Legislature(2023 - 2024)BELTZ 105 (TSBldg)
04/05/2023 03:30 PM Senate EDUCATION
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| SB99 | |
| SB120 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 99 | TELECONFERENCED | |
| *+ | SB 120 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
SENATE EDUCATION STANDING COMMITTEE
April 5, 2023
3:31 p.m.
MEMBERS PRESENT
Senator Löki Tobin, Chair
Senator Gary Stevens, Vice Chair
Senator Jesse Bjorkman
Senator Jesse Kiehl
Senator Elvi Gray-Jackson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING(S)
University of Alaska Board of Regents
John Jepsen - Anchorage
- CONFIRMATION ADVANCED
SENATE BILL NO. 99
"An Act establishing a financial literacy education course for
public schools; and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 120
"An Act extending the education tax credits; providing for an
effective date by amending the effective date of secs. 1, 2, and
21, ch. 61, SLA 2014; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 99
SHORT TITLE: FINANCIAL LITERACY PROGRAM IN SCHOOLS
SPONSOR(s): SENATOR(s) WIELECHOWSKI
03/10/23 (S) READ THE FIRST TIME - REFERRALS
03/10/23 (S) EDC
03/29/23 (S) EDC AT 3:30 PM BELTZ 105 (TSBldg)
03/29/23 (S) Heard & Held
03/29/23 (S) MINUTE(EDC)
04/05/23 (S) EDC AT 3:30 PM BELTZ 105 (TSBldg)
BILL: SB 120
SHORT TITLE: EXTEND EDUCATION TAX CREDITS
SPONSOR(s): EDUCATION
03/31/23 (S) READ THE FIRST TIME - REFERRALS
03/31/23 (S) EDC, FIN
04/05/23 (S) EDC AT 3:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
JOHN SCOTT JEPSEN, Governor Appointee
University of Alaska Board of Regents
Anchorage, Alaska
POSITION STATEMENT: Testified as a governor appointee to the
University of Alaska Board of Regents.
FLORA TEO, President
Junior Achievement of Alaska (JA)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 99.
BRADLEY LONKER, representing self
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 99.
CARMELA WARFIELD, Executive Vice President
Alaska Policy Forum
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 99.
DORA WILSON, Member
Anchorage School Board
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 99.
RAYMOND MATIASHOWSKI, Staff
Senator Jesse Bjorkman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 110.
COLLEEN GLOVER, Director
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions on SB 120.
CHAD HUTCHINSON, Director
State Relations
University of Alaska System
Fairbanks, Alaska
POSITION STATEMENT: Testified by invitation on SB 120.
STEPHANIE MADSEN, Executive Director
At-Sea Processors Association
Juneau, Alaska
POSITION STATEMENT: Testified by invitation on SB 120.
DOUG WALRATH, Director
Northwestern Alaska Career and Technical Center
Nome, Alaska
POSITION STATEMENT: Testified in support of SB 120.
TARA RIEMER, President
Alaska Sea Life Center
Seward, Alaska
POSITION STATEMENT: Testified in support of SB 120.
ACTION NARRATIVE
3:31:44 PM
CHAIR LÖKI TOBIN called the Senate Education Standing Committee
meeting to order at 3:31 p.m. Present at the call to order were
Senators Bjorkman, Gray-Jackson, Stevens, Kiehl, and Chair
Tobin.
^CONFIRMATION HEARING(S)
CONFIRMATION HEARING(S)
UNIVERSITY OF Alaska BOARD OF REGENTS
3:33:40 PM
CHAIR TOBIN announced the consideration of the governor
appointee John Jepsen to the University of Alaska Board of
Regents.
3:34:07 PM
JOHN SCOTT JEPSEN, Governor Appointee, University of Alaska
Board of Regents, Anchorage, Alaska, summarized his professional
experience, emphasizing his commitment to Alaska and his long
history with ARCO. He spoke about his previous involvement with
the University of Alaska Foundation Board and his dedication to
improving the university's role in the state. He expressed
optimism about the university's future and its role in providing
quality education to Alaskans.
3:38:31 PM
SENATOR GRAY-JACKSON thanked Mr. Jepsen for his willingness to
serve on the Board of Regents and asked about his thoughts on
diversity and the university's mission to honor the indigenous
and diverse peoples of Alaska.
3:39:00 PM
MR. JEPSEN highlighted the importance of diversity, particularly
with a focus on Alaska Natives, and mentioned the university's
initiatives to promote diversity. He emphasized the benefits of
diversity in improving the student experience and decision-
making.
3:40:11 PM
SENATOR KIEHL expressed appreciation for Mr. Jepsen's past
service. He noted that the past two years have been difficult
for the university and expressed disappointment that there has
been an absence of focus on the University of Alaska, Southeast
(UAS). He asked Mr. Jepsen to share his vision and the
opportunities he sees for UAS.
MR. JEPSEN discussed the potential of UAS given its proximity to
the ocean and marine life. He emphasized the amount of research
taking place in Alaska and suggested UAS partner with the
University of Alaska, Fairbanks to do research. He said he is
hopeful that the new chancellor of UAS, who has a degree in
zoology and marine biology, will bring new thoughts and ideas to
UAS. He stated his belief that with the right focus UAS could
increase student enrollment.
3:42:54 PM
CHAIR TOBIN noted that Mr. Jepsen served on the University of
Alaska's Foundation Board and had worked for various
organizations that have a philanthropic partnership with the
university. She inquired about his views on the relationship
between the Board of Regents and the Foundation Board in
pursuing financial support and investments in the public
university system.
MR. JEPSEN emphasized the positive relationship between the
Board of Regents and the Foundation Board. The foundation
oversees managing endowment funds for the university, raising
funds through new donors, and enhancing the reputation of the
university. Regents should be involved in making connections
with potential donors. He mentioned the need for increased
alumni participation in fundraising efforts. Corporations are
the main donors. The university has about 100,000 alumni but
only a small portion contribute to the foundation.
CHAIR TOBIN said she supports gifting money to the university
and encourages others to donate.
3:45:17 PM
SENATOR BJORKMAN asked about the compact agreement between the
governor's administration and the university to reduce funding
by millions of dollars. He asked how satisfied Mr. Jepsen is
with this year's funding of the university's operating budget,
and capital and major maintenance expenditures.
3:45:52 PM
MR. JEPSEN expressed his view that the budget the governor
proposed for the current year provides stability to the
university. He mentioned that there have been suggestions for
budget additions but overall noted that funding for the
university is becoming more level, which aids in long-term
planning. He emphasized the importance of raising funds outside
of the Unrestricted General Funds (UGF) due to declining
enrollment since 2012. He encouraged a shift from focusing on
lagging indicators to leading statistics. He mentioned strategic
enrollment plans at the University of Alaska Fairbanks and
anticipated plans at the University of Alaska Anchorage and
University of Alaska Southeast. He acknowledged the need for
more revenue sources, including monetizing intellectual property
(IP). He highlighted the substantial amount of money that the
university puts into research for the federal government. The
university owns the IP but currently does not monetize it. He
urged a continual focus on revenue sourcing while addressing
diversions that interrupt day-to-day university management. He
said, "Obviously there is not a lot of capital within the budget
as proposed" and the university has deferred maintenance issues.
He expressed a desire for the legislature or governor to give
the university an additional $50 million a year to stabilize
infrastructure. Funding for deferred maintenance started to
decrease in 2014. The backlog has gone from $800 million to
about $1.5 billion. It is important to invest in critical areas
to maintain the integrity of infrastructure. He also suggested
working with the university administration to identify potential
solutions, including bonding, which has been done in the past.
3:49:51 PM
SENATOR BJORKMAN questioned the funding level, noting that the
university's operating request and budgets from the
administration appeared to be lower than the university's
original request. This observation raised concerns, especially
since there was a compact agreement in place and the university
had met the revenue reduction. He expressed uncertainty about
Mr. Jepsen's characterization of the current funding proposal
from the administration as providing stability. He sought
clarification, stating that he understood the university's
request had not been fully funded in either the Governor's
proposed budget or the budget presented by the other body. He
asked whether his understanding was correct.
3:50:38 PM
MR. JEPSEN responded by acknowledging that the university
initially requested a budget of approximately $320 million,
while the governor's proposed budget amounted to about $300
million. He mentioned that there were additional funds allocated
to address some disparities in the budget, such as funding for
the recently negotiated faculty salary increase. He also noted
the inclusion of discretionary items, including workforce
enhancement initiatives. While he emphasized that these
discretionary items might not be critical for the university's
day-to-day operations if left unfunded, he believed they were
worth consideration by the legislature.
Furthermore, Mr. Jepsen mentioned specific areas of concern,
including cybersecurity and insurance requirements, which
collectively totaled around $7 million. He expressed hope that
these aspects could receive approval during the budget process.
He emphasized that the budget process was ongoing, with
President Pitney offering suggestions for potential amendments.
Mr. Jepsen also highlighted that, compared to previous years,
the current situation was more stable. The university had access
to reserve funds, allowing management of the institution without
the need for class cuts or staff layoffs. This stability marked
a significant improvement from the previous two years.
3:52:09 PM
SENATOR BJORKMAN inquired about the vital connections between
the university and its feeder programs, particularly the K-12
education system in Alaska, as well as other educational
opportunities. He sought Mr. Jepsen's perspective on the desired
relationships and connections that should be fostered between K-
12 schools in the state and the university system, prompting him
to provide a description of these connections.
3:52:38 PM
MR. JEPSEN highlighted the dual enrollment program as an
excellent opportunity for students to access college courses at
an early stage, effectively reducing the overall cost of their
college education. There are approximately 2,000 - 2,500
students enrolled in the program. He noted that this program
serves as a valuable feeder into the University of Alaska, with
approximately 30 percent of students enrolled in the dual
enrollment program ultimately choosing to attend University of
Alaska System schools for their higher education. Mr. Jepsen
expressed optimism about expanding this program, with the goal
of increasing student participation to over 3,000 in the coming
years. He emphasized that this initiative represents the most
robust connection between the university and K-12 education,
primarily focusing on high school students.
3:54:05 PM
CHAIR TOBIN opened public testimony on the appointment of Mr.
Jepsen to the University of Alaska Board of Regents; finding
none, she closed public testimony.
3:54:23 PM
CHAIR TOBIN solicited a motion.
3:54:25 PM
SENATOR KIEHL stated that the Senate Education Standing
Committee reviewed the following and recommends the appointment
be forwarded to a joint session for consideration:
UNIVERSITY OF ALASKA BOARD OF REGENTS
John Scott Jepsen - Anchorage
Signing the reports regarding appointments to boards and
commissions in no way reflects individual members' approval or
disapproval of the appointees; the nominations are merely
forwarded to the full legislature for confirmation or rejection.
3:54:53 PM
CHAIR TOBIN found no objection and the name was forwarded.
3:54:59 PM
At ease.
SB 99-FINANCIAL LITERACY PROGRAM IN SCHOOLS
3:56:16 PM
CHAIR TOBIN reconvened the meeting and announced the
consideration of SENATE BILL NO. 99 "An Act establishing a
financial literacy education course for public schools; and
providing for an effective date."
3:57:04 PM
CHAIR TOBIN opened public testimony on SB 99.
3:57:28 PM
FLORA TEO, President, Junior Achievement of Alaska (JA),
Anchorage, Alaska, testified in support of SB 99. She spoke
about the mission of the organization and the importance of
financial literacy education. She explained that Junior
Achievement is a nonprofit organization that has been teaching
students about entrepreneurship, economics, and personal finance
for over a century nationally, and for 50 years in Alaska. The
organization achieves this by having local business leaders
visit schools and implement programs spanning from kindergarten
to college level. She mentioned that JA's curriculum continually
evolves to address changing technology and economic trends, and
it has consistently demonstrated a positive impact on students
and fostered connections between the business community and
educators.
MS. TEO also pointed out that research studies in the materials
provided to the committee highlighted the positive effects of
JA's programs, such as a 20 percent increase in income for
students who receive financial literacy education. She
emphasized that financial literacy helps students understand the
importance of education and its impact on their future earnings.
She stressed that JA shares the same goal as SB 99, which aims
to ensure that young people enter adulthood with a solid
understanding of personal finance.
Furthermore, she noted that Alaska is one of only three states
where financial literacy has not been addressed in the state's
education curriculum. She urged committee members to recognize
the educational need for personal finance and provide guidance.
She acknowledged the challenges school districts face with
limited time and resources to teach a wide range of mandated
knowledge. She suggested that SB 99 might undergo revisions but
stressed the importance of formally recognizing financial
literacy as a crucial component of Alaska's curriculum.
3:59:54 PM
BRADLEY LONKER, representing self, Anchorage, Alaska, testified
in support of SB 99. He stated that he is a lifelong Alaskan and
current biological sciences major at the University of Alaska.
He shared his personal experience attending Northern Lights ABC,
a K-8 school in Anchorage, where he participated in Junior
Achievement (JA) programs every year. Bradley highlighted that
these programs taught him valuable lessons about taxes, Free
Application for Federal Student Aid (FAFSA) applications,
budgeting, and credit scores, which he found applicable to his
daily life.
MR. LONKER emphasized that having financial literacy education
in his school had a significant positive impact on his life. He
mentioned instances in both his professional and personal life
where his knowledge of basic finance proved to be invaluable.
For instance, he was able to save and purchase his first car
with cash, apply for scholarships to attend college, secure his
own health care, and avoid unnecessary debt by managing his
finances responsibly.
He expressed gratitude for the financial education he received
through Junior Achievement and stressed the importance of voting
in favor of SB 99.
4:01:41 PM
CARMELA WARFIELD, Executive Vice President, Alaska Policy Forum,
Anchorage, Alaska, testified in support of SB 99. She said that
Alaska Policy Forum is a nonpartisan 501(c)(3) nonprofit
organization that does not receive public funds. In addition to
working at Alaska Policy Forum she is a parent of two students
in Alaska K-12 schools. She spoke from her experience as a
volunteer with local youth organizations. She emphasized the
desire of young adults to be self-sufficient and knowledgeable
about matters that affect their lives. She highlighted the
significance of teaching young people essential financial
skills, including managing household budgets, savings,
investments, cash flow, maintaining a positive credit rating,
and protecting themselves from financial scams.
She pointed out that many other states and school districts have
already recognized the importance of financial literacy
education and have implemented similar curriculum requirements
for high school students. She advocated for an accelerated
timeline for the implementation of these courses, believing that
it would better prepare Alaskan students for future success.
MS. WARFIELD stressed that financial literacy courses provide a
solid foundation for Alaska's youth as they transition from high
school to adulthood, whether they pursue higher education,
career and technical education, or enter the workforce.
Financial literacy leads to personal success and also
contributes to a stronger economy and healthier communities in
the state.
4:03:56 PM
DORA WILSON, Member, Anchorage School Board, Anchorage, Alaska,
testified in support of SB 99. She highlighted her roles as both
a school board member and a mother of three young adult
children, as well as her extensive experience as a therapeutic
foster parent to over 45 youth.
She recounted how her own children, now in their 20s, had
expressed their frustration at not having received basic
financial literacy education in school. They had questioned why
they were not taught about concepts such as credit scores. Dora
mentioned that her youngest child had the opportunity to
participate in a youth summit during her high school years,
which provided her with valuable financial literacy knowledge.
As a result, her daughter started saving a significant portion
of her income, allowing her to purchase a car with cash at the
age of 17 and her first home independently at 19, making her a
taxpayer in Anchorage at the age of 22.
Drawing from her experience as a foster parent, she stressed the
importance of providing financial literacy education to youth
who age out of the state's care and are transitioning into
adulthood.
Furthermore, as a member of the Anchorage School Board, she
shared the district's commitment to preparing students for life,
career, and college. She mentioned that the Anchorage School
District had already revised its curriculum to include a
financial literacy component in the state-required economic and
consumer economics course. She encouraged all school districts
across Alaska to adopt similar practices, ensuring that all
students have access to this vital information.
She expressed her gratitude to Senator Wielechowski for
championing SB 99 and thanked the legislators who supported the
bill. She stated her belief that the bill would benefit all
Alaska students and ultimately contribute to the betterment of
Alaskan communities.
4:06:34 PM
SENATOR BJORKMAN asked whether she was aware of the state
standards for government and citizenship, which requires a
government course teach both macro and microeconomics.
4:06:57 PM
MS. WILSON replied she did not have the information with her.
SENATOR BJORKMAN pointed out that the state standards mandated
the teaching of macro and microeconomics within the government
course, which inherently encompassed personal finance standards.
He then inquired if the Anchorage School District (ASD)
presently enforced a mandatory financial literacy course as a
graduation requirement.
4:07:22 PM
MS. WILSON replied that the financial literacy portion had been
incorporated into the economics and consumer economics courses.
SENATOR BJORKMAN asked if economics and consumer economics are
courses required for graduation.
4:07:43 PM
MS. WILSON replied yes. The courses started in 2020. Students
who were freshmen in 2020 will have taken the courses when they
graduate in 2024.
SENATOR BJORKMAN said he asked the question because he did not
see the requirement on ASD's website. He expressed approval of
the requirement.
4:08:14 PM
CHAIR TOBIN closed public testimony on SB 99.
4:08:14 PM
CHAIR TOBIN held SB 99 in committee.
SB 120-EXTEND EDUCATION TAX CREDITS
4:08:43 PM
CHAIR TOBIN announced the consideration of SENATE BILL NO. 120
"An Act extending the education tax credits; providing for an
effective date by amending the effective date of secs. 1, 2, and
21, ch. 61, SLA 2014; and providing for an effective date."
4:09:22 PM
SENATOR BJORKMAN, District D, speaking as sponsor of SB 120,
introduced the legislation paraphrasing the following sponsor
statement:
[Original punctuation provided.]
Senate Bill 120 Extend Education Tax Credits
Sponsor Statement
Senate Bill 120 seeks to extend the very successful
Alaska Education Tax Credit (AETC) Program through
January 1, 2031. Currently the program will expire on
January 1, 2024.
Education tax credits allow businesses that pay
certain state taxes to claim credit for charitable
gifts made in support of education in Alaska. Eligible
recipients include non-profit, publicly, or privately
accredited Alaska two-year or four-year colleges; non-
profit elementary or secondary schools and school
districts; state operated vocational education and
training schools; non-profit regional vocational
training centers; apprenticeship programs; Alaska
Native cultural programs; the Alaska Higher Education
Investment Fund; and postsecondary institutions
providing dual-credit courses.
Education tax credits can be used to offset many state
taxes including corporate income taxes, fisheries
business and fisheries resource landing taxes, oil and
gas production, and mining license taxes.
In addition to extending the Alaska Education Tax
Credit Program, Senate Bill 120 returns the program to
the credit provision in place before the program was
reduced in 2018. SB 120 allows education tax credits
up to 50 percent of the annual contributions up to
$100,000, 100 percent of the next $200,000, and 50
percent of annual contributions beyond $300,000. The
bill also raises the cap on the total credit per
taxpayer or group to $5,000,000. Currently, the cap is
$1,000,000.
4:14:01 PM
RAYMOND MATIASHOWSKI, Staff, Senator Jesse Bjorkman, Alaska
State Legislature, Juneau, Alaska, presented the sectional
analysis for SB 120:
[Original punctuation provided.]
Senate Bill 120 Extend Education Tax Credits
Version A Sectional Analysis
Section 1 Amends AS 21.96.070(b), which governs
insurance tax education credits, to set the amount of
the Alaska Education Tax Credit (ETC) at 50 percent of
contributions up to $100,000, 100 percent of
contributions from $100,001 through $300,000, and 50
percent of the amount of contributions that exceed
$300,000. Currently the insurance tax education credit
is limited to 50 percent of contributions.
Section 2 Amends AS 21.96.070(d), with governs
insurance tax education credits, to stipulate that
contributions claimed as a credit may not be used to
claim credit elsewhere under this title and may not be
combined with other credits to exceed a total of
$5,000,000. The current cap is $1,000,000. If the
taxpayer is a member of an affiliated group, the total
amount of credits for the group may not exceed
$5,000,000. Currently the cap is $1,000,000.
Section 3 Amends AS 43.20.014(b), which governs
income tax education credits, to align with the tax
credit amounts set forth in the Act.
Section 4 Amends AS 43.20.014(d), which governs
income tax education credits, to align with the total
cap on education credits set forth in this Act.
Section 5 Amends AS 43.55.019(b), which governs the
oil or gas producer education credit, to align with
the tax credit amounts set forth in this Act.
Section 6 Amends AS 43.55.019(d), which governs the
oil or gas producer education credit, to align with
the total cap on education credits set forth in this
Act.
Section 7 Amends AS 43.56.018(b), which governs the
property tax education credit, to align with the tax
credit amounts set forth in this Act.
Section 8 Amends AS 43.56.018(d), which governs the
property tax education credit, to align with the total
cap on education credits set forth in this Act.
Section 9 Amends AS 43.65.018(b), which governs the
mining business education credit, to align with the
tax credit amounts set forth in this Act.
Section 10 Amends AS 43.75.018(d), which governs the
mining business education credit, to align with the
total cap on education credits set forth in this Act.
Section 11 Amends AS 43.75.018(b), which governs the
fisheries business education credit, to align with the
tax credit amounts set forth in this Act.
Section 12 Amends AS 43.75.018(d), which governs
fisheries business education credit, to align with the
total cap on education credits set forth in this Act.
Section 13 Amends AS 43.77.045(b), which governs the
fisheries resource landing tax education credit, to
align with the tax credit amounts set forth in this
Act.
Section 14 Amends AS 43.77.045(d), which governs the
fisheries resource landing tax education credit, to
align with the total cap on education credits set
forth in this Act.
Section 15 Provides for January 1, 2031, effective
date for the expiration of the Education Tax Credit
program.
Section 16 Sets the effective date for this Act as
January 1, 2024.
4:17:55 PM
SENATOR KIEHL asked whether the tax credit is applied to both
the municipal share and the state's share.
MR. MATIASHOWSKI replied that he did not know and would get back
to the committee.
4:18:36 PM
SENATOR KIEHL stated that the tax cap increases by a factor of
five, but the foregone revenue to the state doesn't increase by
the same magnitude, as indicated in the fiscal note. He
requested information on whether there was a historical basis
for this difference, specifically regarding when the maximum
amounts were reduced. He also inquired about the rationale
behind the modeling used in SB 120.
4:19:03 PM
MICHAEL MASON stated that Ms. Glover, the tax director, might be
able to address the questions.
4:19:17 PM
COLLEEN GLOVER, Director, Tax Division, Department of Revenue
(DOR), Anchorage, Alaska, stated that department personnel had
examined historical data. As Senator Bjorkman mentioned, SB 120
essentially reinstated higher thresholds that existed in the
past. Her department considered the average contributions during
that period, which averaged around $6.6 million, as the basis
for their projections. This historical data served as the
foundation for the fiscal note. She also mentioned that the bill
extended the timeframe and increased the thresholds, drawing
from historical data, even though there is no certainty that the
same patterns will occur in the future. She pointed out that the
department provides an annual report to the legislature that is
available on their website. She said it is challenging to
predict with certainty whether the same trends observed in the
past with similar thresholds would continue.
4:20:35 PM
SENATOR GRAY-JACKSON requested that an answer be provided to
Senator Kiehl's question, regarding SB 120 and municipal taxes.
MR. MATIASHOWSKI replied he would follow up with an answer.
SENATOR GRAY-JACKSON asked if Ms. Glover could answer since she
is from the tax agency.
MS. GLOVER stated her belief that SB 120 only applies to the
state portion, but she would double check.
4:21:34 PM
SENATOR GRAY-JACKSON stated she too thought it only applied to
the state portion.
4:21:43 PM
CHAIR TOBIN asked for an overview of the fiscal note for SB 120.
4:21:58 PM
MS. GLOVER said that SB 120 impacted seven different tax
programs, with six falling under the Department of Revenue Tax
Division, and one in commerce. She noted that the fiscal note
only forecasted the effect on the programs specific to the
Department of Revenue. She explained that for all the tax
programs affected, the funding contributed to the general fund,
so any tax credit represented a reduction in the general fund.
She mentioned that the current statute was set to sunset at the
end of the year, and by extending it, an additional half fiscal
year of credits would be provided, resulting in a $1.7 million
credit for FY 2024. In future years the impact of extending the
repeal time and increasing the percentage would generate an
estimated $6.6 million in annual credit usage.
MS. GLOVER noted that historically, the usage of the credit had
been higher, with more participation from taxpayers or donors
when there were higher credit thresholds. However, there has
been a reduction in participation over the last three years,
which could be attributed to various factors, such as changes in
credit provisions and economic conditions.
4:24:20 PM
CHAIR TOBIN announced invited testimony on SB 120.
4:24:49 PM
CHAD HUTCHINSON, Director, State Relations, University of Alaska
System, Fairbanks, Alaska, said that the university had reviewed
SB 120 and expressed strong support for the sunset provisions,
indicating there were no objections to the provisions that would
revert to the statute's pre-2018 state.
MR. HUTCHINSON turned to slide 1 and said he would provide a
general overview, primarily focused on respecting the taxpayers
contributing to the University of Alaska. He characterized the
presentation as a broad generalization of how the university
viewed its role as a beneficiary and how it was addressing
Alaska's workforce needs through contributions from third-party
entities.
4:26:03 PM
MR. HUTCHINSON turned to slide 2 and highlighted examples of
contributions, including a million-dollar donation from Kinross
to the Troth Yeddha' Indigenous Studies Center in Fairbanks. He
noted the university's collaboration with private sector third-
party entities to address educational needs in Alaska,
particularly in terms of workforce development. These
contributions could be in the form of cash or equipment,
reflecting the interest of many companies in ensuring a well-
prepared future workforce by providing necessary funding and
equipment for university programs.
4:26:47 PM
MR. HUTCHINSON turned to slide 3 and shared a document borrowed
from the Department of Revenue. The document outlined the value
of credits, contributions made, and the specific benefits to the
University of Alaska in the calendar year 2022.
The total contributions listed in the second column amounted to
$2.1 million. For most of the tax programs, approximately 50
percent of the credits were claimed. An example was the fishery
resource landing tax, where a 50 percent credit was claimed. The
contributions made directly impacted academic programs,
equipment provision, and research efforts. In cases like
commercial fisheries, contributors showed interest in specific
fisheries populations and made direct contributions to the
university, benefiting both the university and the contributors.
He also noted that the oil and gas property tax total
contribution was $40,000, and the entire amount was given to the
University of Alaska.
4:28:18 PM
MR. HUTCHINSON turned to slide 4 and provided historical
examples of donors to the university, illustrating the program's
broad range of contributors, including mining interests,
commercial fishing, Alaska Airlines, and Holland America. He
highlighted that many major industries in Alaska had
participated in the program, and it had been highly successful:
[Original punctuation provided.]
A Few Tax Paying Entities that Historically Contribute
to the University of Alaska
1. Glacier Fish Company, LLC
2. American Seafoods Company
3. Hecla Greens Creek Mining Company
4. Fairbanks Gold Mining, Inc.
5. ConocoPhillips Alaska, Inc.
6. Alaska Airlines Inc.
7. Holland America Princess - Alaska
8. Ravn Alaska
9. Aurora Animal Clinic
10. Bristol Bay Native Corporation
11. Northrim Bank
12. Teck Alaska, Inc.
MR. HUTCHINSON acknowledged that contributions had declined
since the statutory change in 2018. He expressed gratitude for
the legislative debate aimed at revising the contribution
amounts, and stated his belief that the university would be
pleased with a positive outcome.
4:29:11 PM
SENATOR GRAY-JACKSON asked whether a corporation's contribution
also qualifies for a federal tax write off.
4:29:23 PM
MR. HUTCHISON deferred the question to DOR.
4:29:38 PM
MS. GLOVER replied she could not speak to federal income tax
laws for corporations.
4:30:00 PM
SENATOR GRAY-JACKSON said she was hopeful that DOR could answer
her question but did not expect the department to speak for the
Internal Revenue Service.
4:30:32 PM
STEPHANIE MADSEN, Executive Director, At-Sea Processors
Association, Juneau, Alaska, expressed her gratitude to Senator
Tobin, Senator Bjorkman, and the committee for addressing the
Pollock Conservation Cooperatives' involvement in the education
tax credit program, emphasizing its importance to her fleet.
She detailed the cooperative's history and mission to enhance
the conservation and utilization of Alaska's marine resources.
The Pollock Conservation Cooperative Research Center at the
University of Alaska Fairbanks was created in 2000, funded
through direct donations and education tax credit funds. Ms.
Madsen noted that her members had been contributing since 2000,
likely making them the largest private contributor, with a total
contribution of about $16 million over the years.
4:31:48 PM
MS. MADSEN highlighted the allocation of these funds, with a
significant portion directed toward research aimed at promoting
the conservation and management of marine resources in the
Bering Sea. The contributions also supported graduate
fellowships for students pursuing master's and graduate degrees,
addressing a crucial funding gap for graduate students. She
mentioned that many of the students funded by the Pollock
Conservation Cooperative Research Center, had gone on to work in
government agencies such as the State of Alaska and the National
Marine Fisheries Service.
She further discussed contributions to dual enrollment programs,
specifically the UAS fisheries technology program in Sitka,
which benefits high school students through remote learning
using iPads. Additionally, they consistently supported the
Northwest Alaska Career and Technical Center in Nome,
contributing to workforce development.
MS. MADSEN emphasized the program's vital role in preparing
Alaska's workforce and sparking high school students' interest
in fisheries. She expressed her extreme gratitude for the
committee's consideration and reiterated strong support for all
elements of the legislation.
4:35:01 PM
CHAIR TOBIN opened public testimony on SB 120.
4:35:17 PM
DOUG WALRATH, Director, Northwestern Alaska Career and Technical
Center, Nome, Alaska, testified in support of SB 120, which aims
to extend the education tax credits sunset and return the credit
to its pre-2018 legislative session form.
He noted that the Northwestern Alaska Career and Technical
Center (NACTEC) had been a beneficiary of education tax credit
contributions from the Pollock Conservation Cooperative for over
a decade. He emphasized that the tax credit had allowed NACTEC
to seek funding from business partners since 2009, which had
significantly benefited their programs. Specifically, it had:
1. Led to the creation of a new Alaska Vocational Technical
Center (AVTEC) transitions program.
2. Enabled the development of junior high residential career
exploration programs.
3. Supported the purchase of advanced motion-based simulators
for aviation and maritime training.
He highlighted that from FY 2015 to FY 2019, NACTEC's industry
partners contributed an average of $511,000 annually, equivalent
to 30 percent of their budget. However, after the credit became
less corporate-friendly from FY 2020 to FY 2022, contributions
averaged $195,000 annually, representing 10 percent of their
annual budget. This amounted to a 62 percent decrease in
education tax credit contributions since 2018 when the
legislation changed.
He further pointed out that the education tax credit had a
positive impact on NACTEC's programming, with higher graduation
rates and career exploration outcomes for students attending
their programs. He concluded that when business and industry
collaborate with education providers like NACTEC, it benefits
all parties involved. He urged the committee to recognize the
effectiveness of the education tax credit program and extend its
sunset.
4:38:35 PM
SENATOR KIEHL expressed his support for the program and his
desire to see it extended. He noted Mr. Walrath's comment
regarding the decrease in corporate contributions starting in
2018 and inquired about the factors contributing to this
decline. He specifically asked if it was due to the lower limits
set by the program or the lower federal corporate tax rates and
whether Mr. Walrath had been able to discern which of these
factors was the primary driver of reduced corporate giving and
eligibility.
4:39:13 PM
MR. WALRATH responded that he had not specifically investigated
whether the reduced corporate contributions were primarily
driven by the lower limits or the lower federal corporate tax
rates. He mentioned that he had been proactive in pursuing
funding before the friendly nature of the previous provision
began to phase down. However, he hadn't conducted a detailed
analysis to determine the exact reasons behind the decline in
corporate contributions.
4:40:24 PM
TARA RIEMER, President, Alaska Sea Life Center, Seward, Alaska,
testified in support of SB 120. She stated that the Alaska Sea
Life Center served as a beneficiary of the Alaska Education Tax
Credit due to its role as a coastal ecosystem learning center.
She emphasized that SB 120 would extend the education tax credit
program and potentially increase tax credits from corporations.
She thanked the committee for sponsoring SB 120 and specifically
for restoring the caps on tax credit ratios to their previous
levels.
She underscored the effectiveness of the education tax credit
program in introducing philanthropy to Alaska corporations and
noted that it played a crucial role in introducing potential
corporate donors to the idea of supporting the Alaska Sea Life
Center. However, she pointed out that the program had been more
compelling in the past.
4:42:08 PM
CHAIR TOBIN closed public testimony on SB 120.
4:42:12 PM
CHAIR TOBIN held SB 120 in committee.
4:43:06 PM
There being no further business to come before the committee,
Chair Tobin adjourned the Senate Education Standing Committee
meeting at 4:43 P.M.