Legislature(1997 - 1998)

04/30/1997 09:16 AM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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      SENATE HEALTH, EDUCATION & SOCIAL SERVICES COMMITTEE                     
                         April 30, 1997                                        
                           9:16 a.m.                                           
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Gary Wilken, Chairman                                                 
 Senator Loren Leman, Vice Chairman                                            
 Senator Lyda Green                                                            
 Senator Jerry Ward                                                            
 Senator Johnny Ellis                                                          
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 All members present.                                                          
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 Confirmation:  University of Alaska Board of Regents, Annette                 
    Nelson-Wright                                                              
                                                                               
 SENATE BILL NO. 170                                                           
 "An Act relating to financial assistance for students attending               
 certain graduate education programs; and providing for an effective           
 date."                                                                        
  - MOVED CSSB 170(HES) OUT OF COMMITTEE                                       
                                                                               
 SENATE CONCURRENT RESOLUTION NO. 14                                           
 Establishing the Alaska Task Force on Parity for Mental Health.               
                                                                               
  - HEARD AND HELD                                                             
                                                                               
 SENATE BILL NO. 189                                                           
 "An Act relating to eligibility for and default, collection, and              
 repayment of student loans; relating to nonrenewal of certain                 
 occupational licenses for default on a student loan; and providing            
 for an effective date."                                                       
                                                                               
  - MOVED SB 189 OUT OF COMMITTEE                                              
                                                                               
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 170 - See Senate Health, Education & Social Services minutes               
          dated 4/25/97.                                                       
                                                                               
 SCR 14 - No previous Senate action to record.                                 
                                                                               
 SB 189 - No previous Senate action to record.                                 
                                                                               
  WITNESS REGISTER                                                             
 Joe Ambrose, Staff                                                            
 Senator Taylor                                                                
 State Capitol                                                                 
 Juneau, Alaska 99801-1182                                                     
  POSITION STATEMENT:   Reported that the Sponsor recommended the              
                      committee move forward with the committee                
                      substitute.                                              
                                                                               
 Walter Majoros, Executive Director                                            
 Alaska Mental Health Board                                                    
 431 N. Franklin #101                                                          
 Juneau, Alaska 99801                                                          
  POSITION STATEMENT:   Endorsed SCR 14.                                       
                                                                               
 Jan McGillivary, CEO                                                          
 Alaska Mental Health Association                                              
 4050 Lake Otis #202                                                           
 Anchorage, Alaska 99508                                                       
  POSITION STATEMENT:   Supported SCR 14.                                      
                                                                               
 Peter Braveman                                                                
 Family Centered Services of Alaska                                            
 620 5th Avenue                                                                
 Fairbanks, Alaska 99701                                                       
  POSITION STATEMENT:   Supported SCR 14.                                      
                                                                               
 Don Dapcevich, Executive Director                                             
 Advisory Board on Alcoholism & Drug Abuse                                     
 PO Box 0608                                                                   
 Juneau, Alaska 99811                                                          
  POSITION STATEMENT:   Suggested that chemical dependency be included         
                      in SCR 14.                                               
                                                                               
 Ray Gillespie                                                                 
 Charter North Star Behavior Health Systems                                    
 9478 Riverbend Court                                                          
 Juneau, Alaska 99801                                                          
  POSITION STATEMENT:   Supported SCR 14.                                      
                                                                               
 Jeff Jessee, Executive Director                                               
 Alaska Mental Health Trust Authority                                          
 3601 C Street, Suite 742                                                      
 Anchorage, Alaska 99503                                                       
  POSITION STATEMENT:   Supported exploring mental health parity.              
                                                                               
 Diane Barrans, Executive Director                                             
 Postsecondary Education Commission                                            
 3030 Vintage Boulevard                                                        
 Juneau, Alaska 99801-7109                                                     
  POSITION STATEMENT:   Discussed SB 189.                                      
                                                                               
  ACTION NARRATIVE                                                             
  TAPE 97-46, SIDE A                                                           
                                                                               
     Confirmation:  University of Alaska Board of Regents                    
                                                                               
 Number 001                                                                    
                                                                               
  CHAIRMAN WILKEN  called the Senate Health, Education & Social                
 Services Committee (HES) to order at 9:16 a.m. and announced that             
 the Confirmation hearing of the student nominee for the UA Board of           
 Regents would be held first.                                                  
                                                                               
    ANNETTE NELSON-WRIGHT , student nominee for the UA Board of Regents        
 informed the committee that someone approached her about seeking              
 the student representative position.  After learning what the                 
 position would entail, Ms. Nelson-Wright felt that it would be a              
 good way to become involved and make a difference.  Ms. Nelson-               
 Wright explained that a student representative must first be                  
 elected by the campus, then the name is forwarded to the Governor's           
 office who selects the final nominee.  Ms. Nelson-Wright informed             
 the committee that she was born and raised in Anchorage where she             
 also attended the University of Alaska-Anchorage.  Ms. Nelson-                
 Wright has lived in Juneau for about two years and attends the                
 University of Alaska-Southeast.  Ms. Nelson-Wright, a junior at the           
 university, informed the committee that her degree path was a                 
 Bachelor of Liberal Arts with an emphasis in Social Sciences.                 
                                                                               
  CHAIRMAN WILKEN  asked Ms. Nelson-Wright if there were any burning           
 issues that she wanted to attack as a Regent.   ANNETTE NELSON-               
 WRIGHT  said that many of the issues will depend upon the students,           
 but Ms. Nelson-Wright believed that the university's fiscal crisis            
 would be a big issue.                                                         
                                                                               
  SENATOR GREEN  asked if the Student Regent served as a consultant.           
  ANNETTE NELSON-WRIGHT  explained that the Student Regent has the             
 same power as the other Regents.  The only difference is that a               
 Student Regent only has a two year term as opposed to eight years.            
 In response to Chairman Wilken, Ms. Nelson-Wright agreed that the             
 Student Regent has a full vote.                                               
                                                                               
  CHAIRMAN WILKEN  announced the intention of the committee to forward         
 and endorse Ms. Nelson-Wright's nomination to the Board of Regents.           
                                                                               
                                                                               
              SB 170 REPAY GRADUATE EDUCATION AID                             
                                                                              
 Number 107                                                                    
                                                                               
  CHAIRMAN WILKEN  announced that  CSSB 170(HES)  was the next item of         
 business before the committee.                                                
                                                                               
  JOE AMBROSE , Staff to Senator Taylor, informed the committee that           
 Senator Taylor recommends that the committee move forward with the            
 committee substitute as adopted at the last meeting.  The committee           
 packet contains a memo from Diane Barrans in response to Senator              
 Leman's question regarding federal tax implications.  Mr. Ambrose             
 said that based on similar programs in other states there should              
 not be a problem.  The packet should also include a new calculation           
 based on the new committee substitute.                                        
                                                                               
  SENATOR ELLIS  inquired as to what the Conference Committee has done         
 with WAMI funding.   JOE AMBROSE  was unaware of the Conference               
 Committee's actions.   WENDY REDMAN , Vice President of the                   
 University of Alaska stated that the Conference Committee replaced            
 the money for the WAMI program in the Department of Education                 
 budget that had been previously removed.   CHAIRMAN WILKEN  clarified         
 that half of the request for WAMI had been removed and all of it              
 was replaced.   WENDY REDMAN  agreed.                                         
                                                                               
  SENATOR GREEN  moved to report CSSB 170(HES) out of committee with           
 individual recommendations and accompanying fiscal note.  Without             
 objection, it was so ordered.                                                 
                                                                               
                                                                               
         SCR 14 PARITY FOR MENTAL HEALTH TASK FORCE                          
                                                                               
 Number 161                                                                    
                                                                               
  CHAIRMAN WILKEN  announced that  SCR 14  would be the next order of          
 business before the committee.                                                
                                                                               
  WALTER MAJOROS , Executive Director of the Alaska Mental Health              
 Board (AMHB), noted that AMHB requested that legislation regarding            
 mental health parity in Alaska be introduced.  The AMHB is the                
 state planning and advocacy organization for seriously mentally ill           
 and emotionally disturbed children and adults in Alaska.  The AMHB            
 strongly endorses SCR 14.  Mr. Majoros explained that parity refers           
 to parity of insurance practices for mental health services to                
 receive parity with those receiving physical health services                  
 through insurance coverage.                                                   
                                                                               
 Mr. Majoros estimated that since 1995, 31,000 Alaskans, adults and            
 children, suffer from serious mental illnesses and emotional                  
 disturbances.  Many of these people require a range of mental                 
 health treatment services, from counseling, medication, case                  
 management, rehabilitation, crisis intervention, assessment,                  
 hospitalization, evaluation, etc.  In most cases, private insurance           
 does not cover mental health services and in the case that it does,           
 the services are very inadequate and the restrictions are greater             
 than that imposed on physical health services.  Mr. Majoros stated            
 that the AMHB believes this to be a form of bias and discrimination           
 against those with mental illnesses and emotional disturbances.               
 There has been tremendous change in the efficacy of mental health             
 treatment.  Mental health treatment now parallels physical health             
 treatment in terms of the ability to diagnose and treat.  Further,            
 the developments of recent years provide a more cost effective                
 method of treatment.                                                          
                                                                               
 Number 224                                                                    
                                                                               
 Mr. Majoros informed the committee that many mentally ill persons             
 have testified that they cannot afford to get a job because they              
 would have to go off Medicaid which funds mental health services.             
 Mr. Majoros pointed out that the mental health system supports                
 remaining on public assistance, Medicaid.  If these individual's              
 had the opportunity to receive basic coverage through private                 
 insurance, then there would not be the dependence on public                   
 programs.  Parity would decrease the reliance on public assistance            
 as well as creating a greater partnership between the public and              
 private sector in terms of meeting mental health needs in Alaska.             
                                                                               
 Mr. Majoros noted that much of SCR 14 is based on the federal                 
 legislation, the Mental Health Parity Act of 1996.  The Mental                
 Health Parity Act is the first national parity legislation that has           
 been passed.  Furthermore, the Mental Health Parity Act establishes           
 a requirement for parity on lifetime and annual dollar limits for             
 expenditures for mental health services for recipients of all                 
 insurance programs, but with many exceptions.  Mr. Majoros                    
 mentioned that small businesses of 50 or less employees are exempt            
 from the program.  Furthermore, there is no requirement to have               
 mental health coverage; an employer could choose not to have such             
 coverage or drop that coverage.  Employers can adjust co-insurance,           
 deductibles, service and medical necessity definitions all of which           
 can be different from those for physical health services.  If                 
 employers can document that the net increase in premiums are                  
 greater than one percent, the employer can be exempt.  Mr. Majoros            
 believed that this could be the beginning of parity, but recipients           
 of mental health services are not parallel with recipients of                 
 primary health care services.  Therefore, Mr. Majoros indicated the           
 necessity for a task force to review the federal legislation.                 
                                                                               
 Number 274                                                                    
                                                                               
 Mr. Majoros informed the committee that 13 states have passed or              
 proposed mental health parity laws and in total 35 states are                 
 considering this issue.  SCR 14 is an opportunity to create a                 
 public-private partnership to transfer some of the cost for mental            
 health services to the private sector which can save money.  The              
 present situation is an obstacle for mental health consumers and              
 beneficiaries to become independent.  Currently, those folks are in           
 a double bind, in other words, those folks cannot get off Medicaid            
 coverage nor can they get a job because there is no private sector            
 insurance to meet their needs.  SCR 14 would eliminate the view               
 that mental health services are different than primary health care,           
 it is part of primary health care.                                            
                                                                               
  SENATOR WARD  inquired as to who was responsible for drafting SCR 14         
 and who determined the make-up of the group.   WALTER MAJOROS                 
 explained that he was part of a group of people reviewing drafts.             
 The make-up of the task force was determined by the group, not                
 anyone specific.  Currently, the trend is to have as many mental              
 health consumers on the task force.  This resolution was modelled             
 somewhat after resolutions in other states.                                   
                                                                               
 Number 319                                                                    
                                                                               
  SENATOR GREEN  informed the committee of a conflict due to her               
 husband's employment and requested that she not be required to                
 vote.   SENATOR WARD  objected.  Therefore, Senator Green will be             
 required to vote.                                                             
                                                                               
  SENATOR GREEN  noted that her staff had discussed with the AMHB the          
 possibility of the AMHB creating its own task force, to which there           
 did not seem to be a problem.  Senator Green said that when she was           
 on the Governor's Council for Handicapped & Gifted, the council               
 dealt with many issues that were similar to this.  The council                
 joined with other boards to report on health care; is that possible           
 with this?   WALTER MAJOROS  agreed that there are many issues that           
 AMHB and the Governor's Council take up independently.  The task              
 force was chosen because it is a national model.  Furthermore, it             
 is difficult to generate a consensus on major mental health issues.           
 Mr. Majoros emphasized the importance of having the Legislature's             
 involvement and endorsement from the start in order to increase the           
 likelihood of passing the legislation and building consensus.                 
                                                                               
  SENATOR GREEN  believed that the task force could be accomplished            
 through the AMHB without a resolution.  Senator Green suggested               
 that course be taken.                                                         
                                                                               
   In response to Chairman Wilken,  WALTER MAJOROS  stated that he was         
 the Executive Director of the AMHB.                                           
                                                                               
  CHAIRMAN WILKEN  noted that SCR 14 does not expect any General Fund          
 money to be provided for the task force.  Is there federal or other           
 state money available for those expenses?   WALTER MAJOROS  deferred          
 to Jeff Jessee from the Alaska Mental Health Trust Authority.                 
 Several discussions have occurred with the authority who supports             
 the task force, although there is no guarantee that the authority             
 would be involved with the cost of the task force.  Mr. Majoros               
 mentioned that the AMHB will do a formal proposal to the authority            
 during its budget process this year.                                          
                                                                               
 Number 381                                                                    
                                                                               
  JAN MCGILLIVARY , CEO of the Alaska Mental Health Association(AMHA),         
 informed the committee that she was the Coordinator for the                   
 Building Bridges Campaign for mental health.  The coalition                   
 represents about 40 community based mental health services which              
 are grantees of the Division of Mental Health & Developmental                 
 Disabilities.  Ms. McGillivary supported SCR 14 and the attempt to            
 join the national movement on this issue.  Ms. McGillivary was sure           
 that the task force will find that overall use of medical benefits            
 will drastically decrease once discrimination is eliminated from              
 the insurance benefits arena.                                                 
                                                                               
  PETER BRAVEMAN , Family Centered Services of Alaska, informed the            
 committee that he had a mentally ill sister in another state and              
 would be speaking from that perspective as well as a provider.                
 Current insurance company practices discriminate against consumers            
 which perpetuates the stigma consumers and families live with.  Mr.           
 Braveman stated that his sister receives woefully inadequate                  
 services, costly, and crisis driven services.  Often his family               
 does not interrupt a crisis for his sister because insurance                  
 benefits will run out or the insurance does not cover actions until           
 in crisis.                                                                    
                                                                               
 As a provider, Mr. Braveman sees consumers that do not have a                 
 choice when the insurance ends and the consumer must use publicly             
 funded grantees and have limited access to other community                    
 providers.  Such situations tax public mental health providers.               
 Mr. Braveman supported SCR 14.                                                
                                                                               
 Number 427                                                                    
                                                                               
  DON DAPCEVICH , Executive Director of the Advisory Board on                  
 Alcoholism & Drug Abuse, noted that the Advisory Board on                     
 Alcoholism & Drug Abuse has an interest in being part of the task             
 force.  This issue is equally important for chemical dependency               
 programs as for mental health programs.  Mr. Dapcevich indicated              
 that the Mental Health Trust Authority would be interested in                 
 chemical dependency being added to the task force.  Mr. Dapcevich             
 encouraged the committee to include chemical dependency as a                  
 participant in the task force.  During this era of welfare reform,            
 quality services both in the private and public sector are                    
 necessary and SCR 14 would be a vehicle for that.  Private sector             
 involvement in chemical dependency has significantly diminished in            
 Alaska due to the insurance practices of the predominant carriers.            
 The predominant carriers have severely restricted access to the               
 resources of insurance companies for third party payments.                    
                                                                               
 Mr. Dapcevich noted that this would require minimal costs.  In                
 terms of insurance premiums to include mental health and chemical             
 dependency treatment services, Mr. Dapcevich had received two                 
 different studies which reported that the cost ranges from .4                 
 percent to .7 percent increase in premiums.  This is a minimal cost           
 when considering the quality of services and the decrease in                  
 dependency on public funded services.  Mr. Dapcevich reiterated the           
 need to include chemical dependency and noted that he would provide           
 the committee with a letter with the specific language changes to             
 the resolution to include chemical dependency.                                
                                                                               
  RAY GILLESPIE , Charter North Star Behavior Health Systems,                  
 supported SCR 14.  Gathering the facts about parity is good public            
 policy.  Mr. Gillespie said that he did not have any preconceived             
 notions regarding the findings, conclusions, or resulting public              
 policy recommendations.  With regard to why this task force could             
 not be done by a private organization, Mr. Gillespie believed that            
 the findings would be more credible if the findings came from a               
 group such as the Parity Task Force established by the Legislature.           
                                                                               
  CHAIRMAN WILKEN  announced that SCR 14 will be held to the next              
 scheduled meeting.  With regard to Senator Ward's question about              
 the authors of SCR 14, Chairman Wilken informed the committee that            
 those involved were Mr. Majoros from the AMHB, Ms. Macklen from the           
 Coalition of Mental Health Organizations, and Mr. Jessee from the             
 Mental Health Trust Authority.                                                
                                                                               
  JEFF JESSEE , Alaska Mental Health Trust Authority, said that the            
 trustees are supportive of exploring mental health parity.  The               
 resolution may allow the possibility to review strategic options              
 for introducing parity legislation.  SCR 14 has the potential to              
 significantly increase the availability of mental health services.            
 The trustees view the resolution as a way to spread some of the               
 risk across a larger constituency and perhaps, reduce the fiscal              
 demands on both the state General Fund and on the Trust Authority             
 funds.                                                                        
                                                                               
  CHAIRMAN WILKEN  said that SCR 14 would be held.                             
                                                                               
                                                                               
           SB 189 EDUC.LOAN REPAYMNT\ELIG.; OCC. LIC.                         
                                                                              
 Number 508                                                                    
                                                                               
  CHAIRMAN WILKEN  announced that  SB 189  was the next order of               
 business before the committee.  Chairman Wilken recalled that                 
 during the first few days of session there was a briefing about the           
 student loan program.  During that briefing Chairman Wilken was               
 struck by the losses to the student loan program which are                    
 unacceptable.  Chairman Wilken then had discussions with Ms.                  
 Barrans which determined that the student loan program should not             
 be a give away program.  Ms. Barrans worked on SB 189.  Chairman              
 Wilken informed the committee of a 1994 student loan program study            
 which found that corresponding with late borrower's is the most               
 significant cost to the program.                                              
                                                                               
  DIANE BARRANS , Executive Director of the Postsecondary Education            
 Commission (PSEC), noted that the committee packet contains                   
 pertinent statistics.  At the December 1996 meeting, the PSEC did             
 approve a legislative agenda of which a portion is included in                
 SB 189.  Ms. Barrans informed the committee that for the past six             
 years, the PSEC's annual financial statements have reflected                  
 operational losses which have not been offset by general fund                 
 appropriations.  The cumulative effect has gradually threatened the           
 corporation's ability to continue to issue additional debt.  Both             
 the corporation and the commission have sought ways in which to               
 reverse this effect.  Ms. Barrans acknowledged that the Legislature           
 has provided the program with some collection methods such as the             
 confiscation of permanent fund dividends and license revocation.              
 These tools have proven effective in reducing the programs default            
 rate by 8 percent since FY92, however the default rate remains                
 around 18 percent which is unsustainable.  Ms. Barrans pointed out            
 that the 18 percent default rate represents about $115 million in             
 loans.  SB 189 includes mechanisms that will be effective in                  
 reducing defaults and dollars lost to the loan programs.                      
                                                                               
 Ms. Barrans informed the committee that the program experienced a             
 $2.6 million deficit in FY96 which eroded the asset base of the               
 corporation.  Ms. Barrans expected that loss to increase to about             
 $4 million in FY97 because of the increased borrowing volume due to           
 higher loan limits.  SB 189 is timely.  Ms. Barrans provided the              
 committee with articles regarding the beneficial effects of                   
 alternative student loan program collections and federal student              
 loan program collections.                                                     
                                                                               
  CHAIRMAN WILKEN  asked Ms. Barrans to discuss the letter from Smith          
 Barney which is included in the committee packet.                             
                                                                               
  DIANE BARRANS  informed the committee that Smith Barney is the               
 senior underwriter for the corporation.  The letter suggests that             
 applicants be pre-screened and that credit underwriting standards             
 be implemented.  Ms. Barrans stated that the commission has                   
 discussed a broad screening that would not screen out those with              
 minor credit issues.  Smith Barney indicated that pre-screening of            
 applicants could reduce the default rate by 3 percent. Smith Barney           
 discussed enhanced collection tools such as license renewal                   
 intervention, commercially diligent loan collection, wage                     
 garnishment, and the continued use of PFD garnishment.  All those             
 tools should increase the recovery rate on defaulted loans.  Ms.              
 Barrans explained that although 18 percent of the loans are in                
 default, collection on those defaulted loans occurs and the actual            
 loss to nonpayment is about 12 percent.                                       
                                                                               
  TAPE 97-46, SIDE B                                                           
                                                                               
 Number 591                                                                    
                                                                               
 Ms. Barrans noted that the Smith Barney letter discusses increasing           
 interest rates.  There are two ways to improve the return rate on             
 loans:  increase the interest rate for the repayment period; have             
 interest begin accruing when the student receives the funds.  Ms.             
 Barrans pointed out that there are substantial interest free                  
 periods while a student continues his/her education.  However, the            
 corporation pays interest on the loan during the entire time which            
 results in a loss to the corporation.  Ms. Barrans stated that the            
 most benefit to the corporation would be to allow interest to                 
 accrue throughout the life of the loan.  SB 189 is a compromise               
 that would increase the repayment stream from interest income,                
 therefore the cap is increased from 2.5 percent to 3 percent.  In             
 1997 and 1998, Ms. Barrans anticipated an 8.6 percent interest rate           
 on loans.  Therefore the additional .5 percent would result in a              
 9.1 percent interest rate.  Ms. Barrans pointed out that the                  
 interest rate that the student actually pays is a little less than            
 9.1 percent due to the interest free periods on the loan.  The                
 Smith Barney letter does mention that Tile 4 loans are an option.             
 If the corporation were to offer both state funded and federally              
 funded loans, this would offer loans that would be almost fully               
 insured by the federal government.                                            
                                                                               
  SENATOR GREEN  said that SB 189 takes a new avenue.  Currently, the          
 loan has been available upon request.  SB 189 would require a                 
 credit check and worthiness.  Senator Green inquired as to what the           
 fiscal note covered.   DIANE BARRANS  explained that the fiscal note          
 covers the cost of electronically running a tape of the                       
 corporation's applicant pool against a credit bureau.                         
                                                                               
  CHAIRMAN WILKEN  clarified that SB 189 would not require that every          
 applicant be screened, but only those with prior credit history.              
                                                                               
 DIANE BARRANS  informed the committee that the commission had                 
 discussed screening those applicants 21 or older due to the lack of           
 credit of applicants under the age 21.  No credit is good credit;             
 an applicant will not be turned away because of the lack of credit.           
 Ms. Barrans noted that policy is not stipulated in SB 189, but this           
 is the approach the commission would put in place.                            
                                                                               
  CHAIRMAN WILKEN  stated that he did not intend to narrow the window          
 for applicants to begin a college career, but once the education is           
 completed the person is responsible for repayment.                            
                                                                               
 Number 550                                                                    
                                                                               
  SENATOR ELLIS  requested Ms. Barrans inform the committee about              
 credit worthy cosigners.   DIANE BARRANS  stated that any entity with         
 a credit screening can establish parameters.  A credit bureau                 
 assigns points to certain types of repayment behavior.  Ms. Barrans           
 said that by regulation, the commission would decide what is                  
 egregious bad debt.  If an applicant failed to meet that test, the            
 applicant could apply with a co-signer that would have to meet that           
 test.                                                                         
                                                                               
  CHAIRMAN WILKEN  inquired as to the .5 percent ceiling on profit.            
 Can the corporation make a profit of up to .5 percent on the loan             
 portfolio?   DIANE BARRANS  said that it was about a two percent              
 spread.  Ms. Barrans stated that Bond counsel would have to provide           
 an opinion as to what can be earned without endangering the                   
 corporation's tax exempt status.   CHAIRMAN WILKEN  asked if the              
 corporation's goal is to profit or break even.   DIANE BARRANS                
 replied that the goal is to break even with SB 189.  Ms. Barrans              
 said that if the corporation's goal was profit, that would require            
 a thorough public policy decision from the Legislature and the                
 public.   CHAIRMAN WILKEN  noted the request for the board to provide         
 a resolution in support of SB 189.   DIANE BARRANS  noted that the            
 commission is on record as supporting everything except the .5                
 percent which was not before the commission at the December                   
 meeting.  Ms. Barrans said that the resolution could be requested             
 at the board's June meeting.                                                  
                                                                               
    SENATOR GREEN  discussed the ability to revoke occupational license        
 which in other legislation has come to include recreational                   
 licenses as well.  Senator Green recommended that sports fishing              
 licenses be exempted from those licenses that can be revoked under            
 SB 189.  Senator Green asked if all the appeals come through Ms.              
 Barrans' office and has that always been the case; is there another           
 method of recourse?   DIANE BARRANS  said that all appeals come               
 through her office.  Ms. Barrans explained that certain appeals do            
 go to a hearing officer and the commission has stipulated that                
 appeal process by regulation.  Those appeals going to a hearing               
 officer occur when a person requests a write off of his/her loan              
 due to medical circumstances.  If a person's PFD is garnished, a              
 hearing officer process would occur.  SB 189 would use the                    
 administrative appeal process with the executive director, with the           
 exception of the PFD garnishment.                                             
                                                                               
 In response to Senator Green,  DIANE BARRANS  explained that in the           
 last six months the loan program has increased the level of                   
 correspondence to the borrower.  The number of written notices sent           
 out has doubled.  This process is still being reviewed.  Ms.                  
 Barrans acknowledged that the process can be improved so that                 
 before a loan goes to a collection agency, all internal measures              
 have been exhausted.  Ms. Barrans emphasized that people are                  
 learning that an Alaska student loan is a real debt.                          
                                                                               
 Number 473                                                                    
                                                                               
 With regard to licenses, Ms. Barrans pointed out that the                     
 commission only reviews licenses that were funded with the                    
 education for which the loan paid.  The commission is not reviewing           
 the revocation of any recreational licenses.  Furthermore, some of            
 the occupational licenses have been excluded if the license is not            
 centrally administered.                                                       
                                                                               
  CHAIRMAN WILKEN  noted that in conversations in the past, he                 
 requested that there be methods by which to measure the success of            
 SB 189 which is discussed in the packet.  Chairman Wilken requested           
 that Ms. Barrans develop that more using 1998 as the base year and            
 comparing today to 1998 and where the program would be in 2002.               
                                                                               
  TERESA WILLIAMS  said that she was available for any questions.              
                                                                               
  CHAIRMAN WILKEN  inquired as to the importance of SB 189 getting             
 through this year.   DIANE BARRANS  emphasized that getting SB 189            
 through this year would be extremely helpful.  Ms. Barrans informed           
 the committee that the commission is well into the application                
 process for the 1997-98 year.  All of the contracts are written and           
 prepared by early February.  Ms. Barrans pointed out that the                 
 collection tools would be available immediately upon receipt, but             
 the interest rate would not effect borrowers until the 1998-99                
 year.  If SB 189 is passed before the end of this session, then all           
 the terms could be incorporated in concrete language in next year's           
 promissory notes.                                                             
                                                                               
  SENATOR LEMAN  moved to report SB 189 out of committee with                  
 individual recommendations and accompanying fiscal notes.  Without            
 objection, it was so ordered.                                                 
                                                                               
 There being no further business before the committee, the meeting             
 was adjourned at 10:15 a.m.                                                   
                                                                               

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