Legislature(2013 - 2014)BELTZ 105 (TSBldg)
03/17/2014 08:00 AM Senate EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| SJR23 | |
| SB195 | |
| SB100 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 195 | TELECONFERENCED | |
| += | SJR 23 | TELECONFERENCED | |
| += | SB 100 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE EDUCATION STANDING COMMITTEE
March 17, 2014
8:00 a.m.
MEMBERS PRESENT
Senator Gary Stevens, Chair
Senator Mike Dunleavy, Vice Chair
Senator Bert Stedman
Senator Charlie Huggins
Senator Berta Gardner
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 23
Proposing an amendment to the Constitution of the State of
Alaska relating to contracting state debt for postsecondary
student loans.
- MOVED SJR 23 OUT OF COMMITTEE
SENATE BILL NO. 195
"An Act relating to the membership and authority of the Alaska
Commission on Postsecondary Education; relating to the Alaska
Student Loan Corporation; relating to teacher education loans;
relating to interest on and consolidation of postsecondary
education loans; relating to Alaska supplemental education
loans; relating to AlaskAdvantage grants; relating to the Alaska
family education loan program; relating to postsecondary
educational institutions; and providing for an effective date."
- MOVED SB 195 OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 100
"An Act establishing a grant program to be administered by the
Association of Alaska School Boards for the purchase of student
equipment and technology services; establishing a grant program
for innovative approaches to learning; relating to
correspondence study programs and student allotments; and
providing for an effective date."
- MOVED CSSSSB 100(EDC) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 195
SHORT TITLE: POSTSECONDARY EDUCATION LOANS/GRANTS
SPONSOR(s): SENATOR(s) FAIRCLOUGH
02/24/14 (S) READ THE FIRST TIME - REFERRALS
02/24/14 (S) EDC, FIN
03/10/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
03/10/14 (S) Heard & Held
03/10/14 (S) MINUTE(EDC)
03/17/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
BILL: SJR 23
SHORT TITLE: CONST. AM: STUDENT LOAN DEBT
SPONSOR(s): SENATOR(s) FAIRCLOUGH
02/14/14 (S) READ THE FIRST TIME - REFERRALS
02/14/14 (S) STA, EDC
03/06/14 (S) STA AT 9:00 AM BUTROVICH 205
03/06/14 (S) Moved SJR 23 Out of Committee
03/06/14 (S) MINUTE(STA)
03/07/14 (S) STA RPT 2DP 2NR
03/07/14 (S) DP: COGHILL, GIESSEL
03/07/14 (S) NR: DYSON, WIELECHOWSKI
03/07/14 (S) FIN REFERRAL ADDED AFTER EDC
03/10/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
03/10/14 (S) Heard & Held
03/10/14 (S) MINUTE(EDC)
03/17/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
BILL: SB 100
SHORT TITLE: EDUCATION GRANTS; CORRS STUDY; ALLOTMENTS
SPONSOR(s): SENATOR(s) DUNLEAVY
04/06/13 (S) READ THE FIRST TIME - REFERRALS
04/06/13 (S) EDC
04/10/13 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
04/10/13 (S) Heard & Held
04/10/13 (S) MINUTE(EDC)
02/07/14 (S) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS
02/07/14 (S) EDC, FIN
03/03/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
03/03/14 (S) Heard & Held
03/03/14 (S) MINUTE(EDC)
03/14/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
03/14/14 (S) <Bill Hearing Postponed to 3:00 pm>
03/14/14 (S) EDC AT 3:00 PM BELTZ 105 (TSBldg)
03/14/14 (S) Heard & Held
03/14/14 (S) MINUTE(EDC)
03/17/14 (S) EDC AT 8:00 AM BELTZ 105 (TSBldg)
WITNESS REGISTER
SENATOR ANNA FAIRCLOUGH
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SJR 23 and SB 195.
DIANE BARRANS, Executive Director
Postsecondary Education Commission
Department of Education and Early Development (DEED)
Juneau, Alaska
POSITION STATEMENT: Answered questions regarding SB 195.
SHEILA PETERSON, Staff
Senator Mike Dunleavy
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Reviewed the changes in version G of SB 100
on behalf of the sponsor.
SUSAN MCCAULEY, Ph.D., Director
Teaching and Learning Support
Department of Education and Early Development (DEED)
Juneau, Alaska
POSITION STATEMENT: Answered questions related to SB 195.
PETE LEWIS, Superintendent
Fairbanks North Star Borough School District
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 100.
ACTION NARRATIVE
8:00:47 AM
CHAIR GARY STEVENS called the Senate Education Standing
Committee meeting to order at 8:00 a.m. Present at the call to
order were Senators Stedman, Dunleavy, and Chair Stevens. He
noted three bills on the docket: SB 195, SJR 23, and SB 100.
SJR 23-CONST. AM: STUDENT LOAN DEBT
8:01:33 AM
CHAIR STEVENS announced the consideration of SJR 23, version U.
SENATOR ANNA FAIRCLOUGH, Alaska State Legislature, Juneau,
Alaska, sponsor of SJR 23, explained that the bill proposes to
ask voters if the state can refinance post-secondary student
loans. It would allow the state to use its good credit to
provide students in the past and future with a lower interest
rate.
CHAIR STEVENS opened and closed public testimony.
8:03:02 AM
SENATOR STEDMAN asked why a constitutional amendment is needed
instead of going through an appropriations process.
CHAIR STEVENS announced the arrival of Senator Huggins.
SENATOR FAIRCLOUGH explained that Alaska's constitution only
allows bonding, with the full faith and credit of the state, for
housing loans for veterans and for capital improvement projects.
SENATOR STEDMAN restated the question and asked why the
treasury's ability to restructure notes is not used, or other
loan programs, instead of changing the constitution.
SENATOR FAIRCLOUGH said it certainly is up to the will of the
body if they want to use general fund dollars, but that is
something that has not been done in the past. She explained
that, currently, the loans are issued against the revenues that
the students will pay, a higher percentage than the bond market.
SENATOR STEDMAN asked if there is no other mechanism to achieve
the goal, short of changing the constitution.
SENATOR FAIRCLOUGH said the legislature could fully fund the
program if they opted to. There would be an issue of fairness
due to the number of loans still due.
She related that before this could happen, it would go to a vote
of the people in the 2014 election. Next, the commission would
have to seek approval by the legislature. In 2016, at the
earliest, voters would have to approve the constitutional
amendment. The earliest a student could receive the benefits
would be in 2017.
8:06:25 AM
CHAIR STEVENS said the actual vote would take place in the
general election of 2014.
SENATOR FAIRCLOUGH said yes.
SENATOR DUNLEAVY moved to report SJR 23 from committee with
individual recommendations and attached fiscal notes. There
being no objection, SJR 23 was reported from the Senate
Education Standing Committee.
8:07:05 AM
At ease
SB 195-POSTSECONDARY EDUCATION LOANS/GRANTS
8:08:23 AM
CHAIR STEVENS announced the consideration of SB 195.
SENATOR ANNA FAIRCLOUGH, Alaska State Legislature, Juneau,
Alaska, reviewed SB 195. She said bill makes substantive and
housekeeping changes to the Alaska State Statutes regarding the
Alaska Commission on Post-secondary Education and the Alaska
Student Loan Corporation. These changes include allowing the
commission to set favorable terms for borrowers and increase the
total loan limit a student may borrow. Currently, loan limits
have not been changed in almost 20 years. The cost of post-
secondary education has almost doubled since 1995. Alaska
students and their financial aid officers report that borrowers
with a high unmet cost of attendance are increasingly choosing
loans with higher loan limits, even those that have higher
interest rates.
She explained that this bill defines what an on-time student is
so that they can reach and accomplish their goals. It enables a
student to enter the workforce earlier and enter repayments
sooner so that they have less debt to carry. There is strong
evidence that shows the correlation between the intensity of the
enrollment of a student and their completion rates.
CHAIR STEVENS asked who the bill would affect and how many years
the loan can be used.
SENATOR FAIRCLOUGH deferred to Diane Barrans to answer. She said
on page 13, lines 12-14, it takes the loan limit from $42,500 to
$56,000 and from $60,000 to $87,000 for undergraduates and
graduate students respectively. The bill also allows
consolidation of loans.
CHAIR STEVENS asked how many years the loan is available to a
student.
DIANE BARRANS, Executive Director, Postsecondary Education
Commission, Department of Education and Early Development
(DEED), Juneau, Alaska, answered questions regarding SB 195. She
explained that there is not a limit on the number of years a
student can access the loan; there is a total dollar amount.
CHAIR STEVENS inquired if part-time students can receive a loan.
MS. BARRANS said they can be part-time students and they have to
be matriculated into a degree or certificated program.
CHAIR STEVENS noted the presence of Senator Gardner.
SENATOR GARDNER understood that currently a student with
multiple loans is required to pay the oldest one first, not the
one with the highest interest rate. She asked about the interest
rate and impact of consolidated loans, as provided for in the
bill.
8:12:53 AM
MS. BARRANS clarified that Senator Gardner's understanding is
not correct. As long as the student's other loans are paid to a
current status, they can prepay any loan they select. Paying the
highest rate loan first would be to their benefit. She stated
that consolidation is done at the prevailing rate, which is 7.3
percent now. Currently, the only education loans eligible for
consolidation are Alaska state loans; SB 195 would allow for
other loans.
CHAIR STEVENS asked if the provisions in the bill would apply to
parent loans.
MS. BARRANS said they would.
SENATOR STEDMAN asked for additional information regarding the
7.3 percent interest rate and why there is no forgiveness
program.
8:14:31 AM
MS. BARRANS replied, with respect to the interest rate, the
market environment post-2008 has substantially changed. The
rates have risen substantially. Currently, the loan volume has
dropped to the extent that the corporation can use available
cash to fund loans. The previous legislation, SJR 23, would
allow the corporation to leverage the AAA rating of the state,
even though the bonds would be paid down with revenue from the
loans.
She addressed the forgiveness program question. She related that
the loan forgiveness program was a very generous program funded
through 1987. As a result of the fluctuation of oil revenues,
that program was eliminated. The corporation was established in
1987 for the purpose of allowing student loans to become an
enterprise operation of the state. She added that the only thing
keeping the corporation from instituting a forgiveness program
would be making funding available to pay the costs.
SENATOR STEDMAN asked if the borrower would be better off with a
forgiveness program or with a 7.3 percent interest rate.
MS. BARRANS replied that very few students enjoyed any benefit
from the forgiveness program. When looking at the almost $500
million of loans that the state funded, fewer than 30 percent of
the students enjoyed any benefit. Only 21 percent of those
received the full 50 percent forgiveness and the cost to the
loan program was larger in loan write-offs from individuals who
failed to repay the debt than the cost of loan forgiveness
itself. About $74 million in loans were forgiven. She noted she
was one of those who benefitted from loan forgiveness. She said
it would depend on which of those students you were, as to
whether or not it would be more beneficial to have loan
forgiveness. The mind set of borrowers during that time was that
it wasn't really a loan.
CHAIR STEVENS said he also received loan forgiveness. He
remarked that if people spend five years working in Alaska they
will probably stay. Legislators have always liked the idea of
loan forgiveness.
8:19:05 AM
SENATOR STEDMAN said he also had a forgiveness loan. He opined
that a person who signed a note in the 80's was under the same
payback obligation as someone today. He said he has a hard time
drawing a conclusion that there was a different attitude in the
past. He suggested that underwriting requirements could be
rectified. He said the state has some tools available that
should be considered for the future. He noted that a 7 percent
interest rate is a whole lot different than 50/50 forgiveness.
As far as a policy call, the state has tools available to use.
The resources in the treasury are owned by everyone, and he said
he is more inclined to come up with a mechanism to encourage
students to return to the state.
8:21:54 AM
MS. BARRANS said it is up to the will of the legislature. She
encouraged loan repayment programs, which are programs that are
not entitlements but would pre-fund an account and could be used
to pay down loans for individuals who complete credentials in
areas that have economic interest to the state. The legislature
created such a program two years ago that focused on health care
professions; however, the budget for that program has been cut
in half. Individuals were recruited into health care jobs and
are now at risk for not receiving that benefit. She concluded
that SB 195 is more sustainable without relying on year-to-year
funding.
8:23:35 AM
CHAIR STEVENS said more work is needed on this issue.
SENATOR FAIRCLOUGH hoped the committee would move the bill out
of committee. She said she and Ms. Barrans have been working on
SB 195 for over a year in order to provide a tool the
legislature can use at its discretion to help assist students.
CHAIR STEVENS asked Ms. Barrans if she had any further comments.
MS. BARRANS requested support of the bill and thanked the
sponsor. She summarized that the key provisions in the bill are
the ones that incent on-time enrollment and expedite the time it
takes to get a degree. A large portion of students attend part
time and complete their credentials in very low numbers.
SENATOR STEDMAN if there was an increase in the number of staff
needed to manage today's student loan programs.
MS. BARRANS explained that the current loan portfolio is about
$500 million and the staffing has not substantially changed in
numbers. The last significant increase in staff was in the early
90's. Some staff have been reallocated through creating more
efficient loan serving systems. Staff now provide outreach and
early awareness out of the Anchorage office, and the number of
staff on loan servicing has been reduced.
CHAIR STEVENS asked how much the loan portfolio was in the past.
MS. BARRANS explained that when the corporation was making both
federally guaranteed and state loans, it was issuing in excess
of $80 million a year in loans. The program was ended by the
current administration in Washington, D.C. in 2008. Since then,
there has been a rapid decline in the loan volume due to
Congress's seeking to protect consumers against lenders who are
not federal education loan lenders. That created barriers
because they failed to make a distinction between state-based
programs and other lenders. The state can no longer partner with
schools to recommend a state loan. The other factor is that the
state previously promoted the federally guaranteed loan. At the
same time, in order to issue bonds the state had to change the
underwriting criteria so that students now have to be credit
worthy or have a credit-worthy cosigner. She concluded that this
has resulted in a decline rate for about 40 percent of
applicants.
8:29:37 AM
SENATOR HUGGINS asked if any schools are precluded, such as
religious schools.
MS. BARRANS said the requirement is that the school be
accredited or approved by the commission to participate in the
loan program.
SENATOR GARDNER asked if the average 18-year-old requires a
cosigner.
MS. BARRANS said yes.
CHAIR STEVENS opened and closed public testimony.
SENATOR DUNLEAVY moved to report SB 195 from committee with
individual recommendations and attached fiscal note. There being
no objection, the motion carried.
8:31:39 AM
At ease
SB 100-EDUCATION GRANTS; CORRS STUDY; ALLOTMENTS
8:33:22 AM
CHAIR STEVENS announced the consideration of SB 100, version G.
SHEILA PETERSON, Staff, Senator Mike Dunleavy, Alaska State
Legislature, Juneau, Alaska, reviewed the changes in version G
of SB 100 on behalf of the sponsor. She related that version G
ensures that the individual learning plan (ILP) would be created
with the assistance and approval of a certified teacher, parent,
and child. Added in version G are the following provisions: that
the progress of the student would be monitored by the teacher
and the vendors would be non-sectarian - public, private, or
religious organizations; textbook selection would have to follow
the same criteria that public schools use; once a student left
the correspondence program, any unexpended allotment monies
would return to the district; and a family member who is helping
with instruction could not be reimbursed by the allotment fund.
8:35:45 AM
CHAIR STEVENS asked for the definition of "family members."
MS. PETERSON said family members are "the student's spouse,
guardian, parent, step-parent, sibling, step-sibling,
grandparent, step-grandparent, child, uncle, or aunt."
CHAIR STEVENS asked if there are any constitutional issues
regarding SB 100. He asked about allowing vendors to be
religious institutions.
SENATOR DUNLEAVY said many home schools employ vendors approved
by the school district for the purpose of supporting a public
ILP. Vendors can be private individuals, such as those that have
business licenses or are tutors. The important point is that the
coursework is being purchased for the support of a public ILP.
He maintained that constitutionality is difficult to define
because one must almost have a court action to determine that.
He provided an example in the bill previously passed by the
committee. He understood that if the purchasing of a course or a
service supports a public IEP, it should not be a problem. He
opined that people can sue for any reason at any time to test a
law.
8:38:55 AM
SENATOR GARDNER agreed that one never knows until someone takes
it to court. She stated, however, that her office has a
constitutional opinion that SB 100 does not violate the
constitution.
SENATOR STEDMAN asked who has that opinion.
SENATOR GARDNER said her office.
CHAIR STEVENS asked the Department of Education and Early
Development (DEED) to respond.
8:40:06 AM
SUSAN MCCAULEY, Ph.D., Director, Teaching and Learning Support,
Department of Education and Early Development (DEED), Juneau,
Alaska, answered questions related to SB 195. She said that
quite a few of the provisions in SB 100 mirror elements that are
currently in regulation regarding correspondence study school
programs. The additions in version G track closely with
regulations, particularly on page 4, line 24, with regard to
textbooks, services, and other curriculum materials. She said
the changes reflect on-going conversations between the
department and the sponsor.
SENATOR GARDNER read on page 4, line 10, section (b),
"Notwithstanding another provision of law, the department may
not impose additional requirements, other than the requirements
specified under (a) of this section and under AS 14.03.320, on a
student who is proficient or advanced on statewide assessments
required under AS 14.03.123(f)." She asked whether there are
additional requirements that might be imposed.
DR. MCCAULEY explained that currently in regulation there are
some restrictions regarding the use of allotment funds, such as
for gym membership and family travel. In previous conversations
there were questions whether or not the language just referenced
would restrict the department from monitoring whether a student
used an allotment to pay for services provided by a family
member. That language has now been added to the bill. Those are
two examples that would fall under "imposing additional
requirements" and would be at odds when a student is proficient.
SENATOR GARDNER understood that a student enrolled in a program
under this bill might be able to use allotment funds for travel
and for a gym membership.
DR. MCCAULEY said yes. She understood that those would be
permitted and are not restricted and would fall under a broad
category of "imposing additional requirements" when a student is
proficient.
8:44:00 AM
SENATOR GARDNER said yet services and materials would have to be
a part of the ILP and from an approved vendor.
DR. MCCAULEY said correct. There is language that says services
must be for an instructional purpose and connected to an ILP.
There are still safeguards that ensure allotment funds are to
support instruction and have an approval process.
CHAIR STEVENS asked where that language is found in the bill.
DR. MCCAULEY said it is on page 4, line 15, of the original
bill.
SENATOR DUNLEAVY opined that the bill has more safeguards than
current K - 12 schools have. It focuses on the ILP and outcomes.
8:46:24 AM
CHAIR STEVENS asked where it says, "must be used for
instructional purposes."
SENATOR DUNLEAVY replied that it is on page 4, lines 17 and 30.
SENATOR GARDNER said on page 4, lines 14 and on.
CHAIR STEVENS maintained that he sees the wording "instructional
expenses", not "instructional purposes."
MS. PETERSON pointed to page 4, line 16, and page 4, line 30; it
must support a public purpose - the education of the child.
CHAIR STEVENS opened public testimony.
8:49:30 AM
PETE LEWIS, Superintendent, Fairbanks North Star Borough School
District, Fairbanks, Alaska, testified in support of SB 100. He
said the 80/20 match, innovative learning grants, and one-to-one
funding will be beneficial to school districts. He mentioned
support for correspondence study program funding. He requested a
phase-in approach to the 1 percent funding ratio.
CHAIR STEVENS closed public testimony.
SENATOR DUNLEAVY moved to report CSSSSB 100 from committee with
individual recommendations and attached fiscal note. There being
no objection, CSSSSB 100 (EDC) was reported from the Senate
Education Standing Committee.
8:52:11 AM
At ease
8:53:32 AM
There being nothing further to come before the committee, Chair
Stevens adjourned the Senate Education Standing Committee at
8:53 p.m.
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