Legislature(2013 - 2014)SENATE FINANCE 532

03/31/2014 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SJR 21 CONST. AM: MEMBERSHIP OF JUDICIAL COUNCIL TELECONFERENCED
Moved CSSJR 21(2d FIN) Out of Committee
+ SJR 23 CONST. AM: STUDENT LOAN DEBT TELECONFERENCED
Moved SJR 23 Out of Committee
+= SB 104 APPROPRIATIONS FROM THE DIVIDEND FUND TELECONFERENCED
Moved CSSB 104(FIN) Out of Committee
+= SB 140 AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND TELECONFERENCED
Moved CSSB 140(FIN) Out of Committee
+= HB 199 VPSO FIREARMS TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 31, 2014                                                                                            
                         9:07 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:07:13 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the Senate Finance  Committee meeting                                                                    
to order at 9:07 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Anna Fairclough, Vice-Chair(via teleconference)                                                                         
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Heather Shadduck,  Staff, Senator  Pete Kelly;  Nancy Meade,                                                                    
General  Counsel,   Alaska  Court  System;   Diane  Barrans,                                                                    
Executive  Director,  Alaska   Commission  on  Postsecondary                                                                    
Education,  Department of  Education and  Early Development,                                                                    
Executive   Officer,   Alaska  Student   Loan   Corporation;                                                                    
Christine  Marasigan,  Staff  Senator Kevin  Meyer;  Senator                                                                    
Fred Dyson;  Joshua Banks, Staff, Senator  Fred Dyson; Jesse                                                                    
Logan,  Staff, Senator  Lesil McGuire;  Representative Bryce                                                                    
Edgmon; Captain  Steven Arlow, Department of  Public Safety,                                                                    
Anchorage;                                                                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Robert Dotson, Self, Cordova;                                                                                                   
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
                                                                                                                                
SJR 21    CONST. AM: MEMBERSHIP OF JUDICIAL COUNCIL                                                                             
                                                                                                                                
          CSSJR  21(2d FIN)  was REPORTED  out of  committee                                                                    
          with  a  "do  pass"   recommendation  and  with  a                                                                    
          previously published fiscal  impact note: FN1(GOV)                                                                    
          and  a previously  published  fiscal impact  note:                                                                    
          FN2(CRT).                                                                                                             
                                                                                                                                
SJR 23    CONST. AM: STUDENT LOAN DEBT                                                                                          
                                                                                                                                
          SJR 23  was REPORTED out  of committee with  a "do                                                                    
          pass" recommendation and with  a new fiscal impact                                                                    
          note from  the Office  of the  Governor and  a new                                                                    
         fiscal impact note from the Legislature.                                                                               
                                                                                                                                
SB 104    APPROPRIATIONS FROM THE DIVIDEND FUND                                                                                 
                                                                                                                                
          CSSB 104(FIN)  was REPORTED out of  committee with                                                                    
          a "do  pass" recommendation and with  a new fiscal                                                                    
          impact note from Senate  Finance Committee for the                                                                    
          Department  of Corrections  and with  a previously                                                                    
          published   zero   fiscal    note:   FN2(ADM),   a                                                                    
          previously published  zero fiscal  note: FN3(LAW),                                                                    
          and  a  previously  published  zero  fiscal  note:                                                                    
          FN6(AMD).                                                                                                             
                                                                                                                                
SB 140    AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND                                                                                
                                                                                                                                
          CSSB 140(FIN)  was REPORTED out of  committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously    published   fiscal    impact   note:                                                                    
          FN1(CED).                                                                                                             
                                                                                                                                
HB 199    VPSO FIREARMS                                                                                                         
                                                                                                                                
          HB  199  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
SENATE JOINT RESOLUTION NO. 21                                                                                                
                                                                                                                                
     Proposing amendments  to the Constitution of  the State                                                                    
     of  Alaska to  increase the  number of  members on  the                                                                    
     judicial council  and relating to the  initial terms of                                                                    
     new members appointed to the judicial council.                                                                             
                                                                                                                                
9:09:18 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly MOVED  to ask  unanimous consent  to RESCIND                                                                    
the committee's  previous action on  SJR 21. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
9:09:35 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  MOVED  to   ADOPT  the  proposed  committee                                                                    
substitute  for SJR  21,  Work  Draft 28-LS1364\P  (Wallace,                                                                    
3\28\14) as  a working  document. There being  NO OBJECTION,                                                                    
it was so ordered.                                                                                                              
                                                                                                                                
9:10:00 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly  commented  that   what  the  committee  had                                                                    
previously voted  on was  to increase  the number  of public                                                                    
members  on  the judicial  council  in  order to  allow  the                                                                    
practical establishment  of more  regional diversity  on the                                                                    
council. Secondly,  because there were 3  public members and                                                                    
3 attorney members,  there were times when  those two groups                                                                    
had an  even split on a  nominee; the split put  the Supreme                                                                    
Court  Justice  in the  position  of  having a  conflict  of                                                                    
interest  as they  voted  with  one side  or  the other.  He                                                                    
explained that there were concerns  that justices could have                                                                    
an influence  on choosing colleagues  that would  agree with                                                                    
their  views. He  had discovered  that  the biggest  concern                                                                    
that people had with  the state's constitution regarding the                                                                    
judicial  council was  that the  attorney  members were  not                                                                    
required to  be confirmed  by the legislature;  however, the                                                                    
public members  had to go  through the  confirmation process                                                                    
just like the other state  boards. He thought that there was                                                                    
support  to  pass  the  resolution on  the  floor  with  the                                                                    
previous CS, but  that it made sense to  address the glaring                                                                    
concerns regarding  the attorney members of  the board being                                                                    
beyond the  scrutiny of elected  officials; he  offered that                                                                    
having the  attorney members be  beyond the scrutiny  of the                                                                    
legislature  did not  sit well  "our"  way of  life and  how                                                                    
almost every  other part of our  government and constitution                                                                    
worked.  He observed  that in  the  new CS,  the Alaska  Bar                                                                    
Association would still appoint  the 3 attorney members, but                                                                    
that the appointees would come  before the legislature to be                                                                    
confirmed. He added  there was also language in  the CS that                                                                    
addressed a quorum, but that  his staff would speak to those                                                                    
changes.                                                                                                                        
                                                                                                                                
9:13:09 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  wanted the  public to  be aware  that public                                                                    
testimony  would  not  be  taken   on  the  CS  because  the                                                                    
committee  had   already  taken  public  testimony   on  the                                                                    
previous version.                                                                                                               
                                                                                                                                
9:13:49 AM                                                                                                                    
                                                                                                                                
HEATHER SHADDUCK,  STAFF, SENATOR  PETE KELLY, spoke  to the                                                                    
changes reflected  in Version P.  The first change  could be                                                                    
found on Page 1, lines 10 and 11:                                                                                               
                                                                                                                                
     The three attorney members and six non-attorney                                                                        
     members shall be subject to confirmation be a majority                                                                 
    of the members of the legislature in joint session.                                                                         
                                                                                                                                
Ms. Shadduck  noted that the  next change could be  found on                                                                    
Page 2, lines 2 and 3:                                                                                                          
                                                                                                                                
     The judicial council shall act by a majority vote of a                                                             
     quorum of at least seven members and according to                                                                      
     rules which it adopts.                                                                                                     
                                                                                                                                
Ms. Shadduck explained that the  language had been change in                                                                    
order for a quorum to be more easily attainable.                                                                                
                                                                                                                                
9:15:02 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly noted  that  the 7  members  still kept  the                                                                    
committee's desire to not have  the Supreme Court Justice in                                                                    
the position of  having a possible conflict  of interest. He                                                                    
further  explained that  having  7 members  on the  judicial                                                                    
council,  instead of  6, removed  the need  for the  Supreme                                                                    
Court Justice to break a possible tie.                                                                                          
                                                                                                                                
9:15:32 AM                                                                                                                    
                                                                                                                                
Ms.  Shadduck  stated  that  there  had  been  concern  that                                                                    
without  a  quorum  threshold, the  judicial  council  might                                                                    
conduct business  with only 2  members; however, it  was not                                                                    
the  sponsors' intent.  She pointed  out that  putting in  a                                                                    
quorum at a  higher threshold ensured that  all voices would                                                                    
be heard.                                                                                                                       
                                                                                                                                
9:16:12 AM                                                                                                                    
                                                                                                                                
NANCY MEADE,  GENERAL COUNSEL,  ALASKA COURT  SYSTEM, stated                                                                    
that the  Supreme Court had  not given her direction  on the                                                                    
confirmation of  attorney members  by the legislature.   She                                                                    
pointed out that the issue had  not been an oversight in the                                                                    
constitutional   convention;   there  had   been   extensive                                                                    
discussion  regarding  the  decision to  not  have  attorney                                                                    
members approved  by the legislature.   She stated  that the                                                                    
reasoning  of  the  constitutional   framers  was  that  the                                                                    
attorney  members  should  be  free  from  any  thinking  of                                                                    
whether a  nominee would be  acceptable to  the legislature,                                                                    
whether  republican   or  democrat.  She  opined   that  the                                                                    
constitutional founders  had wanted the attorney  members to                                                                    
be clear  of political  hurdles so  that the  bar membership                                                                    
could put  the best people  on the Judicial  Council without                                                                    
having the concern of whether  that person would pass muster                                                                    
in the legislative confirmation  process. She concluded that                                                                    
not  requiring  attorney  members  to be  confirmed  by  the                                                                    
legislature  was  not an  oversight,  but  was a  purposeful                                                                    
decision by the constitutional founders.                                                                                        
                                                                                                                                
Ms. Meade  furthered that the  court opposed  the resolution                                                                    
because of  the imbalance  in the  number of  public members                                                                    
versus  attorney  members. The  concern  was  that with  the                                                                    
imbalance,  there  was   substantial  potential  for  public                                                                    
members  to  choose applicants  to  submit  to the  governor                                                                    
based   on  considerations   other   than  the   applicant's                                                                    
qualifications to  be a  quality judge.  She responded  to a                                                                    
previous question from Vice-Chair  Fairclough and noted that                                                                    
the Judicial Council did play  a large role in the retention                                                                    
of  judges  and not  just  in  the selection  and  screening                                                                    
process.  She explained  that the  Judicial Council  came up                                                                    
with  recommendations on  whether a  judge should  or should                                                                    
not be  retained and that  the information was  published in                                                                    
the  voter  information  pamphlet. She  explained  that  the                                                                    
council ascertained its opinion of  a judge by surveying law                                                                    
enforcement, court staff,  jurors, social workers, volunteer                                                                    
Court  Appointed and  Special Advocates  (CASA) workers;  it                                                                    
also conducted public hearings and  looked at a judge's case                                                                    
files, performance,  and records of reversal  on appeal. The                                                                    
court's concern was the threat  of retaliation for any judge                                                                    
that made  a decision  that was  contrary to  the governor's                                                                    
position.  She  did  not believe  that  the  resolution  did                                                                    
service to the Alaska Court System or Alaskans.                                                                                 
                                                                                                                                
9:21:41 AM                                                                                                                    
                                                                                                                                
Co-Chair Kelly  asserted that the  bill dealt  with regional                                                                    
diversification  on the  Judicial  Council.  He pointed  out                                                                    
that the only  2 rural members that had been  on the council                                                                    
were  both public  members;  the last  rural  member was  in                                                                    
1987, from  Barrow; and the  one before that was  1961, from                                                                    
Kotzebue.  He  believed  that by  adding  the  extra  public                                                                    
members, the  governor would have the  opportunity to expand                                                                    
rural  representation.  He  suggested that  the  framers  of                                                                    
Alaska's  constitution had  made  an  oversight in  assuring                                                                    
adequate representation,  for all groups,  stretching across                                                                    
a  great expanse.  He asserted  that even  judges should  be                                                                    
held accountable by the public.  He warned that the judicial                                                                    
system  should not  become arrogant  in  believing it  could                                                                    
escape the scrutiny of the  people of Alaska. He likened the                                                                    
council  to  the  board  of  barbers  and  hairdressers  and                                                                    
believed that its members should be equally scrutinized.                                                                        
                                                                                                                                
9:27:02 AM                                                                                                                    
                                                                                                                                
Senator  Olson  thought  that having  more  members  on  the                                                                    
council would  increase the chances of  having rural members                                                                    
on  the board.  He  commented there  had  been two  judicial                                                                    
council  members from  his district,  but none  from Senator                                                                    
Hoffman's district.                                                                                                             
                                                                                                                                
9:27:32 AM                                                                                                                    
                                                                                                                                
Co-Chair  Kelly MOVED  to  REPORT CSSJR  21(2d  FIN) out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSJR 21(2d  FIN) was REPORTED  out of committee with  a "do                                                                    
pass" recommendation and with  a previously published fiscal                                                                    
impact  note: FN1(GOV)  and  a  previously published  fiscal                                                                    
impact note: FN2(CRT).                                                                                                          
                                                                                                                                
9:27:51 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:32:10 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
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.                                                                                               
                                                                                                                                
9:32:44 AM                                                                                                                    
                                                                                                                                
Vice-Chair Fairclough related  that SJR 23 would  add to the                                                                    
constitution the  authorization to issue the  full faith and                                                                    
credit  for student  postsecondary loans.  She related  that                                                                    
Alaska's forefathers  could not  have contemplated  the debt                                                                    
load or  the cost of postsecondary  education that currently                                                                    
existed in  the United States. She  reported that currently,                                                                    
the  Alaska State  Constitution  only allowed  for the  full                                                                    
faith and  credit of the  state for capital  improvements or                                                                    
housing  loans   for  veterans.  She  stated   that  if  the                                                                    
resolution was passed  by a two-thirds majority  by both the                                                                    
House and  the Senate,  the Alaska Student  Loan Corporation                                                                    
would  be able  to utilize  the best  possible financing  to                                                                    
benefit students  who accessed loan services  from the State                                                                    
of Alaska.  She pointed out  that regarding process,  if the                                                                    
resolution passed in the current  session and was put on the                                                                    
2014 ballot,  a loan could  not be issued until  the student                                                                    
loan  corporation made  that recommendation  and brought  it                                                                    
back  to the  legislature; if  the legislature  approved the                                                                    
resolution at this time, it  would be advanced to the people                                                                    
of Alaska  again on. She  believed that the issue  needed to                                                                    
be put  before voters  during the  general election  of 2014                                                                    
because  waiting until  the next  legislative session  would                                                                    
disadvantage  students even  further.  She  stated that  the                                                                    
current student  loan rate for  students who  accessed loans                                                                    
in Alaska  was 7.3 percent  and noted that the  federal rate                                                                    
on  loans was  3.86 percent.  She thought  that if  the full                                                                    
faith and  credit of the State  of Alaska could be  used and                                                                    
the  loans  were  still  repaid,  students  who  took  loans                                                                    
through the  state could  save 1 percent  or greater  in the                                                                    
bond market.                                                                                                                    
                                                                                                                                
9:35:29 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer OPENED public testimony.                                                                                         
                                                                                                                                
9:36:15 AM                                                                                                                    
                                                                                                                                
ROBERT DOTSON, SELF, CORDOVA  (via teleconference), spoke in                                                                    
support  of the  resolution. He  wondered why  the State  of                                                                    
Alaska found  it necessary  to have  a 7.3  percent interest                                                                    
rate on student  loans when a less than  .5 percent interest                                                                    
passbook saving could  be issued at a bank.  He thought that                                                                    
the high interest rate made  it difficult to pay off student                                                                    
loans. He  stressed that Alaska's  young people  were unable                                                                    
to buy  a home, rent  an apartment,  or buy a  vehicle while                                                                    
also paying student loans.                                                                                                      
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
9:38:38 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer noted  that  a letter  of  support from  the                                                                    
Alaska  Student  Loan  Corporation  was  located  in  member                                                                    
files.                                                                                                                          
                                                                                                                                
DIANE  BARRANS,  EXECUTIVE  DIRECTOR, ALASKA  COMMISSION  ON                                                                    
POSTSECONDARY EDUCATION,  DEPARTMENT OF EDUCATION  AND EARLY                                                                    
DEVELOPMENT,   EXECUTIVE   OFFICER,  ALASKA   STUDENT   LOAN                                                                    
CORPORATION, replied  in the affirmative. She  said that the                                                                    
corporation  had been  working  with  its financial  advisor                                                                    
over the  last year in  order to  identify way in  which the                                                                    
rates  that Alaska  residents  paid on  the  loans could  be                                                                    
reduced,  as well  as possible  ways to  make the  loan more                                                                    
accessible to Alaska students.                                                                                                  
                                                                                                                                
9:39:51 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  requested an explanation of  why the state's                                                                    
interest on student loans was 7.3 percent.                                                                                      
                                                                                                                                
Ms.  Barrans replied  that since  the  establishment of  the                                                                    
Alaska Student  Corporation in 1987,  the way the  loans had                                                                    
been  financed was  that debt  was issued  in the  financial                                                                    
markets  that was  backed by  the assets  of the  loans. She                                                                    
reported that the  markets had taken a  substantial turn for                                                                    
the  worse regarding  the pricing  of the  state's loans  as                                                                    
well as  the underwriting criteria  that was expected  to be                                                                    
applied  to  the loans.  She  related  in the  current  bond                                                                    
market,  the cost  of the  funds alone  for the  state using                                                                    
bonds was around  the high 4 percent low  5 percent, without                                                                    
consideration  of  the  cost of  servicing  the  loans.  She                                                                    
stated that  the underwriting criteria  had been  changed in                                                                    
2009  because  the  rating agencies  and  bond  buyers  were                                                                    
exhibiting increased scrutiny of  the underlying assets. She                                                                    
said that  borrowers currently had to  establish good credit                                                                    
or have a co-signer with established good credit.                                                                               
                                                                                                                                
9:41:45 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  inquired  whether the  default  rate  among                                                                    
students had contributed to the high interest rate.                                                                             
Ms. Barrans replied  that the default rate was  not a factor                                                                    
in the cost of funds. She  explained that the bond was asset                                                                    
backed and  that the  rates had risen  in recent  years. She                                                                    
furthered  that the  default  rate  came into  consideration                                                                    
when the  state was  structuring the bond  deals themselves.                                                                    
She said  that when  examining the amount  of assets  to the                                                                    
bonds  that were  issued, the  higher  the fault  rate in  a                                                                    
portfolio  would  require  an  increase  in  the  amount  of                                                                    
collateral necessary.                                                                                                           
                                                                                                                                
9:43:00 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  inquired what type of  collateral was needed                                                                    
and whether the parents were required to co-sign.                                                                               
                                                                                                                                
Ms. Barrans replied  that if the applicant did  not meet the                                                                    
credit test, a co-signer would be necessary.                                                                                    
                                                                                                                                
9:43:21 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  queried  what  the  default  rate  was  for                                                                    
student loans.                                                                                                                  
                                                                                                                                
Ms. Barrans replied that the  last published annual rate was                                                                    
6.4 percent;  the rate had  been lower  in the past  but had                                                                    
risen due to the economic climate on a national level.                                                                          
                                                                                                                                
9:43:52 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  asked how  Alaska's  rate  compared on  the                                                                    
national level.                                                                                                                 
                                                                                                                                
Ms. Barrans  responded that the  rate was average.  She said                                                                    
that  rates varied  as to  whether  or not  a co-signer  was                                                                    
required;   many   alternative  education   loan   providers                                                                    
required a co-signer.                                                                                                           
                                                                                                                                
9:44:32 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer understood that  the corporation was required                                                                    
to make money off the loan  program and then give a dividend                                                                    
back  to the  state. He  thought  that instead  of giving  a                                                                    
dividend  to  the state  the  rates  for students  could  be                                                                    
reduced.                                                                                                                        
                                                                                                                                
Ms.  Barrans replied  that in  2001-2002 there  had been  an                                                                    
expectation that corporations return  funds to the state for                                                                    
other uses.  She said that  the corporation's  statutes were                                                                    
amended to indicate that any  year that there was net income                                                                    
a dividend would be provided back to the state.                                                                                 
                                                                                                                                
9:47:02 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  inquired  whether   the  program  would  be                                                                    
available for out-of-state students.                                                                                            
                                                                                                                                
Ms. Barrans replied in the affirmative.                                                                                         
                                                                                                                                
Co-Chair  Meyer surmised  that  the loans  could  be used  a                                                                    
recruiting tool for the university.                                                                                             
                                                                                                                                
Ms. Barrans agreed.                                                                                                             
                                                                                                                                
9:48:05 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  wondered if  the  program  could result  in                                                                    
additional risk to the state.                                                                                                   
                                                                                                                                
Ms.  Barrans  responded  that  the  objective  would  be  to                                                                    
structure  the loans  and bond  issues in  a way  that would                                                                    
mitigate the risk  to the state. Ultimately,  the bonds were                                                                    
general obligation bonds,  but the Texas model,  used in the                                                                    
development   of  the   proposal,  was   based  on   general                                                                    
obligation  debt and  had  never resulted  in  the State  of                                                                    
Texas making repayments.                                                                                                        
                                                                                                                                
9:49:37 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer inquired  //. Ms.  Barrans replied  that the                                                                    
commission  promoted  the  federal  loans if  the  rate  was                                                                    
better///.                                                                                                                      
                                                                                                                                
Co-Chair  Meyer  realled that  some  were  income based  and                                                                    
inquired//. Ms. Barrans responded that//.                                                                                       
                                                                                                                                
9:50:39 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer  inquired  if Department  of  Education  and                                                                    
Early  Development required//.  Ms.  Barrans responded  that                                                                    
that it was not a requirement, but that///.//.                                                                                  
                                                                                                                                
9:50:58 AM                                                                                                                    
                                                                                                                                
Co-Chair  Meyer queried  the amount  that the  student could                                                                    
receive from the state versus  the amount they could receive                                                                    
from the federal government.                                                                                                    
                                                                                                                                
Ms. Barrans  said that  the commission  promoted use  of the                                                                    
federal  loans,  provided  it  was a  better  deal  for  the                                                                    
student. She  furthered that  the commission  urged students                                                                    
to view the  loans from the state as  supplemental loan used                                                                    
to fill any  gap in tuition payment. She  explained that the                                                                    
annual maximum  for an undergraduate  student was  $8500 per                                                                    
year.                                                                                                                           
                                                                                                                                
Co-Chair  Meyer understood  that  the loans  on the  federal                                                                    
level were based  on income but that the  state's loans were                                                                    
not.                                                                                                                            
                                                                                                                                
Ms. Barrans responded  that the state loans  were not income                                                                    
based.  She  said  that the  federal  subsidy  available  to                                                                    
borrowers  was income  based. She  stated  that the  federal                                                                    
loan was an entitlement, anyone  could borrow it and certain                                                                    
benefits were available based on family income.                                                                                 
                                                                                                                                
Co-Chair  Meyer asked  if the  Free Application  for Federal                                                                    
Student Aid (FAFSA) was required for the state loan.                                                                            
                                                                                                                                
Ms. Barrans  relayed that if  the FAFSA was required  by the                                                                    
school the  student would need  to complete it;  however, it                                                                    
was not a requirement of the student loan program.                                                                              
                                                                                                                                
Co-Chair Meyer  asked the University of  Alaska required the                                                                    
FAFSA.                                                                                                                          
                                                                                                                                
Ms.  Barrans  said that  they  either  required or  strongly                                                                    
encouraged  the FAFSA.  She suggested  that the  online form                                                                    
had  become  easier to  fill  out  and that  completing  the                                                                    
application  would   help  students   access  all   the  aid                                                                    
available to them.                                                                                                              
                                                                                                                                
9:51:49 AM                                                                                                                    
                                                                                                                                
Senator Olson  wonders why a  student would take out  a loan                                                                    
at 7.3 percent interest when  they could receive a loan from                                                                    
another institution at a lesser rate.                                                                                           
                                                                                                                                
Ms. Barrans  thought that if  a student could pay  for their                                                                    
education using only the lower  rate federal loans then they                                                                    
should do so.                                                                                                                   
9:52:41 AM                                                                                                                    
                                                                                                                                
Senator Olson  highlighted the default rate  of 6.4 percent.                                                                    
He  wondered how  the  state would  continue  to manage  the                                                                    
default rate during unstable economic climates.                                                                                 
                                                                                                                                
Ms.  Barrans replied  that the  bond  deals were  structured                                                                    
with  overcollateralization; one  of the  factors the  state                                                                    
considered was what was expected  not to be collected on the                                                                    
loans,  either from  default  or  permanent disability.  She                                                                    
asserted  that  it would  not  be  expected that  the  state                                                                    
would, in any way, subsidize the program.                                                                                       
                                                                                                                                
9:53:31 AM                                                                                                                    
                                                                                                                                
Senator Olson assumed  that there would be  no dividend paid                                                                    
to the state as a result of the program.                                                                                        
                                                                                                                                
Ms.   Barrans  responded   that  it   had  never   been  the                                                                    
corporation's objective to be able  to pay a dividend to the                                                                    
state.                                                                                                                          
                                                                                                                                
9:54:22 AM                                                                                                                    
                                                                                                                                
Senator  Hoffman wondered  if there  would be  opposition to                                                                    
changing the constitution to include the loans.                                                                                 
                                                                                                                                
Ms. Barrans replied that one  of the benefits was that there                                                                    
did  not seem  to be  any opposition  other than  people not                                                                    
wanting to alter the state constitution.                                                                                        
                                                                                                                                
9:55:27 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer inquired  if the loans could  be limited only                                                                    
to students enrolled in schools within the state.                                                                               
                                                                                                                                
Ms.  Barrans replied  that it  would be  a policy  call. She                                                                    
thought a  reduction in loan  volume could be  an unexpected                                                                    
consequence. She  said that the  number of  students already                                                                    
receiving loans  was small.  She added  that when  trying to                                                                    
scale a program to achieve  efficiencies in terms of cost of                                                                    
servicing, the smaller the program  is the more expensive is                                                                    
for  those  participating.  If the  size  of  the  borrowing                                                                    
population can  be expanded then  the cost is spread  over a                                                                    
greater number of individuals thereby  reducing the cost for                                                                    
all.                                                                                                                            
                                                                                                                                
9:56:52 AM                                                                                                                    
                                                                                                                                
Co-Chair Meyer asked the denial rate percentage                                                                                 
                                                                                                                                
Ms. Barrans responded that it was approximately 40 percent.                                                                     
                                                                                                                                
9:57:14 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough noted  that  allowing the  percentage                                                                    
rates  to  drop would  allow  for  the possibility  for  the                                                                    
commission to reduce the required credit score.                                                                                 
                                                                                                                                
Ms. Barrans replied that the  credit criteria could probably                                                                    
be  moderated. She  stated  that one  of  the advantages  to                                                                    
having  a  general  obligation back  bond  was  that  rating                                                                    
agencies looked to the credit  of the state that was backing                                                                    
the bond. She  did not think that the  credit criteria could                                                                    
be eliminated, but it could  be moderated to be more readily                                                                    
available to students.                                                                                                          
                                                                                                                                
9:58:43 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough believed  that  the resolution  would                                                                    
benefit the  people of Alaska  and the state's  student loan                                                                    
program.                                                                                                                        
                                                                                                                                
9:59:42 AM                                                                                                                    
                                                                                                                                
Co-Chair Kelly MOVED to REPORT  SJR 23 out of committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
SJR  23 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and  with a new  fiscal impact note  from the                                                                    
Office of  the Governor  and a new  fiscal impact  note from                                                                    
the Legislature.                                                                                                                
                                                                                                                                
10:00:05 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:03:08 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 104                                                                                                           
                                                                                                                                
     "An Act relating to appropriations from the dividend                                                                       
     fund; creating the criminal fund; and providing for an                                                                     
     effective date."                                                                                                           
                                                                                                                                
10:03:21 AM                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  MOVED  to   ADOPT  the  proposed  committee                                                                    
substitute  for  SB  104, WORK  DRAFT  28-LS0847\E  (Martin,                                                                    
3/28/14) as  a working  document. There being  NO OBJECTION,                                                                    
it was so ordered.                                                                                                              
                                                                                                                                
10:03:42 AM                                                                                                                   
                                                                                                                                
CHRISTINE  MARASIGAN, STAFF  SENATOR KEVIN  MEYER, spoke  to                                                                    
the  changes in  the new  bill  version. She  said that  the                                                                    
changes dealt  with paying for  arrearages and how  the fund                                                                    
would   be  divided   between  the   priorities  that   were                                                                    
originally laid  out in the legislation.  She explained that                                                                    
the substantive  changes to the  legislation could  be found                                                                    
on  Page  4,  lines  2  through 12.  She  relayed  that  the                                                                    
sponsor's  original prioritization  that  a  portion of  the                                                                    
fund went to the Violent  Crimes Compensation Board had been                                                                    
maintained, a percentage had been  added as a guideline. The                                                                    
second priority  in the current  bill went  directly towards                                                                    
sexual   assault  response   teams  and   domestic  violence                                                                    
intervention  projects  that  input  data  into  the  Alaska                                                                    
Public  Safety  Information  Network.  She  added  that  the                                                                    
remaining  amount would  be available  to the  Department of                                                                    
Corrections   for  costs   related   to  incarceration   and                                                                    
probation; monies  from the  permanent fund's  criminal fund                                                                    
went  to pay  for healthcare  for incarcerated  inmates. The                                                                    
new  section offered  general guidelines  on  how the  funds                                                                    
would be distributed.                                                                                                           
                                                                                                                                
10:06:05 AM                                                                                                                   
                                                                                                                                
SENATOR FRED DYSON appreciated the  work of the committee on                                                                    
the legislation.                                                                                                                
                                                                                                                                
10:06:29 AM                                                                                                                   
                                                                                                                                
Co-Chair Kelly  expressed discomfort that child  support had                                                                    
been removed from the bill.                                                                                                     
                                                                                                                                
10:06:40 AM                                                                                                                   
                                                                                                                                
Senator Dyson  interjected that  removing child  support had                                                                    
been a difficult  decision. He said that there  were tens of                                                                    
millions of  dollars worth of  arrearages that had  not been                                                                    
paid. He believed  that the intent of the  bill had remained                                                                    
intact.                                                                                                                         
                                                                                                                                
10:07:43 AM                                                                                                                   
                                                                                                                                
Ms.  Marasigan spoke  to  the funds  that  would go  towards                                                                    
arrearages.  She said  that legislative  legal had  asserted                                                                    
that how  the money  would be  dispersed could  constitute a                                                                    
violation to the constitution because  it would be relieving                                                                    
a personal  debt. She said that  it was difficult to  find a                                                                    
mechanism in  which to make  it work within the  confines of                                                                    
the  legislation.   She  offered   that  there   were  still                                                                    
arrearages that  would need to  be taken care at  some point                                                                    
in the future.                                                                                                                  
                                                                                                                                
10:08:42 AM                                                                                                                   
                                                                                                                                
Senator  Dyson  offered that  the  bill  was an  attempt  to                                                                    
restore  victims to  a pre-offense  condition. He  felt that                                                                    
the  children of  criminals  were victims.  He  said that  a                                                                    
perpetrators debt, either to his  victim or to his children,                                                                    
did not disappear with the  passage of the bill. He believed                                                                    
that the issue would be revisited in the future.                                                                                
                                                                                                                                
10:10:45 AM                                                                                                                   
                                                                                                                                
JOSHUA  BANKS, STAFF,  SENATOR FRED  DYSON, stated  that the                                                                    
sponsor had  tried to work  out the child support  issue. He                                                                    
expressed satisfaction  with the changes in  the legislation                                                                    
made by the committee.                                                                                                          
                                                                                                                                
10:12:09 AM                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  MOVED  to  REPORT   CSSB  104(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSB  104(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with a  new fiscal impact note from                                                                    
Senate Finance  Committee for the Department  of Corrections                                                                    
and  with   a  previously  published     zero  fiscal  note:                                                                    
FN2(ADM), a previously  published zero fiscal note:FN3(LAW),                                                                    
and a previously published zero fiscal note FN6(AMD).                                                                           
                                                                                                                                
10:12:29 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:16:08 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 140                                                                                                           
                                                                                                                                
     "An Act creating the Arctic infrastructure development                                                                     
     program and fund in the Alaska Industrial Development                                                                      
     and Export Authority."                                                                                                     
                                                                                                                                
                                                                                                                                
10:16:30 AM                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  MOVED  to   ADOPT  the  proposed  committee                                                                    
substitute  for  SB  140, WORK  DRAFT  28-LS1246\T  (Martin,                                                                    
3/29/14) as  a working  document. There being  NO OBJECTION,                                                                    
it was so ordered.                                                                                                              
                                                                                                                                
10:17:01 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
Ms. Marasigan explained the changes in the new CS.                                                                              
                                                                                                                                
10:18:12 AM                                                                                                                   
                                                                                                                                
Senator Bishop noted "shorebased" on page 8 and                                                                                 
inquired///. Ms. Marasigan//.                                                                                                   
                                                                                                                                
10:18:42 AM                                                                                                                   
                                                                                                                                
JESSE LOGAN, STAFF, SENATOR LESIL MCGUIRE, addressed the                                                                        
changes in the new CS.                                                                                                          
                                                                                                                                
10:19:47 AM                                                                                                                   
                                                                                                                                
Co-Chair Kelly MOVED to ADOPT Amendment 1(copy on file):                                                                        
                                                                                                                                
Page 7, line 11                                                                                                                 
After "fishery"                                                                                                                 
Delete "or"                                                                                                                     
Insert "and"                                                                                                                    
                                                                                                                                
There being NO OBJECTION, Amendment 1 was ADOPTED.                                                                              
                                                                                                                                
10:20:56 AM                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  MOVED  to  REPORT   CSSB  140(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSSB  140(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact note: FN1(CED).                                                                                                   
                                                                                                                                
10:21:32 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:23:18 AM                                                                                                                   
                                                                                                                                
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 199                                                                                                            
                                                                                                                                
     "An Act relating to Department of Public Safety                                                                            
     regulations allowing village public safety officers to                                                                     
     carry firearms."                                                                                                           
                                                                                                                                
10:23:50 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE BRYCE EDGMON, introduced HB 199.//.//.                                                                           
                                                                                                                                
10:26:06 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer  required an explanation  of the  fiscal note                                                                    
that was attached to the bill. Representative Edgmon//.                                                                         
                                                                                                                                
10:27:02 AM                                                                                                                   
                                                                                                                                
Co-Chair  Meyer   noted  that  the  backup   did  show  some                                                                    
expense//.                                                                                                                      
                                                                                                                                
10:27:28 AM                                                                                                                   
                                                                                                                                
Senator Olson though  that the bill was a good  one and that                                                                    
all it did was remove the prohibition for VPSOs//.                                                                              
                                                                                                                                
10:27:49 AM                                                                                                                   
                                                                                                                                
Senator Bishop supported the bill and noted that///.                                                                            
                                                                                                                                
10:28:32 AM                                                                                                                   
                                                                                                                                
Senator Dunleavy inquired where the troopers were in the                                                                        
bill.                                                                                                                           
                                                                                                                                
10:28:56 AM                                                                                                                   
                                                                                                                                
CAPTAIN STEVEN ARLOW, DEPARTMENT OF PUBLIC SAFETY,                                                                              
ANCHORAGE, spoke in support of the bill.                                                                                        
                                                                                                                                
10:29:46 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
10:30:03 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer liked the bill but indicated that he would                                                                       
hold the// he inquired if Senator Olson was carrying the                                                                        
companion bill. Senator Olson//.                                                                                                
                                                                                                                                
                                                                                                                                
10:30:25 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:30:52 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
10:31:35 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer discussed the following meeting's agenda.                                                                        
                                                                                                                                
10:32:02 AM                                                                                                                   
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:32 a.m.                                                                                         

Document Name Date/Time Subjects
2014 03 08_UA support of SJR23 and SB195.pdf SFIN 3/31/2014 9:00:00 AM
SB 195
Fiscal Note SJR23-LEG-SESS-03-07-14.pdf SFIN 3/31/2014 9:00:00 AM
SJR 23
SJR 23 Fiscal Note.pdf SFIN 3/31/2014 9:00:00 AM
SJR 23
SJR 23 Sectional Analysis.pdf SFIN 3/31/2014 9:00:00 AM
SJR 23
SJR 23 Sponsor Statement.pdf SFIN 3/31/2014 9:00:00 AM
SJR 23
SJR23supportLttrBarrans.pdf SFIN 3/31/2014 9:00:00 AM
SJR 23
SJR21 Kawerak Testimony.msg SFIN 3/31/2014 9:00:00 AM
SJR 21
SJR21 Testimony in Support HJR 33 Larry Wood.doc SFIN 3/31/2014 9:00:00 AM
SJR 21
SJR21 opposition - Otte.msg SFIN 3/31/2014 9:00:00 AM
SJR 21
SJR21 support - Jones.msg SFIN 3/31/2014 9:00:00 AM
SJR 21
SJR21 support - Torrison.msg SFIN 3/31/2014 9:00:00 AM
SJR 21
SJR21 support - Zobel.msg SFIN 3/31/2014 9:00:00 AM
SJR 21