Legislature(2015 - 2016)BUTROVICH 205

02/24/2015 03:30 PM EDUCATION

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Audio Topic
03:30:12 PM Start
03:30:40 PM SJR2
04:03:34 PM Presentation: Alaska Performance Scholarship Program and Alaska Education Grant Program
04:24:16 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SJR 2 CONST. AM: G.O. BONDS FOR STUDENT LOANS TELECONFERENCED
Heard & Held
+ Presentation: Alaska Performance Scholarship TELECONFERENCED
Program
Alaska Education Grant Program
Diane Barrans, Director, Alaska Commission on
Postsecondary Education
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE EDUCATION STANDING COMMITTEE                                                                             
                       February 24, 2015                                                                                        
                           3:30 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mike Dunleavy, Chair                                                                                                    
Senator Charlie Huggins, Vice Chair                                                                                             
Senator Cathy Giessel                                                                                                           
Senator Gary Stevens                                                                                                            
Senator Berta Gardner                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE JOINT RESOLUTION NO. 2                                                                                                   
Proposing an amendment to the Constitution of the State of                                                                      
Alaska relating to contracting state debt for postsecondary                                                                     
student loans.                                                                                                                  
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PRESENTATION: ALASKA PERFORMANCE SCHOLARSHIP PROGRAM AND ALASKA                                                                 
EDUCATION GRANT PROGRAM                                                                                                         
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SJR 2                                                                                                                   
SHORT TITLE: CONST. AM: G.O. BONDS FOR STUDENT LOANS                                                                            
SPONSOR(s): SENATOR(s) MACKINNON                                                                                                
                                                                                                                                
01/21/15       (S)       PREFILE RELEASED 1/9/15                                                                                
01/21/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/15       (S)       STA, EDC, FIN                                                                                          
02/10/15       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
02/10/15       (S)       Moved  SJR 2 Out of Committee                                                                          
02/10/15       (S)       MINUTE(STA)                                                                                            
02/11/15       (S)       STA RPT 3DP 2NR                                                                                        
02/11/15       (S)       DP: COGHILL, MCGUIRE, WIELECHOWSKI                                                                     
02/11/15       (S)       NR: STOLTZE, HUGGINS                                                                                   
02/24/15       (S)       EDC AT 3:30 PM BUTROVICH 205                                                                           
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
SENATOR ANNA MACKINNON                                                                                                          
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of SJR 2.                                                                                         
                                                                                                                                
DIANE BARRANS, Executive Director                                                                                               
Post-Secondary Education Commission                                                                                             
Department of Education and Early Development (DEED)                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented information  on SJR 2,  the Alaska                                                             
Performance Scholarship  Program and  the Alaska  Education Grant                                                               
Program.                                                                                                                        
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:12 PM                                                                                                                  
CHAIR  MIKE   DUNLEAVY  called  the  Senate   Education  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order  were   Senators  Huggins,  Giessel,  Gardner,   and  Chair                                                               
Dunleavy. Senator Stevens arrived shortly thereafter.                                                                           
                                                                                                                                
         SJR 2-CONST. AM: G.O. BONDS FOR STUDENT LOANS                                                                      
                                                                                                                                
3:30:40 PM                                                                                                                    
CHAIR DUNLEAVY announced the consideration of SJR 2.                                                                            
                                                                                                                                
3:31:12 PM                                                                                                                    
SENATOR ANNA MACKINNON, Alaska State  Legislature, sponsor of SJR                                                               
2, said  the constitutional amendment  proposes to try  to reduce                                                               
student loan debt, or at least  the interest rate a student would                                                               
pay.   She  stated   that,  "Our   forefathers  could   not  have                                                               
anticipated  the debt  required to  get an  education in  today's                                                               
world, let alone, America."  Alaskan disproportionately carries a                                                               
much higher interest  rate than the federal  rate. Currently, the                                                               
state's  interest rate  is 6.7  percent and  the federal  rate is                                                               
4.66 percent.                                                                                                                   
                                                                                                                                
She understood that should SJR 2  go forward, the state would ask                                                               
voters in  the 2016 general election  to approve a change  in the                                                               
state constitution that would allow  debts and the full faith and                                                               
credit of the  state of Alaska to  be used to back  that debt for                                                               
student loans.  Currently, under  Article IX,  Section 8,  of the                                                               
Alaska Constitution the only allowable  use of the full faith and                                                               
credit  of the  state  for is  capital  improvements and  housing                                                               
loans for  veterans. She concluded  that SJR  2 would be  a third                                                               
amendment  to that  section  and would  allow  student loan  debt                                                               
backed by revenue that students pay.                                                                                            
                                                                                                                                
SENATOR GARDNER requested to know how the state sets interest                                                                   
rates and how much flexibility it has in doing so.                                                                              
                                                                                                                                
3:33:39 PM                                                                                                                    
DIANE BARRANS, Executive Director, Post-Secondary Education                                                                     
Commission, Department of Education and Early Development                                                                       
(DEED), answered Senator Gardner's question about interest rate.                                                                
She explained that the Alaska Student Loan Corporation (ASLC)                                                                   
Board sets the interest rates annually. The essential components                                                                
are factored in; the cost of funds, the cost of providing and                                                                   
serving the program, as well as the cost of losses.                                                                             
                                                                                                                                
SENATOR GARDNER asked if the state or agency makes money based                                                                  
on the current loan rate and what the current net balance is.                                                                   
                                                                                                                                
MS. BARRANS explained that it is not the goal of the corporation                                                                
to make money, but to have a sustainable structure. A look back                                                                 
over 20 years would show a great variation of net income from                                                                   
less than $1 million in a given year to as high as $12 million.                                                                 
The way net income is distributed has also varied over the                                                                      
years. In 2001 the state statute was amended to permit the                                                                      
corporation to pay a dividend or return of contributed capital                                                                  
to the state. Since then, the corporation has returned over $31                                                                 
million to the state. Since the downturn in the market, the                                                                     
board has not elected to return a dividend to the state.                                                                        
                                                                                                                                
3:37:01 PM                                                                                                                    
SENATOR GIESSEL recalled during the time of her own student loan                                                                
and the tendency of students to not repay their loans. She asked                                                                
what the default rate of Alaska students is.                                                                                    
                                                                                                                                
MS. BARRANS agreed that the default rates used to be high. Back                                                                 
in the 80's and early 90's, the default rate was in excess of 27                                                                
percent. The current default rate is less than 6.5 percent.                                                                     
                                                                                                                                
CHAIR DUNLEAVY asked why that is.                                                                                               
                                                                                                                                
SENATOR MACKINNON added that the Student Loan Corporation is                                                                    
third in line to garnish a student's PFD, which increases the                                                                   
corporation's ability to recoup payments.                                                                                       
                                                                                                                                
MS. BARRANS replied that there are a number of factors that                                                                     
enable collection of payments and one of the most effective is                                                                  
the ability to garnish the PFD. Over the years more than $12                                                                    
million has been collected on defaulted loans.                                                                                  
                                                                                                                                
She said in late 80's and early 90's there were over 140 for-                                                                   
profit institutions that delivered training programs, many of                                                                   
which were not valuable investments. There was also a mindset                                                                   
where students expected to only have to repay 50 percent of the                                                                 
loan. The loan was not treated like a legitimate debt. In the                                                                   
mid-90's, the corporation adopted levels of underwriting                                                                        
standards. It began with a credit-ready standard and then, after                                                                
the market collapse in 2007-8, the credit criteria was increased                                                                
to having positive credit or a cosigner with positive credit.                                                                   
                                                                                                                                
3:40:29 PM                                                                                                                    
CHAIR DUNLEAVY asked what the current interest rate is.                                                                         
                                                                                                                                
MS. BARRANS reiterated that it is 6.7 percent.                                                                                  
                                                                                                                                
CHAIR DUNLEAVY asked what interest rate the bill targets.                                                                       
                                                                                                                                
SENATOR MACKINNON explained that the delta is between 1 percent                                                                 
and 1.3 percent gain, but is variable depending on the bond                                                                     
market. It provides a better rating so the corporation can                                                                      
borrow at a lower interest rate.                                                                                                
                                                                                                                                
CHAIR DUNLEAVY asked how the rate would be set.                                                                                 
                                                                                                                                
MS. BARRANS said the process would not be different, but the                                                                    
cost factors to the board would be lower. The cost of funds                                                                     
would be between 1 percent and 1.3 percent lower, resulting in                                                                  
directly benefitting borrowers.                                                                                                 
                                                                                                                                
CHAIR DUNLEAVY recalled the history of the loan fund.                                                                           
                                                                                                                                
MS. BARRANS corrected that in 1987 about $260 million in loan                                                                   
assets was turned over to the corporation for capitalization. In                                                                
1994 small infusions of cash brought the total contribution from                                                                
the state to $306 million.                                                                                                      
                                                                                                                                
CHAIR DUNLEAVY asked how much is in the account now.                                                                            
                                                                                                                                
MS. BARRANS replied that about $460 million is currently in the                                                                 
portfolio.                                                                                                                      
                                                                                                                                
She observed, in addition to the annual dividend payments the                                                                   
corporation made between 2001 and 2008, in 2004 and 2005 loan                                                                   
assets were used to issue approximately $150 million in capital                                                                 
project bonds which were used to finance various projects. The                                                                  
total return on the "state's investment" is over $192 million                                                                   
from ASLC.                                                                                                                      
                                                                                                                                
3:44:07 PM                                                                                                                    
SENATOR HUGGINS asked what Trendsetters is.                                                                                     
                                                                                                                                
MS. BARRANS said they train in haircutting.                                                                                     
                                                                                                                                
SENATOR HUGGINS asked what AEG means.                                                                                           
                                                                                                                                
MS. BARRANS explained that the Alaska Education Grant is a                                                                      
needs-based grant program.                                                                                                      
                                                                                                                                
SENATOR HUGGINS said he was glad to see a long list of                                                                          
institutions for whom loans are available. He concluded that                                                                    
students have choices when it comes to scholarships.                                                                            
                                                                                                                                
MS. BARRANS agreed. The loan is portable for out-of-state                                                                       
education; the scholarship and grant are not.                                                                                   
                                                                                                                                
SENATOR HUGGINS said UAA has the largest number of recipients.                                                                  
He asked if a student could use the scholarship during a                                                                        
semester abroad.                                                                                                                
                                                                                                                                
MS. BARRANS explained if the semester is a formal exchange                                                                      
program, it qualifies.                                                                                                          
                                                                                                                                
3:46:42 PM                                                                                                                    
SENATOR GARDNER asked if loans and grants go to individual                                                                      
students, not the institution.                                                                                                  
                                                                                                                                
MS. BARRANS clarified that the funds are dispersed through the                                                                  
institution to the student.                                                                                                     
                                                                                                                                
SENATOR GARDNER said the student pays back the funds, not the                                                                   
institution.                                                                                                                    
                                                                                                                                
MS. BARRANS said correct.                                                                                                       
                                                                                                                                
SENATOR GARDNER concluded that programs abroad not affiliated                                                                   
with a college do not qualify for the funds.                                                                                    
                                                                                                                                
CHAIR DUNLEAVY noted Western Interstate Commission for Higher                                                                   
Education (WICHE) and Western Undergraduate Exchange (WUE)                                                                      
programs are available to Alaskans.                                                                                             
                                                                                                                                
MS. BARRANS agreed. She said also under WICHE are the                                                                           
Professional Student Exchange Program and the Graduate Regional                                                                 
Exchange Program. A student could not use the scholarship or                                                                    
grant funds for these programs.                                                                                                 
                                                                                                                                
CHAIR DUNLEAVY noted a zero fiscal note on the resolution this                                                                  
year, whereas there was one last year for $1,500 for publishing                                                                 
ballots and publications. He asked if those expenses would be                                                                   
absorbed by the Division of Elections.                                                                                          
                                                                                                                                
3:48:45 PM                                                                                                                    
SENATOR MACKINNON understood they would. All costs are rolled                                                                   
into a bond proposition which the students will pay for at a                                                                    
later date.                                                                                                                     
                                                                                                                                
SENATOR HUGGINS requested examples of scenarios whereby the                                                                     
state would lose money with this initiative.                                                                                    
                                                                                                                                
MS. BARRANS explained if it is structured correctly there should                                                                
be no cost to the general fund. The bonds would be structured                                                                   
similar to those from 1988 through 2008 and would adequately                                                                    
cover debt service. She noted ASLC carries a moral obligation if                                                                
it cannot pay its own bond to request the legislature for                                                                       
funding to cover the debt service. She concluded that the                                                                       
legislation does not present a material risk.                                                                                   
                                                                                                                                
SENATOR HUGGINS pointed out that the Scholars Program is missing                                                                
from the chart.                                                                                                                 
                                                                                                                                
MS. BARRANS said the UAS Scholars Program is funded and                                                                         
administered by the university.                                                                                                 
                                                                                                                                
SENATOR HUGGINS asked if a student could get a supplemental                                                                     
student loan if the Scholars Program money is not adequate.                                                                     
                                                                                                                                
MS. BARRANS said yes. She explained that the supplemental loan                                                                  
is available to cover a student's unmet costs.                                                                                  
                                                                                                                                
3:51:54 PM                                                                                                                    
SENATOR GARDNER said the state has contributed $306 million over                                                                
time.                                                                                                                           
                                                                                                                                
MS. BARRANS explained that a small portion was cash and the rest                                                                
was outstanding loans made when the state funded the program                                                                    
from the general fund. The portfolio was turned over to the                                                                     
corporation and it used the income to pledge against the bonds                                                                  
it began to issue in 1988.                                                                                                      
                                                                                                                                
SENATOR GARDNER summarized that the state invested about $306                                                                   
million and now the value of the portfolio is about $460                                                                        
million.                                                                                                                        
                                                                                                                                
MS. BARRANS said you can't equate the original portfolio and the                                                                
current one. The state has funded, overall, about $1.6 billion                                                                  
in student loans since the program was established in 1968. The                                                                 
outstanding portfolio is just the outstanding portfolio of                                                                      
loans. In order to look at the full value of the corporation,                                                                   
you would have to look at the corporation's investments, as                                                                     
well. The corporation has several million dollars of                                                                            
investments.                                                                                                                    
                                                                                                                                
SENATOR GARDNER she said, "If we considered loans to students -                                                                 
Alaskans - to be an investments, what other kinds of investments                                                                
does the trust make?" She stressed that the effort is to fund                                                                   
student education.                                                                                                              
                                                                                                                                
MS. BARRANS offered to provide information about ASLC's                                                                         
investment portfolio. She said they are typically conservative,                                                                 
low-return investments.                                                                                                         
                                                                                                                                
SENATOR GARDNER said she is trying to understand whether the                                                                    
state is profiting by charging high interest rates and if it                                                                    
should lower rates and profit less.                                                                                             
                                                                                                                                
3:55:12 PM                                                                                                                    
MS. BARRANS explained that the corporation has created a set of                                                                 
borrow benefits that are annually reviewed. These are an                                                                        
opportunity to lower the cost to students by creating credits.                                                                  
For example, in the current 6.7 percent interest rate there is                                                                  
an "Alaska presence" discount credit of .5 percent. The                                                                         
corporation has also approved a .25 discount for on-line                                                                        
automatic payment which drops the interest rate below 6 percent.                                                                
                                                                                                                                
She said the corporation's goal is to ensure that it remains in                                                                 
the black, covers operational costs, and is a sustainable                                                                       
enterprise, not do more. When the legislation was enacted in                                                                    
2001 to create the capacity to do a return to the state, it was                                                                 
clear that payments could be made to the state only when they                                                                   
would not put the corporation's core mission at risk. Low                                                                       
borrower rates were driven by market circumstances. She                                                                         
concluded that in terms of the interest rate environment, timing                                                                
is everything.                                                                                                                  
                                                                                                                                
3:58:27 PM                                                                                                                    
SENATOR MACKINNON pointed out that the resolution requires voter                                                                
approval and then it would return to policy makers to scrutinize                                                                
any kind of investment in an additional bond before it was put                                                                  
out to voters a second time in the 2018 election. The first time                                                                
a loan would be available would be in 2019. She said it is a                                                                    
forward thinking tool that is not available now for refinancing                                                                 
high interest rate loans. She disclosed she is a cosigner on one                                                                
of her son's student loans, but would not benefit by this                                                                       
legislation.                                                                                                                    
                                                                                                                                
4:00:16 PM                                                                                                                    
CHAIR DUNLEAVY announced the arrival of Senator Stevens.                                                                        
                                                                                                                                
SENATOR MACKINNON requested a public testimony notice.                                                                          
                                                                                                                                
CHAIR DUNLEAVY opened public testimony. Seeing none, he closed                                                                  
public testimony.                                                                                                               
                                                                                                                                
CHAIR DUNLEAVY held SJR 2 in committee.                                                                                         
                                                                                                                                
4:01:59 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
                                                                                                                                
^PRESENTATION: Alaska Performance  Scholarship Program and Alaska                                                           
Education Grant Program                                                                                                     
PRESENTATION: Alaska Performance Scholarship Program and Alaska                                                             
                    Education Grant Program                                                                                 
                                                                                                                                
4:03:34 PM                                                                                                                    
                                                                                                                                
CHAIR  DUNLEAVY   announced  the   presentation  of   the  Alaska                                                               
Performance Scholarship  (APS) Program  and the  Alaska Education                                                               
Grant (AEG) Program.                                                                                                            
                                                                                                                                
DIANE  BARRANS,  Executive   Director,  Post-Secondary  Education                                                               
Commission,  Department  of   Education  and  Early  Development,                                                               
shared APS  highlights from the  2015 Outcomes Report.  She noted                                                               
APS  was  considered  an  invitation   to  excellence  to  Alaska                                                               
students  and schools.  The merit-based  scholarship provides  an                                                               
opportunity  for  eligible students  to  annually  receive up  to                                                               
$4,755 based on the level of award for which they qualify.                                                                      
                                                                                                                                
She pointed  out that  the APS  program is  increasing statewide.                                                               
The  program  was designed  out  of  concern  that the  best  and                                                               
brightest in  Alaska were going to  the Lower 48 for  their post-                                                               
secondary education  and remaining there. The  number of students                                                               
using the  award has  been fairly  stable, but  there has  been a                                                               
large increase  in use by  Level 1  students. The effects  of the                                                               
rigor  of  the  program  have  resulted in  much  less  need  for                                                               
remediation  the  first  year  in   college.  Of  those  that  do                                                               
participate  in  the  program,  17  percent  require  a  remedial                                                               
course, whereas, of those not  in the program, 50 percent require                                                               
remediation.                                                                                                                    
                                                                                                                                
4:07:43 PM                                                                                                                    
She  related that  students in  APS  are taking  more credits,  a                                                               
requirement of  the program. The  rate of those remaining  in the                                                               
program is  75 percent;  of non-eligible  students only  about 40                                                               
percent have  remained in  college. She  concluded that  the data                                                               
indicates that APS is having a positive effect.                                                                                 
                                                                                                                                
CHAIR DUNLEAVY asked at what amount the fund is capitalized.                                                                    
                                                                                                                                
MS.  BARRANS   said  she  receives  that   information  from  the                                                               
Department of  Revenue and it was  in excess of $444  million, up                                                               
from $400 million in 2011.                                                                                                      
                                                                                                                                
CHAIR DUNLEAVY asked if a Level  1 recipient would have to have a                                                               
GPA of 3.5 and  an SAT score of 1680, and if they  did not have a                                                               
score of 1680 if they would fall into Level 2.                                                                                  
                                                                                                                                
MS. BARRANS said  it depends on the score. It  is possible that a                                                               
student had a 3.5  GPA, but not a high enough  SAT to qualify for                                                               
APS at all.                                                                                                                     
                                                                                                                                
CHAIR DUNLEAVY  asked if a  student has  poor grades, but  a high                                                               
SAT score could they receive the APS.                                                                                           
                                                                                                                                
MS. BARRANS  said they would not.  They must have taken  the core                                                               
curriculum, have a GPA of 3.5, and a high test score.                                                                           
                                                                                                                                
CHAIR DUNLEAVY asked if private school students are eligible.                                                                   
                                                                                                                                
MS. BARRANS  said they may  be if  they can document  and satisfy                                                               
the three  criteria using a  process developed by DEED.  There is                                                               
not a large population of  private school students qualifying for                                                               
the APS.                                                                                                                        
                                                                                                                                
CHAIR DUNLEAVY asked if a home school student could qualify.                                                                    
                                                                                                                                
MS. BARRANS said yes, through the same process.                                                                                 
                                                                                                                                
CHAIR  DUNLEAVY asked  if a  student who  completed school  three                                                               
years ago  and did  not apply  for the APS  would be  eligible to                                                               
apply.                                                                                                                          
                                                                                                                                
MS. BARRANS  said no. There is  a six-year window during  which a                                                               
student who qualified for an APS would have had to use it.                                                                      
                                                                                                                                
CHAIR DUNLEAVY asked if military service is an exception.                                                                       
                                                                                                                                
MS. BARRANS said the State  School Board can create an exception.                                                               
She gave  an example of a  nursing program where a  student could                                                               
not get the courses needed within the time period.                                                                              
                                                                                                                                
4:12:37 PM                                                                                                                    
CHAIR DUNLEAVY  asked if  $10,247,314 was  awarded last  year for                                                               
the APS.                                                                                                                        
                                                                                                                                
MS. BARRANS said yes. It is  a moving target and assumes fall and                                                               
spring enrollment.                                                                                                              
                                                                                                                                
CHAIR   DUNLEAVY  asked   if  an   individual  could   get  three                                                               
scholarships - UAS Scholars, APS, and AEG.                                                                                      
                                                                                                                                
MS.  BARRANS said  yes.  A high  performing,  low income  student                                                               
could  qualify. She  said there  is some  overlap between  the UA                                                               
Scholars group  and APS, but  fairly minimal overlap  between the                                                               
grant recipient pool and the APS.                                                                                               
                                                                                                                                
CHAIR  DUNLEAVY  asked if  UA  Scholars  consist  of the  top  10                                                               
percent of their class.                                                                                                         
                                                                                                                                
MS. BARRANS could not say.                                                                                                      
                                                                                                                                
CHAIR DUNLEAVY  suggested that a student  could be in the  top 10                                                               
percent of  their graduating  class but not  be eligible  for the                                                               
APS if their SAT or ACT did not meet the qualification.                                                                         
                                                                                                                                
MS. BARRANS said yes.                                                                                                           
                                                                                                                                
4:14:55 PM                                                                                                                    
MS. BARRANS turned  to the Alaska Education  Grant, a needs-based                                                               
program. It differs  from the APS in that it  is available to all                                                               
students that are enrolled in  a qualifying program in Alaska and                                                               
is not  limited to students  who graduated after a  certain point                                                               
in time.                                                                                                                        
                                                                                                                                
MS. BARRANS related  that the pool of eligible  students is based                                                               
on student enrolled in Alaska  institutions and who completes the                                                               
Free Application for  Federal Student Aid (FAFSA) and  has a high                                                               
need. Last year just under  6,000 students applied for the grant;                                                               
less than 2,900  were funded. That is a  function of availability                                                               
of funds. Grant numbers are  a moving target through the academic                                                               
year.                                                                                                                           
                                                                                                                                
4:16:58 PM                                                                                                                    
CHAIR  DUNLEAVY  listed  the  sources of  funding  for  APS,  UAS                                                               
Scholars, and AEG.                                                                                                              
                                                                                                                                
MS. BARRANS  said AEG is funded  through the same fund  source as                                                               
APS - the Higher Education Investment Fund.                                                                                     
                                                                                                                                
CHAIR DUNLEAVY  asked if the  capitalization of the  $440 million                                                               
was for both AEG and APS.                                                                                                       
                                                                                                                                
MS.  BARRANS  said  the  original  capital  investment  was  $400                                                               
million and the balance in June of 2014 was about $440 million.                                                                 
                                                                                                                                
CHAIR DUNLEAVY asked if that included both programs.                                                                            
                                                                                                                                
MS. BARRANS said yes.                                                                                                           
                                                                                                                                
She said  the percentage  of applicants  AEG is  able to  fund is                                                               
just under 50  percent. Recipients in the current  year come from                                                               
45 of the 54 districts.                                                                                                         
                                                                                                                                
4:19:01 PM                                                                                                                    
SENATOR  GARDNER asked  how many  AEG  recipients complete  their                                                               
course of study.                                                                                                                
                                                                                                                                
MS. BARRANS said the corporation does  not have that data at this                                                               
time, but  it could be  made available by the  proposed statewide                                                               
longitudinal data system.                                                                                                       
                                                                                                                                
SENATOR  GARDNER noted  the data  system is  called ANSWERS.  She                                                               
asked if 50 percent of eligible students are funded.                                                                            
                                                                                                                                
MS. BARRANS said yes.                                                                                                           
                                                                                                                                
SENATOR  GARDNER  asked if  some  students  qualify, but  do  not                                                               
receive funds.                                                                                                                  
                                                                                                                                
MS. BARRANS said  yes. She spoke of when  the legislature created                                                               
the Higher  Education Investment  Fund to support  both programs,                                                               
it used a formula that suggested  how the total would be expended                                                               
in one year: 2/3 would go to PSA, 1/3 to AEG.                                                                                   
                                                                                                                                
SENATOR GARDNER asked if it  is a first come/first served process                                                               
where some students  get the full amount, or  if everyone's award                                                               
is reduced according to what's available.                                                                                       
                                                                                                                                
MS. BARRANS  explained that  it is  not a  pro-rata award.  It is                                                               
awarded by  greatest-to-least needs. Based on  legislation passed                                                               
in 2014, the corporation is  changing the sorting process to look                                                               
at continuing  student having  a higher priority  for a  grant in                                                               
order to incent persistence. It will still be needs based.                                                                      
                                                                                                                                
4:22:22 PM                                                                                                                    
CHAIR DUNLEAVY asked what would happen  if there was a default of                                                               
the student  loan program. He  wondered if the  corporation would                                                               
draw  on   general  funds  without  the   legislature  having  to                                                               
appropriate them.                                                                                                               
                                                                                                                                
MS. BARRANS she asked if the  scenario assumes there is a general                                                               
obligation bond.                                                                                                                
                                                                                                                                
CHAIR DUNLEAVY said yes.                                                                                                        
                                                                                                                                
MS. BARRANS offered  to find out from the  Department of Revenue.                                                               
She believed that  any debt service to the state  is paid through                                                               
a form of an appropriation.                                                                                                     
                                                                                                                                
4:24:16 PM                                                                                                                    
There being nothing  further to come before  the committee, Chair                                                               
Dunleavy  adjourned the  Senate Education  Standing Committee  at                                                               
4:24 p.m.                                                                                                                       

Document Name Date/Time Subjects
SJR 2 Constitutional Am G.O. Bonds for Loans.pdf SEDC 2/24/2015 3:30:00 PM
SJR 2 Fiscal Note.pdf SEDC 2/24/2015 3:30:00 PM
SJR 2 Sponsor Statement.pdf SEDC 2/24/2015 3:30:00 PM
SJR 2 Sectional Analysis.pdf SEDC 2/24/2015 3:30:00 PM
SJR 2 UA Letter of Support.pdf SEDC 2/24/2015 3:30:00 PM
SJR 2 Juneau Chamber Letter of Support.pdf SEDC 2/24/2015 3:30:00 PM
APS and AEG Awards.pdf SEDC 2/24/2015 3:30:00 PM
APS Stats at a Glance.pdf SEDC 2/24/2015 3:30:00 PM