slope that might qualify.
JOHANNA BALES, ACTING DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE, replied that there were currently oil and gas
credits including the qualified capital expenditure credit
and the annual loss carry-forward credit that could be used
in conjunction with the resource and development credit.
She opined that it was something that could occur but it
would be under limited circumstances. She noted that a
simple change could be made to the legislation to prevent
tax payers from receiving credits from multiple locations.
Representative Edgmon observed that there were two types of
corporate income taxes and he wondered whether the
fisheries business tax and mining license tax would be the
largest participants under the tax credit that did not
apply to the oil industry.
8:55:05 AM
Ms. Bales replied that the corporate income tax applied to
all industries, but there were minor differences in the
statute related to oil and gas companies. She explained
that all companies that paid corporate income tax would be
eligible for the credit for research and development
outside of exploration activities.
Representative Edgmon asked whether all industries would
have an equal opportunity to take advantage of the credit.
Ms. Bell responded in the affirmative. She relayed that the
intent had been to help stimulate investment,
manufacturing, and innovation.
Representative Doogan asked whether the credits would be
stackable with any other existing credits that a company
was eligible for. Ms. Bales responded that the credits
would not be stackable. She explained that if a company was
allowed a federal credit that it could choose either the
state or federal corporate income tax credit. In limited
circumstances the expenditures for the resource and
development credit could be utilized for some of the oil
and gas tax credits as well.
8:58:06 AM
AT EASE
8:58:38 AM
RECONVENED
Representative Doogan asked whether the credits were
stackable in some circumstances. Ms. Bales responded that
the credits were not stackable because there were two
separate tax programs involved. She expounded that the
corporate income taxes could only be used with one credit.
Representative Doogan wondered whether the tax credit could
potentially be an additional 20 percent on top of other tax
breaks that the state provided to the oil industry. Ms.
Bales responded in the affirmative. She read from Page 2,
Line 11 of the bill, "any federal credit that had been
apportioned to the state and claimed under AS 43.20.021,"
and explained that the removal of the words "AS 43.20.021"
and the insertion of the words "under this title" would
eliminate the ability to use the expenses in a separate tax
credit program. She expressed that the committee might
consider making the revision if it had strong concerns
about the issue, but she did not know how the
administration would feel about the change. She relayed
that the circumstances in which a company could use the
same expenditures for credits could only occur when a
company had a loss in the oil and gas tax.
Representative Doogan was concerned that Alaska could be
responsible for a $300,000 million per year program if
there were a high number of oil companies that could
potentially take advantage of the $10 million credit. He
stressed that he did not support the portion of the bill.
9:03:16 AM
Representative Guttenberg wondered how it would be possible
to know the tax credit was working in the intended way. He
asked whether there would be an audit or accountability for
the credits. Ms. Bales responded that the credit
piggybacked the federal definition that was relatively
strict. She detailed that tax payers would be required to
provide proof that research and development had been
conducted in Alaska and that it met the definition of the
federal law. The department would provide oversight and
would report how many people took advantage of the program.
The intent of the legislation was to bring in new
technology, industry, and research and development activity
into the state.
Representative Guttenberg wondered whether the research
would be public at any point. Ms. Bales replied that the
information may or may not be reported due to tax payer
confidentiality. Companies were hesitant to disclose
business processes that could help their competition. She
observed that there was a balance between a need to know
and public curiosity and that faith in the tax
administration was important.
9:06:11 AM
DAN WHITE, ASSOCIATE VICE CHANCELLOR OF RESEARCH,
UNIVERSITY OF ALASKA FAIRBANKS (UAF)(via teleconference),
supported HB 118 and believed that it would allow the state
to provide an incentive to businesses to take advantage of
new opportunities. The legislation helped contribute to the
university's mission to conduct resource and development
and move it into the private sector that was a critical
element of economic development in Alaska. He stated that
the bill would build a bridge between business and industry
and that funded research at the university would lead to
job growth and economic diversification. Businesses gained
competitive advantages in the global market when UAF
conducted applied research and licensed the technology to
the private sector. He detailed that the link was enhanced
when businesses were able to invest in resource and
development.
ALLAN JOHNSTON, ENCORE CAREER, TEAM NETWORK, (via
teleconference), voiced strong support of the legislation.
He was very supportive of economic development in Alaska.
He had been a sponsor of business plan competitions at
Alaska's universities. He discussed that Alaska had come in
last in the entrepreneurial capacity index that was listed
in the 2008 Milken survey. It was important to encourage
the ability to dream big in Alaska. He thought it was a
good idea to put a cap on the amount the bill would pay
out. He expressed that the state needed to take advantage
of the many opportunities that were available and to be
competitive on a national and global basis. He supported
the university's ability to commercialize and its tie to
the private sector.
9:10:16 AM
CHRISTI BELL, DIRECTOR, UNIVERSITY OF ALASKA CENTER FOR
ECONOMIC DEVELOPMENT (via teleconference), stated that the
university system was very supportive of HB 118 and of
greater private sector research and development and
opportunities through public and private collaborations.
With the tax credit the university could market the
incentives to private firms to encourage assets at the
university such as the super computing system. Research
helped the ability to offer scholarships and would help
students grow, to foster innovation, and to create jobs.
The National Science Foundation had found that 73 percent
of finance papers cited that industry patents were funded
through contracts with university research operations.
Alaska was struggling to bring new research to the economy
and needed to be competitive in new innovations and
processes. She emphasized that the state ranked between
43rd and 51st in a national survey. She discussed that many
states offered resource and development tax incentives to
attract corporations and businesses and to encourage
investment in resource and development facilities.
9:15:07 AM
PETER STITZEL, SITKA MEAL, OIL, AND GELATIN (via
teleconference), testified in strong support of the
legislation. He believed that supported research through
the resource and development tax credit could effectively
inspire firms to establish Alaska-based operations. He
expressed that wild Alaska salmon waste was a special and
rare opportunity and that its presence in Sitka had caught
the attention of nutraceutical, feed, and pet food
companies. He thought the Sitka facility would become an
incubator for the offshoots of many businesses,
particularly in the nutraceutical business.
BILL POPP, PRESIDENT AND CHIEF EXECUTIVE OFFICER, ANCHORAGE
ECONOMIC DEVELOPMENT CORPORATION (via teleconference),
spoke in support of HB 118. He thought the bill would
diversify Alaska's economy by attracting new business and
innovation including tech transfer opportunities and
venture capital. He believed the legislation represented an
important component in a strategy to develop new industries
in information technology, renewable energy, life sciences,
biotech, and other.
Co-Chair Thomas CLOSED public testimony.
Vice-chair Fairclough asked whether the administration
objected to a CS that would eliminate the ability to
supplement other oil and gas credits. She cited that
Lockheed Martin had expressed interest in facility and
pharmaceutical companies could be big ticket items
interested in research and development.
9:19:55 AM
Ms. Bell responded that the department would discuss the
idea internally and would get back to the committee. She
explained that DCCED wanted to be as open as possible and
recognized the existence of technological challenges in all
industries and the opportunity for processes and patents,
etc.
Vice-chair Fairclough relayed that she had advocated for
the oil and gas tax credits and was open to economic
development; however, she believed that oil and gas tax
credits belonged in the oil and gas bill and not in HB 118.
She asked the department to provide information on how
other states used the tax credit. She expressed that in
terms of fiscal stability that it was important to know
what the limit was that the state could expend in a year,
but that job creation would help ease her concern about the
amount of the $10 million credit. She was interested in a
cap on the amount and did not want stackable credits. She
wondered why a seven-year carry-forward of the credit was
necessary for a large corporation that was not dependent on
stability and felt that the time period was too long.
Representative Gara wondered whether the credit would apply
to a new tobacco or liquor store because of the "new
component" definition and what would preclude them from
applying under the legislation. He was troubled that the
state would be incorporating a federal definition of
research and development and cited a portion of the
language: "for development of a new or improved component
of the tax payer." He added that he was a proponent of
incentivizing high tech and new innovative business.
Ms. Bell replied that the first threshold that research and
development was required to meet included the following
four items: "purposes discovering information technological
in nature; the application of which is intended to be
useful in the development of a new or improved component of
the tax payer; substantially all of the activities
constitute a process of experimentation; and, the
experimentation is for a qualifying activity or purpose."
9:25:08 AM
Representative Gara wondered whether seafood companies that
filed as C corporations would not be eligible for the
credit because they paid the raw fish tax and were not
corporations. Ms. Bell responded that in order to qualify
the company would need to be an Alaska tax payer as a C
corporation eligible for corporate tax payers.
Representative Gara recommended a sunset and a report to
allow the legislature to review the credit in three years
and to assess whether it had been working.
Co-Chair Thomas stressed that communities were dependent on
the raw fish tax and he hoped companies were eligible for
the credit.
9:27:59 AM
Representative Doogan requested a better explanation of
what would be allowable under the bill. He was concerned
about the use of federal tax codes because the information
was not very specific and the language was broad. He
wondered what was included under the federal code that
allowed development of new technology.
HB 118 was HEARD and HELD in committee for further
consideration.
9:29:49 AM
AT EASE
9:36:16 AM
RECONVENED
HOUSE BILL NO. 104
"An Act renaming the Alaska performance scholarship
and relating to the scholarship and tax credits
applicable to contributions to the scholarship;
establishing the Alaska performance scholarship
investment fund and the Alaska performance scholarship
award fund and relating to the funds; making
conforming amendments; and providing for an effective
date."
9:36:16 AM
MIKE HANLEY, COMMISSIONER, DEPARTMENT OF EDUCATION AND
EARLY DEVELOPMENT (DEED), relayed that HB 104 had been
introduced by the governor to fund a program that had been
established by the legislature the prior year. He relayed
that the bill would offer incentives for students and
families across the state and would ultimately transform
kindergarten through college and career education in
Alaska. The scholarship rewarded students that sought
postsecondary education in the state and had taken courses
to prepare for success beyond high school, worked hard, and
performed well in school. He explained that the bill had
three components, including, the name change from a merit
scholarship to a performance scholarship in order to avoid
potential copyright issues; second, the establishment of an
award fund and an investment fund that the legislature
could appropriate funds into and taxpayers could donate to;
three, corporate tax credits to incentivize donors. The
governor was looking for a sustainable and predictable
source of funding to ensure the success of the program. The
department had been working hard with statewide school
districts to utilize the scholarship program.
KAREN EEKS, SELF, KETCHIKAN (via teleconference), urged the
passage of HB 104. She discussed that she had been heavily
involved in improving the graduation rate and was involved
in the local Empowering Youth task force. The program
researched national, state, and local drop out statistics,
including the various reasons that students dropped out,
and recommended solutions. One of the recommendations had
been for the funding and implementation of the performance
scholarship. The task force was deeply concerned about the
dropout rate not only for the students but for the state's
economic and social future. She discussed that there were
devastating repercussions for the state's economy and
society when youths dropped out of high school. She
explained that the scholarship program would be an
important signal to young people throughout the state
regarding the importance of their education. She urged the
committee to make modifications to the bill if they had
concerns about equal access to the program for students
throughout the state. She stressed that over the long-term
the investment in Alaska's students would come back to the
state.
9:43:15 AM
Representative Gara wondered whether she had information
about the "alternative pathway" approach that had been
offered in other states. He explained that the approach had
allowed bright students, who had not been able to take some
of the required coursework or who had received their GED
[General Education Development], to qualify for the
scholarship.
Ms. Eeks was not familiar with the alternative pathway. She
thought that the scholarship should be available to as many
students as possible. She felt that many youths were
falling through the cracks and that it was important to
support them.
Co-Chair Stoltze CLOSED public testimony.
DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON
POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT, discussed that the House Education CS had
continued with the use of the new program name. She
explained that the CS and added two additional requirements
for postsecondary institutions under Section 6. The first
requirement was mandatory counseling for students and the
availability of courses for students to complete their
degree in a timely fashion. The department was currently in
the process of approving institutions to participate
beginning in the fall of 2011; therefore, the effective
date on the new requirements would be FY 13. The second
requirement stipulated that scholarships would be paid on a
pro rata basis and that no new scholarships would be
awarded if funding was insufficient. The Education CS
created a non-lapsing investment fund within the general
fund that would accept appropriations, donations, and
investment income. Additionally, the CS created a provision
similar to community revenue sharing that anticipated a
time at which new appropriations would no longer be
accepted. The fund would accept up to $160 million and
would provide sufficient funding for students who had
received the scholarship to continue to receive it
throughout their college career. She relayed that no other
changes had been made to the bill.
9:49:23 AM
Representative Costello asked whether students that
graduated from the Nine Star High School Completion Program
would be eligible under the definition of high school on
Page 4, Lines 27-28. Commissioner Hanley did not know
whether the Nine Star program would qualify for the
scholarship. He noted that he would get back to the
committee with an answer.
Representative Costello requested information regarding the
eligibility for alternative programs that served at risk
youth and on an expansion to the definition to include the
programs if they did not currently qualify. Commissioner
Hanley replied that the intent was that the program would
be available to all students. He explained that the bill
did not look at the format of the school, but focused on
student qualifications that included required course work,
and sufficient ACT scores.
Representative Gara queried whether the two programs
available under the bill were the need-based Alaska
Advantage Education Grant and the merit-based Alaska
Performance Scholarship Award. Ms. Barrans responded that
the Education CS expanded the scholarship award fund and
the investment fund to include Alaska Advantage Education
Grant funding.
Representative Gara asked whether the Alaska Advantage
Education Grant was the existing needs-based program. Ms.
Barrans replied in the affirmative.
Representative Gara wondered whether the bill determined
how money was apportioned to each program. Ms. Barrans
replied that the legislature would be required to determine
how the money was divided on an annual basis.
Representative Gara discussed an amendment that he had
distributed. He wondered whether the department would help
the legislature to consider an alternative pathway that was
used by other states that would allow students who did not
have all of the courses available to them or who had a GED
to participate in the program. He believed that the merit-
based program the former DEED commissioner had advocated
for had a couple of flaws including that many districts did
not offer the courses that a student needed to qualify and
that the scholarship was not available to students who had
received a GED due to extenuating circumstances.
Commissioner Hanley responded that the department was
working very closely with school districts that may not be
able to offer all of the courses that were required under
the legislation. He expressed confidence that districts
across the state could provide the required courses;
however, he was willing to consider it as a hardship if a
district could not provide the required courses. He
discussed that there was a two-year grace period for
students who experienced situations that were beyond their
control. He elaborated that students would be allowed to
take a course during the summer or during their first year
at the university level. He expressed concern about the
incorporation of the GED into a program that worked to
provide incentives for students to continue in
postsecondary education and that required them to be
prepared for college.
Co-Chair Stoltze shared similar concerns with
Representative Gara.
9:56:22 AM
Representative Gara understood that the performance
scholarship was directed at high achieving students. He
opined that merit-based scholarships should not go to
students who received a 2.5 GPA and that the money should
go to needs-based students. He did not want the department
to offer the scholarship to low achieving students;
however, he did not want to punish students for
circumstances that had been out of their control if they
were able to take other steps to meet SAT or ACT and course
requirements.
Representative Wilson wondered how the bill's definition of
high school would apply to children who were home schooled
to ensure that they were eligible for the scholarship.
Commissioner Hanley responded that the goal was to keep
expectations high without putting up hurdles for students.
A home schooled student's eligibility would be determined
based on the courses that they had taken and on their
SAT/ACT scores. He noted that the first scholarship
applicant that had recently been accepted had been home
schooled.
Ms. Barrans added that the department had developed an
eligibility determination process. She explained that an
application and an assessment were required to ensure that
a home school program ran parallel to high school.
Representative Wilson wondered whether requiring different
qualifications for a needs-based program and a merit-based
program in one bill took away from the intent of the
legislation. She thought a student could just apply for the
needs-based program if they did not meet those under the
merit-based program.
10:00:37 AM
Ms. Barrans responded that the only combinations that
occurred in the bill related to the award fund and the
investment fund. She relayed that there were no other
changes to the Alaska Advantage Grant or performance
scholarship requirements. There were two separate
complimentary programs in statute that did not conflict
with each other. The performance scholarship was available
beginning with 2010 high school graduates and the Alaska
Advantage Grant Program was available to any student
attending an accredited institution in the state. A student
was required to make good progress and earn sufficient
credits to be eligible for the needs-based program.
Representative Wilson thought the goal had been create an
equal opportunity for students to excel; however, she
believed that the existence of two paths created by the two
separate programs took away from the goal.
Ms. Barrans disagreed. She clarified that there were two
programs with different policy objectives that shared the
goal of preparing students as trained Alaskans who were
ready to enter the workforce. The maximum award under the
scholarship program was $4,755 per year and the maximum
needs-based grant was $2,000 per year. She explained that a
low income student that qualified for the grant and one of
the three levels of the scholarship would receive funds to
assist them with attendance fees. The cost of full-time
attendance was typically about $18,000 per year and
provided incentive for students to maximize the resources
provided by the state.
Co-Chair Thomas wondered about the eligibility of out-of-
state religious correspondence courses. He had voted
against the legislation the previous year because the
majority of his constituents had expressed that they would
not qualify under the program. He believed that there were
rural districts and others that would be left behind due to
their inability to offer all of the required courses.
Ms. Barrans believed that the assessment would be based on
the curriculum and not on the source of the classes. She
detailed that the curriculum would need to pass assessment,
along with sufficient test scores and GPA.
Co-Chair Thomas requested a definitive answer in the
language of the bill.
Co-Chair Stoltze requested written correspondence from the
department that would provide clarity on the eligibility of
home and charter schools. Commissioner Hanley replied that
a correspondence course that was incorporated into a
student's high school transcript would be accepted as part
of their transcript.
Co-Chair Thomas wondered whether scholarship funds would be
refunded to the state if a student dropped out during
college. He reiterated his concern about the eligibility of
out-of-state correspondence courses. Ms. Barrans replied
that there were refund policies that schools were required
to comply with. She expounded that the state would receive
a refund in an amount that would depend on the length of
time the student had attended school prior to leaving.
Co-Chair Thomas remarked that he could not guarantee that
he would vote in favor of the bill even if the bill was
amended to reflect his concerns.
10:07:44 AM
Representative Guttenberg wondered whether the only
eligibility requirements for the Alaska Advantage Grant
were the ability to prove a need for the funds and active
enrollment. Ms. Barrans replied that a student would be
required to maintain "academic good progress," meaning that
a student would need to take at least 12 credits per term
and maintain a minimum 2.0 GPA.
Representative Guttenberg asked whether there was a "look-
back" provision related to grant eligibility. He wanted to
make certain that a student applying for school later in
life was not deemed ineligible for the grant funds due to
previous high school or college records. Ms. Barrans
responded that the only time there would be a look-back
would be in circumstances in which a student had taken the
grant and had subsequently dropped out of college. A
student would be required to attend one term to reestablish
their eligibility before they could apply for the grant.
Representative Guttenberg echoed Co-Chair Thomas's concern
that a student's location in Alaska should not limit their
ability to obtain either the scholarship or the grant.
10:10:26 AM
Representative Joule wondered whether a student was allowed
a semester probationary period if their GPA dropped below
2.0. Ms. Barrans responded that a student was required to
have a 2.0 GPA at the end of their freshman year.
Representative Joule wondered whether a student that had
not initially qualified for funding would be eligible if
they began college and achieved a 3.0 to 3.5 GPA. Ms.
Barrans replied that the student would not be eligible for
the performance scholarship, but they would be eligible for
the education grant.
Representative Joule explained that he had not been
speaking only of needs-based students. He surmised that
students who had left the state to attend school and
performed well would not ever be eligible for the
performance scholarship. He discussed the incentive to
encourage students to return to the state. Ms. Barrans
replied that he was correct. She understood that the
legislature may have many policy objectives, but the main
objective of the program that had been approved the prior
year was to keep the pipeline flowing from high school into
postsecondary education. The idea was to increase the
stakes in high school and to transform the system to reduce
the number of students that did not perform well. The
program required that students begin and use their
eligibility within six years of high school graduation.
10:14:22 AM
Representative Joule communicated that he would prefer to
see a needs-based component as it was currently laid out
instead of a performance-based scholarship. He believed
that the performance part became an indicator of where
problems resided in Alaska's school districts and could
help with the ability to learn how to develop the capacity
for all of Alaska's students to qualify for a performance
scholarship that would allow them to go on to academics
and/or a vocational field. He expressed hope for a
conclusion.
Representative Edgmon asked for confirmation that the
governor's FY 12 funding level was $8.2 million for the
performance scholarship and $1.1 million for the Alaska
Advantage Grant. Ms. Barrans replied in the affirmative.
Representative Edgmon believed that there should be more of
a needs-based component in the program. He expressed
concern about students in smaller communities.
Vice-chair Fairclough had learned from a presentation
related to standards in math, science and reading that
Alaska's schools did not have an aligned K-12 curriculum or
standards for grades 11 and 12. She had heard concern from
the university that K-12 had not been preparing students to
attend college and the K-12 schools had communicated that
the university would accept all standards, which was the
reason remedial courses were needed at a college level. She
read a standard for a tenth grader in math: "explaining in
words or identifying the difference between experimental
and theoretical probability of independent and dependent
events." She believed that the measurement had no relevant
meaning. She quoted from a tenth grade standard regarding
writing about a topic: "organizing ideas using appropriate
structure to maintain the unity of the composition (e.g.
chronological order, order of importance, comparison and
contrast, cause and effect, classification, and
identification) using a variety of transitional words and
phrases." She communicated her frustration about the
complexity and confusing nature of the state's high school
standards and the finger pointing between the university
and K-12.
Commissioner Hanley replied that the state had scored a "D"
on the understandability of its standards based on a
national level. The department was currently developing a
time-line to change Alaska standards. He had recently met
with commissioners outside of Alaska and had discussed
national standards that other states had adopted.
Vice-chair Fairclough expressed the importance of clear
standards and of input from PTA members and Alaskans that
spoke local languages such as Inupiat, Athabascan, and
other. She believed that it would not help if the same
people who wrote the current standards were the ones that
reviewed the new standards.
Representative Guttenberg wondered whether there was a
place the legislature could go to better understand
terminology used within the education system. He noted that
he had done and appreciated the legislature in a classroom
program.
10:24:24 AM
Commissioner Hanley responded that DEED was working on the
development of clear standards that met national and
international norms and on the development of relevant
place-based curriculum that varied throughout the state. He
hoped to bring a new set of standards before the committee
the following legislative session.
Representative Gara asked whether the Alaska Advantage
Grant Program remained available for vocational education
and certificated courses. Ms. Barrans replied that there
had been no changes to the structure, eligibility
requirement, or other to the grant program.
Representative Gara asked whether the bill still included
accountability language that required a student to maintain
a certain GPA to qualify for the needs-based grant. Ms.
Barrans replied in the affirmative.
HB 104 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:26:19 AM
The meeting was adjourned at 10:26 AM.