Legislature(1993 - 1994)
01/19/1993 03:00 PM House HES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE HEALTH, EDUCATION AND SOCIAL SERVICES
STANDING COMMITTEE
January 19, 1993
3:00 p.m.
MEMBERS PRESENT
Rep. Cynthia Toohey, Co-Chair
Rep. Con Bunde, Co-Chair
Rep. Gary Davis, Vice Chair
Rep. Tom Brice
Rep. Pete Kott
Rep. Irene Nicholia
Rep. Harley Olberg
Rep. Al Vezey
MEMBERS ABSENT
Rep. Bettye Davis, excused
COMMITTEE CALENDAR
Overview from the Department of Education
WITNESS REGISTER
Jerry Covey
Commissioner
Alaska Department of Education
801 W. 10th St., Suite 200
Juneau, Alaska 99801-1894
Phone: 465-2800
Allan Barnes
Executive Director
Alaska Commission on Postsecondary Education
P.O. Box 110505
Juneau, Alaska 99811-0505
Phone: 465-2165
Mary Lou Madden
Assistant Director
Alaska Commission on Postsecondary Education
P.O. Box 110505
Juneau, Alaska 99811-0505
Phone: 465-2165
ACTION NARRATIVE
TAPE 93-2, SIDE A
Number 000
CO-CHAIR CON BUNDE called the meeting to order at 3:04 p.m.,
noting members in attendance. He announced that the purpose
of the meeting would be to hear an overview of the
Department of Education.
Number 025
JERRY COVEY, commissioner, Alaska Department of Education
(DOE), said the department, with 450 employees around the
state, consumes more of the state operating budget than any
other department. While the DOE is known for dealing with
school district programs, teacher certification, curriculum
and centralized correspondence, Mr. Covey explained, it also
administers state libraries in Juneau and Anchorage, state
museums in Juneau and Sitka, and the state archives. He
noted the department's vocational rehabilitation function,
based around the state, occupies the majority of
departmental employees.
Number 068
(Chair Bunde noted Rep. Nicholia's arrival at 3:05 p.m.)
MR. COVEY stated the DOE'S centralized correspondence
course, which predates similar programs run by individual
school districts. He described the Mt. Edgecumbe High
School boarding school in Sitka, which was a Bureau of
Indian Affairs school before it began operating in 1985 as a
state school, now serving approximately 300 Alaska students.
He mentioned the Alaska Vocational Technical Center in
Seward, a successful postsecondary vocational school, which
has been operating since 1968.
MR. COVEY referred to a chart describing the department's
organization. (A copy of the chart is on file in the
committee room.)
MR. COVEY said the DOE is governed by a board which, while
appointed by the governor, nonetheless has the authority to
act independently of, and sometimes in opposition to, the
governor.
MR. COVEY described the department's recent year-long
initiative to solicit public input for a plan to make
changes in the state educational system. He stated that a
long and costly effort has resulted in a package of three
bills designed: 1) to change educational programs; 2) to
change the instructional unit foundation formula; and 3) to
change capital projects. He said the educational system's
interconnectedness required a comprehensive package to
overcome resistance to change.
MR. COVEY predicted the three-bill package represented
unprecedented opportunities to make beneficial changes to
the state's educational system, and he expressed a
willingness to work with the committee to modify the package
to the committee's satisfaction. Public support from the
program would help guide the committee as it considers the
bills, he said.
Number 212
CHAIR BUNDE thanked Mr. Covey for his presentation,
especially the acknowledgement that the process is on-going,
which would give the state's many self-proclaimed
educational experts an opportunity to be heard. He delayed
further questions on the bills until they were presented for
later committee presentations.
Number 231
REP. NICHOLIA asked Mr. Covey when he would make his
presentation on the proposed bills resulting from the Alaska
2000 project he described.
MR. COVEY responded that the bills would be ready by the end
of the week, and he would make his presentation at the
committee's invitation.
CHAIR BUNDE said he would schedule such a meeting at a
mutually convenient time.
Number 242
MR. COVEY, at Rep. Nicholia's request, promised to make
background information available to the committee in
advance. He also told the committee that the department
intended to propose other changes to educational regulations
and would seek committee input into such changes.
Number 252
MR. COVEY ended his presentation by reiterating the combined
power of the public and the talent in his department.
Though recent past efforts have failed to make this
combination, he said, he expressed a belief that it is
possible and once begun, would result in rapid action.
Number 284
CHAIR BUNDE welcomed Mr. Allan Barnes, executive director of
the Alaska Commission on Postsecondary Education, and
invited him to begin his presentation.
MR. BARNES said the commission has 14 members, including:
one member each from the state House of Representatives and
the state Senate; several public members; two members of the
state Board of Regents; and representatives from proprietary
schools.
MR. BARNES said the commission has three major functions:
1) consumer protection, in which it monitors newspapers to
detect and notify law enforcement officials of potentially
fraudulent claims for schools in the state; 2) institutional
authorization, working with approximately 130 educational
institutions, many of them private institutions such as
trade schools; and 3) student financial aid.
Financial aid is the commission's largest task, MR. BARNES
said. It includes the student loan program, including:
regular student loans, full time loans, and primary
education loans. The financial aid element also contracts
for federal student loans for the approximately 2,000
students receiving such loans, he stated. Financial aid
also manages a grant program for low-income students,
jointly funded by the federal government and by state
operating funds, he explained. Financial aid also manages
the Western Interstate Commission on Higher Education
professional exchange program, and it is the principle
conduit for the Washington, Alaska, Montana Idaho medical
exchange program with the University of Washington.
MR. BARNES said student loans are generated by the Alaska
Student Loan Corporation, which began in 1987, and which has
five members: the commissioners of the departments of
Administration, Revenue, and Commerce and Economic
Development; and two members of the Commission on
Postsecondary Education. Mr. Barnes explained that the
corporation generates money by issuing and selling bonds.
In 1992 the board authorized issuance of $47 million in
bonds for student loans, which, along with previous loan
repayments, creates the money available for student loans.
For the first time, in 1993, there will be no general funds
used for student loans, he said.
MR. BARNES noted approximately 70 of the 89 commission
staffers work on student loans; approximately 10 in awarding
loans; and approximately 60 of them in collecting the $530
million in outstanding loans. There are 160,000 active
loans, with default rates of seven percent per year, and
about 12 percent cumulatively, compared to the national
federal default rate averaging about 20 percent, he said.
He explained the disparity by saying more of Alaska's loans
are made to middle class students, while the federal loans
are often made to low income students and to some borrowers
who might not intend to repay them.
MR. BARNES identified several issues facing the commission.
They included: improved communication with borrowers by
telephone regarding loan delinquencies; the legitimate
garnishment of permanent fund dividends of delinquent
borrowers; and capital improvements in the loan program's
records retrieval and telephone system. He predicted the
committee would hear complaints about the loan callers and
promised help in answering them. He noted that ten
temporary workers have finished their three weeks' training
and are ready to begin work in communications.
Number 350
CHAIR BUNDE thanked Mr. Barnes and praised the loan program
for offering educational opportunities to the state's
students. He expressed concerns that the student loan
program had attracted fraudulent educational institutions
interested more in collecting tuition from the loans than in
offering instruction, and he encouraged Mr. Barnes to pursue
such frauds.
Number 366
CHAIR BUNDE asked whether the loan division had considered
allowing loan recipients to repay their obligation in part
through public service.
MR. BARNES said the division had not, because they must
repay the entire amount of the bonds issued, and any
shortfall would have to be made up with state general funds.
Number 377
CHAIR BUNDE asked how the commission achieves its low loan
default rate and how it might be lower still.
MR. BARNES said the loan program is run like a business,
tracing defaulters and telephoning them to request payment
or face collection proceedings. Defaults got out of hand in
the mid-1980s, Mr. Barnes explained, prompting the
commission to employ three private collection agencies, in
Anchorage, Fairbanks and Juneau, which are paid a percentage
of their collections. The commission will garnish wages and
will go after bank accounts and, except in case of
bankruptcy or medical emergency, rarely write off bad loans.
REP. BRICE inquired as to the rate of loans made.
MR. BARNES answered that the rate of student loan issuance
peaked at 17,000 loans in 1986, the last year the 5 percent
forgiveness program was in effect. About 13,500 loans are
issued each year, with an annual growth rate of about 2
percent.
MR. BARNES answered another question from Rep. Brice, saying
that the commission collects $4 million per month in loan
repayments, most of which is committed to repay the
bondholders. Mr. Barnes said the commission may make loans
to students out of previous loan repayments and from
issuance of new bonds.
Number 400
REP. TOOHEY asked why some educational programs in the state
must be 12 weeks in duration before students can qualify for
student loans, when the instructional program might cover
only eight weeks' worth of material.
MR. BARNES answered that state regulations allow
certification of shorter courses, but require a minimum of
eight to 10 weeks of instruction before it qualifies as an
approved school for student loan purposes. Mr. Barnes also
referred the question to his assistant director.
Number 415
MARY LOU MADDEN, assistant director of the Alaska Commission
on Postsecondary Education, said state regulations require
an educational program to be equivalent to half-time college
level instruction, or to require a certain amount of
instructional time, to qualify for student loan.
Number 422
REP. DAVIS praised the worth of the student loan program,
but said he believed other states take advantage of the
Alaska student loan program. He proposed a reciprocity
agreement with other states, requiring those states to
charge lower residents' tuition rates to students paying
tuition with Alaska student loans.
Number 437
MR. BARNES responded that the desire of Alaska students to
attend certain schools in Washington, Oregon or other states
creates a disincentive for such schools to offer any
reductions in tuition. He offered to investigate the
possibility of such an agreement, but doubted he would
succeed. He noted that undergraduate students participating
in the Western Interstate Commission on Higher Education
program are charged one and a half times the residential
tuition rate, instead of the higher nonresident fees, at
schools outside of Alaska.
Number 452
REP. NICHOLIA noted she had occasion in the past, during
eight and a half years as a programs administrator for
higher education, to deal with the student loan program and
commission counselors. She expressed hope that improvements
in the commission's communications would eliminate long
delays in communicating with the commission's loan
officials.
Number 462
MR. BARNES said the commission began issuing monthly bill
statements to borrowers a year ago, which averted
significant problems associated with the previous system of
payment coupons and created an increasing demand for
communications with the commission.
ADJOURNMENT
Number 480
CHAIR BUNDE announced that background information on the
committee's overview for the Department of Health and Social
Services was available in the committee room.
CHAIR BUNDE adjourned the meeting at 3:36 p.m.
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