Legislature(1995 - 1996)
03/29/1996 09:04 AM Senate HES
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* first hearing in first committee of referral
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SENATE HEALTH, EDUCATION AND SOCIAL SERVICES COMMITTEE
March 29, 1996
9:04 a.m.
MEMBERS PRESENT
Senator Lyda Green, Chairman
Senator Loren Leman, Vice-Chairman
Senator Mike Miller
Senator Judy Salo
MEMBERS ABSENT
Senator Johnny Ellis
OTHER MEMBERS PRESENT
Representative Con Bunde
COMMITTEE CALENDAR
SENATE BILL NO. 301
"An Act relating to postsecondary education."
PREVIOUS SENATE COMMITTEE ACTION
SB 301 - See Senate Health, Education & Social Services minutes
dated 3/6/96.
WITNESS REGISTER
Mike Tibbles, Staff
Senator Green
State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Compared the proposals of EO 97 and SB 301.
Mike Ford, Legislative Legal Counsel
Legislative Affairs Agency
130 Seward Street, Suite 409
Juneau, Alaska 99801-2105
POSITION STATEMENT: Discussed the changes encompassed in SB 301.
Diane Barrans, Executive Director
Alaska Commission on Postsecondary Education
Department of Education
Executive Officer, Alaska Student Loan Corporation
3030 Vintage Boulevard
Juneau, Alaska 99801-7109
POSITION STATEMENT: Discussed SB 301.
Kathleen Strasbaugh, Assistant Attorney General
Civil Division
Department of Law
PO Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Discussed the constitutional problems with the
confirmation aspect of SB 301.
ACTION NARRATIVE
TAPE 96-25, SIDE A
SB 301 POSTSECONDARY EDUCATION
Number 002
CHAIRMAN GREEN called the Senate Health, Education and Social
Services (HESS) Committee to order at 9:04 a.m. and introduced
SB 301 as the only order of business before the committee.
MIKE TIBBLES, Staff to Senator Green, informed everyone that he
would go through the proposals of the Executive Order (EO) and
explain how they have been changed in SB 301. The executive order
proposed that the higher education and policy planning functions be
transferred to the Department of Education. Mr. Tibbles noted that
some of those functions have become obsolete, are no longer
required, and have been repealed from federal law. Those obsolete
functions have been removed. The advisory functions have been left
with the commission which will remain in tact.
SENATOR SALO inquired as to what section that referred.
MIKE FORD, Attorney with the Division of Legal Services, explained
that functions relating to postsecondary institutions were left
with the commission. Page 18 of the draft CS is where this is
located. He noted that there are numerous differences between the
draft CS and the EO. Some functions of the commission are
transferred to the existing corporation while others are being
placed in the Department of Education and some are left with the
commission. Mr. Ford said this is an effort to maintain
legislative confirmation of members to the commission, to transfer
the loan functions to the corporation.
CHAIRMAN GREEN mentioned that the task force had discussed the need
to specify a difference between the institutional authorizations
and loan approvals.
Number 077
MIKE TIBBLES referred Senator Salo to Section 46 in answer to her
question. The EO proposed to move the Alaska Student Loan
Corporation to the Department of Revenue which SB 301 does. The
proposed increase in the corporation's board membership from 5 to
7 is accomplished as well as adding three non voting members. The
three non voting members consist of one student and a legislator
from each body. Therefore, the majority of the board will consist
of public members rather than agency individuals.
EO 97 also proposed to eliminate the special interest positions
which SB 301 does with specific language. EO 97 proposed to move
the financial aid program administration and institutional
authorization functions from the commission to the corporation.
SB 301 leaves the institutional authorization with the commission,
but SB 301 moves the financial aid program and administration to
the corporation.
CHAIRMAN GREEN said that the intent with SB 301 was to take
everything from EO 97 possible and place it in the bill with
legislative oversight and separate the institutional authorization
and the financial aid program.
Number 123
SENATOR SALO inquired as to what portions of the EO are not
encompassed in SB 301.
MIKE TIBBLES pointed out that SB 301 allows the commission to
remain in tact with the institutional authorization in order to
give the commission regulatory authority.
MIKE FORD mentioned that Section 2 of SB 301 gives the University
of Alaska the authority to run the WAMI program which the
commission currently runs. Mr. Ford pointed out that some sections
in SB 301 are clean-up from SB 123. Section 12 changes the amount
of the loan a full-time undergraduate and a full-time graduate
student can receive.
Mr. Ford informed the committee of a suggestion regarding the ties
between the two boards. The commission and the corporation are the
same people. In the draft CS of SB 301, the members of the
commission consist of the voting members of the corporation. He
emphasized that the goal is to maintain legislative oversight of
the loan process by having the power of legislative confirmation
over the commission members. Mr. Ford suggested that the language
be changed so that the corporation members consist of the
commission members in order to avoid the dilemma of an unconfirmed
commission member.
CHAIRMAN GREEN inquired as to where the language would need to be
changed.
MIKE FORD pointed out that the board of the corporation is in
Section 4, the board of the commission is in Section 44. The
language should be reversed in those two sections. The corporation
should consist of the voting members of the commission. Mr. Ford
also noted that a substantive change was made in Section 22 which
left in an existing provision of law on page 9, line 19. The same
issue occurs in Section 30 of SB 301 and that too should be
changed. Mr. Ford believed that the fees are subject to
appropriation and that language should be in the bill.
Number 232
SENATOR SALO inquired as to the effect of moving the WAMI program
into the university. Senator Salo noted that every year there has
been debate over the funding for this program. Will this pass on
the obligation without the money? MIKE FORD clarified that the
power of appropriation will remain. Mr. Ford did not envision any
change other than who receives the funds.
CHAIRMAN GREEN mentioned that the concern was that currently there
are two separate budget items which pertain to WAMI one being in
the Department of Education and the other in the university.
Chairman Green said that the university should handle the program
if the program is a valid university and state program. She
inquired as to who made the request for this change.
REPRESENTATIVE BUNDE said that he made the request. Currently,
there are two different funding communities for the same program
and this would simply consolidate the program. The program would
not be changed at all. This is pass through money after the first
year; the university instead of postsecondary education would pass
the money to the University of Washington.
SENATOR SALO felt that the WAMI funding would be more vulnerable
under this arrangement because of the pressures on the university's
budget. She noted her support of the WAMI program.
REPRESENTATIVE BUNDE said that if Senator Salo meant vulnerable in
the sense that the actual cost of the program would be more
evident, he would agree. He believed the debate over whether the
state can afford to fund WAMI will continue. Representative Bunde
felt that placing the funding in a single budget item would clarify
the debate by showing the cost of the program in one item.
MIKE FORD informed the committee that there are a number of changes
encompassed in SB 301 and the committee should have a sectional
analysis specifying the technical changes. He said that he had
previously pointed out the substantive changes. There are some
clean-up provisions removing many provisions that are no longer
required under federal law.
CHAIRMAN GREEN asked if that, the repealers, was contained in
Section 55. MIKE FORD replied no, part of the repealers are
contained in Section 55. The repealers are in many provisions
relating to the existing functions of the commission, references,
and the relationship between the commission and the corporation
which are no longer necessary.
Number 298
SENATOR MILLER moved that Ford workdraft 3/28/96, version C be
adopted in lieu of the original bill for discussion purposes.
Hearing no objection, it was adopted.
SENATOR SALO recommended that the committee review the suggestion
regarding which board creates the other board. This probably is
not the final workdraft. SENATOR MILLER agreed.
DIANE BARRANS, Executive Director of the Alaska Commission on
Postsecondary Education and Executive Officer of the Alaska Student
Loan Corporation, noted that the commission has worked with
Representative Bunde, Representative Toohey, and Senator Green on
this draft; however, that does not mean that SB 301 would be an
ideal situation. Ms. Barrans said that the commission has always
been committed to making the necessary changes for the success of
the loan program. The EO would have consolidated all agency
functions under one board with a clear focus on the general welfare
of the program and its customers. Ms. Barrans acknowledged that SB
301 does accomplish some positive changes such as separating the
institutional authorization function by placing that function in
the Department of Education and moving the administration of the
loan fund to the Department of Revenue. The question still
remains: why are two boards necessary? Under SB 301, the
inefficiencies of a state agency having to administer the function
of two distinctly separate bodies would remain.
Ms. Barrans echoed the benefits of SB 301 which Mr. Tibbles and Mr.
Ford previously mentioned. The change in the number of board
members would provide some cost reduction. Furthermore, arranging
meetings and doing corporation business would be easier. All of
the AS 14.43 functions and administration of the loan fund would
also be consolidated with the administration of the loan finances.
Moving the institutional authorization function to the Department
of Education would clearly separate that activity as well as the
liability from the fund. Ms. Barrans also reiterated the clean-up
language that eliminates the outdated or unnecessary language which
was not possible under the EO. Ms. Barrans believed that the
Department of Education is working on a fiscal note reflecting the
cost of managing the institutional authorization function as well
as the commission board. SB 301 does provide for the assessment of
fees in order to offset the cost to the department. Ms. Barrans
indicated that the department would pass along the cost of
regulation to the regulated bodies. Currently, that function is
funded through corporation receipts. Due to the indenture and
covenants on the bonds, the transfer of the current funding source
for those activities is not possible. Ms. Barrans offered to
answer any questions.
Number 366
SENATOR SALO inquired as to Ms. Barrans reaction to changing who is
a subset of who regarding the corporation and the commission.
DIANE BARRANS said that this was the first discussion of such and
she would have to consult with the Bond Council. Ms. Barrans
expressed concern that the business of the corporation must
continue even with the process of legislative confirmation.
SENATOR SALO requested an explanation of the general fund or
corporation receipts to which Ms. Barrans previously referred.
DIANE BARRANS explained that the institutional authorization
function works out of the Anchorage office. Those employees
administer student financial aid compliance reviews as well as
institutional authorization reviews which achieves efficiency. Ms.
Barrans estimated that the staffing costs for institutional
authorization alone would total about $125,000 per year. The dual
activity of the staff may allow institutional authorization to be
administered more efficiently than under the Department of
Education. Currently, the Department of Education does not have
staff to look at postsecondary institutions.
SENATOR SALO asked if Ms. Barrans meant that there is a problem
with the bond. DIANE BARRANS explained that there are covenants on
the bonds. That revenue, corporation receipts, funds all of the
activity. Therefore, only functions related to the student loan
program can be financed. The institutional authorization function
has been done without general fund support, but staff has done
institutional authorization functions as well as loan functions.
SENATOR SALO suggested that if this function is transferred to the
Department of Education and that employee is given other duties
within the department, there would be a problem with corporate
receipts paying for that. DIANE BARRANS agreed. Ms. Barrans
emphasized that it is not an option to transfer staff funding or
revenues with this. Perhaps, the positions could be transferred.
Ms. Barrans estimated that it would amount to 1.3 full-time
positions in order to administer institutional authorization. Ms.
Barrans reiterated that SB 301 does provide for the assessment of
fees on the regulated institutions to offset or cover the cost of
the function. Long-term there should be a program receipt offset
to pay for the function.
Number 419
SENATOR SALO inquired as to how that would work. Senator Salo
asked if that meant paying for an evaluation authorization under
the program as a postsecondary institution. DIANE BARRANS replied
yes. Currently, there are fees associated, $100. Other states
charge fairly substantial authorization fees. Ms. Barrans said
that this is similar to occupational licensing. Regardless of the
passage of SB 301, Ms. Barrans hoped that under the Governor's fees
bill there will be an opportunity to take this function off of the
corporation receipts and have program receipts to fund this
function.
CHAIRMAN GREEN was confused. She thought that this workdraft was
brought forward by Ms. Barrans and Ms. Williams to the committee.
She was troubled by this very different reaction to the workdraft
that Chairman Green heard in the subcommittee last week. Has
something changed since that time?
DIANE BARRANS said that nothing had changed. She reiterated that
SB 301 does contain advantages and improvements to the program.
Ms. Barrans pointed out that she has consistently supported a
single board.
CHAIRMAN GREEN asked Ms. Barrans if she had determined language
creating a single board with legislative confirmation. DIANE
BARRANS replied no. That is why SB 301 is before the committee
today.
CHAIRMAN GREEN stated that the legislature feels the need for
confirmation. DIANE BARRANS said that Kathleen Strasbaugh may want
to speak to that. Ms. Barrans pointed out that the commission has
performed these functions for 21 years and without legislative
confirmation. With the two ex officio members on the corporation
board, there is a voice - if not a vote - from both the House and
the Senate. Ms. Barrans indicated that may be why the confirmation
issue has not been pressed. The language has been present for the
commission's 21 years, but no general public members have been
confirmed.
CHAIRMAN GREEN pointed out that there was also more strict criteria
regarding who the members would be or represent. Chairman Green
believed there was an interest to reach confirmation. She
expressed interest in developing a method to which Ms. Barrans
approved.
SENATOR SALO did not believe that the interest in legislative
confirmation was universal for the legislature. Senator Salo was
interested in developing the best governing body which could
function without disruption. She agreed that legislative input may
be desirable, but it may be problematic to create a situation in
which the board cannot function for any period of time. The
language must ensure that the corporation maintains a good bond
rating and can function amidst political upheaval. Senator Salo
felt that it was more important for the governing body to be able
to clearly function rather than for the legislature voting on the
membership of the body.
DIANE BARRANS believed that the commission's preferred approach has
been consistent on this issue. She believed there to be an ernest
effort to improve the program and a bill that could be debated and
discussed with regards to the best interest of the loan program.
Number 482
KATHLEEN STRASBAUGH, Assistant Attorney General in the Department
of Law, informed the committee that the confirmation of the board
poses constitutional problems. The board has not been subject to
confirmation in the past 21 years because the enforcement
activities of the board were somewhat less than a majority of the
activities of that commission. Ms. Strasbaugh pointed out that
governors of both parties have been willing to overlook the
constitutional violation in legislative membership on any such
board. This dual office holding has been tolerated because there
was not a confirmation process and the legislature was allowed to
participate.
Ms. Strasbaugh stated that she had mispoken yesterday and neither
the PERS or TERS board are subject to confirmation. Members of the
TERS board are subject to confirmation because they are the
personnel board. Currently, postsecondary is an open
constitutional question due to the smaller role their current
activities play in their overall activities. SB 301 would maintain
two boards solely for the legislature to indirectly confirm the
members of the loan corporation. Loan corporations are not subject
to confirmation which was determined early in the constitutional
juris prudes in two cases in 1963 and 1969. There is a specific
constitutional definition of which boards are subject to
confirmation. Ms. Strasbaugh said that the argument against
confirmation is made substantial due to the lack of confirmation
over these 21 years. Ms. Strasbaugh emphasized that the only
reason for the second board is to reach the corporation which would
not otherwise be possible constitutionally. In Ms. Strasbaugh's
opinion, the postsecondary commission is not a confirmation board
in the present workdraft. There have been dual boards, PERS and
the personnel board who was also the Labor Relations Agency. In
this case, the corporation is supposed to be separate so that its
assets are only subject to liability and not the full faith and
credit of the state.
SENATOR SALO said that the workdraft before the committee
establishes that the corporation board is subject to confirmation.
KATHLEEN STRASBAUGH replied not directly. If the corporation board
is the postsecondary board or vice versa, only the postsecondary
board is subject to confirmation. Ms. Strasbaugh emphasized that
in name the student loan corporation is not before the legislature;
however, if the statutes say they are the same people then in
essence the student loan corporation is being confirmed.
Number 536
SENATOR MILLER commented that this has been an ongoing discussion.
The other argument is that the framer's of the constitution
probably never envisioned the semi-public corporations of today who
control billions of dollars of state assets. Perhaps, the
constitution may have been written differently if this had been
envisioned. Senator Miller inquired as to the time when the
legislature would be involved with the billions in state assets,
the assets of the people of Alaska. He mentioned that there are
some constitutional amendments that would change part of that.
KATHLEEN STRASBAUGH clarified that she was present to point out
that this is a constitutional problem and must be addressed in a
constitutional fashion.
SENATOR MILLER noted that there were a few recommendations on
amendments.
CHAIRMAN GREEN asked if Mr. Ford had the language for the changes.
MIKE FORD said that there were a number of minor issues that were
pointed out in House HESS yesterday. There was a recommendation to
change "program to "programs" on page 4, line 21. Also there was
a recommendation to delete subsection (b) of Section 6 in order to
allow the attorney general to be legal counsel.
KATHLEEN STRASBAUGH interjected that there is a process that the
attorney general is supposed to approve legal contracts which
almost every statute includes without the second section. She felt
that subsection (b) might create confusion about the procurement
code requirements regarding legal counsel. Deleting subsection (b)
removes any ambiguity, but is does not prohibit access to private
counsel.
CHAIRMAN GREEN specified lines 29 and 30 on page 4.
MIKE FORD directed the committee to page 13, line 30 where it was
suggested to insert the "subject to appropriation" language. Mr.
Ford suggested that the existing approach to the commission and the
corporation should be reversed in order to be clear that if a
member of the commission is not confirmed, the person could not sit
on the corporation board. Mr. Ford did not believe there would be
any greater a disruption than currently because the current members
of the corporation are subject to confirmation as commissioners.
Number 580
SENATOR LEMAN said that Amendment 1 consists of the following:
page 4, line 21 delete "program" insert "programs", delete
subsection (b) under Section 6, page 13 reinsert "subject to
appropriation." Senator Leman moved Amendment 1.
SENATOR SALO inquired as to where the "subject to appropriation"
language was located.
CHAIRMAN GREEN directed Senator Salo to page 13, line 30.
Reinserting the language would make it consistent with the language
on page 9.
TAPE 96-25, SIDE B
SENATOR SALO said that she would appreciate another workdraft which
incorporated the amendments. She indicated that she would like
more time with the bill.
CHAIRMAN GREEN said that was her intention. Chairman Green
requested that the workdraft clarify the language regarding the
boards. She invited Ms. Barrans to give input on this. Chairman
Green said that she had intended to incorporate everything possible
from the EO with input from everyone involved. She reiterated the
importance of confirmations and addressing the issue before it
becomes a problem.
DIANE BARRANS pointed out that her charge was the well-being of the
student loan fund. There are issues larger than this that Senator
Miller has addressed; Ms. Barrans said that debate was beyond her
purview.
CHAIRMAN GREEN asked Ms. Barrans to stay in touch so that another
draft could be ready for Monday.
DIANE BARRANS pointed out that page 17, line 25 of Section 44
refers to the commission as the Alaska Postsecondary Education
Commission while everywhere else the bill refers to the commission
as the Alaska Commission on Postsecondary Education.
MIKE FORD said that as long as the language is consistent it would
not matter; the commission could be referred to in either manner.
Mr. Ford asked if Mr. Barrans had a preference.
SENATOR LEMAN inquired as to how the letterhead was printed. DIANE
BARRANS said Alaska Commission on Postsecondary Education.
Number 549
CHAIRMAN GREEN inquired as to Ms. Barrans' view on the WAMI and
WITCHE programs. DIANE BARRANS noted that the commission has been
supportive of the WAMI program over the years. Ms. Barrans
expressed concern with the effort to make the WAMI program at least
partially a loan program. The university is not organized to
administer a loan program, but if that is the desired direction of
the program then Ms. Barrans believed it appropriate to leave that
with the agency which administers loan programs.
CHAIRMAN GREEN requested that Ms. Barrans review the reasoning for
creating one line item for these programs. DIANE BARRANS explained
that historically, the program began its first year on the
Fairbanks campus as a State of Alaska program. Currently, there is
a contract between the State of Alaska, the University of
Washington, and the University of Alaska. When the Fairbanks
campus reorganized and downsized, the Fairbanks campus said that it
could not afford to have the program. For a couple of years, the
entire four years of the program was in Seattle. Then the
University of Alaska decided that it would make sense for them to
have a biomedical program as well as the nursing program. The
first year's funding in the University of Alaska's budget is
dedicated to the biomedical program which is the first year
training for the WAMI program. Ms. Barrans clarified that since
the program is a State of Alaska program, the commission is the
agency that funds State of Alaska student aid programs so that the
second, third, and fourth year funding was placed in the
commission's budget. This was to ensure the funding would be
independent from the university since the funding would not be used
on campus.
CHAIRMAN GREEN surmised that it would not necessarily be
inconsistent that the funding be located in the university budget.
If the university has the first year, then it would not be
inconsistent for the university to have the following years. DIANE
BARRANS replied not necessarily.
SENATOR SALO noted that there are advantages to the state and there
are involvements between Alaska and Washington which go beyond the
tuition of the students in the medical program. Therefore, Senator
Salo was leery of all the funding being placed in the university
budget. Senator Salo did not believe the program would survive in
the university budget in the same way due to the pressures the
university faces. She indicated that the connection between the
medical community in Alaska and a major medical hospital and
university and the consultations are advantageous to the entire
state. That advantage has very little to do with the students in
the program or the university. Some of the functions of the
program are a partnership between the states rather than between
the two universities. For these reasons as well as the
aforementioned possibility of the program moving to a loan status,
Senator Salo wanted to have more time with the bill.
DIANE BARRANS informed the committee that the University of
Washington School of Medicine does view itself as our regional
medical school as a state. The relationship is broader than only
a relationship with the University of Alaska-Anchorage (UAA). The
University of Washington has worked with the biomedical staff of
UAA and medical professionals in Anchorage for the last three years
in order to establish a family medical residency program.
Number 489
SENATOR LEMAN asked if Amendment 1 was adopted. CHAIRMAN GREEN
said that Amendment 1 was adopted. Chairman Green explained that
Mr. Ford would include the remaining changes in the next workdraft.
SENATOR LEMAN asked if there was an existing student member on the
board and is this the same procedure. Are there other universities
or colleges which offer course work; are those excluded by the
language?
DIANE BARRANS explained that the institutions that are listed are
four year institutions that are public or nonprofit. There is
another institution that has a junior college program. Ms. Barrans
did not believe there to be an organized student government on any
other school campus than those listed.
SENATOR LEMAN noted that Whalen Baptist College exists. What is
the rationale for naming only the ones in the bill? DIANE BARRANS
said that she could explore the possibilities. This structure has
been the most efficient structure providing nominees.
CHAIRMAN GREEN interjected that it does not have to be limited to
those listed in the bill; it is merely the nominee. She believed
that making the language more inclusive would be better.
SENATOR LEMAN agreed with the list, but he wondered if it excluded
other nominees from being considered. Senator Leman asked that
issue be reviewed.
MIKE FORD said that it could be described generically as a four
year public or nonprofit institutions submit nominees.
DIANE BARRANS suggested that the definition include language that
the institution have an organized student government in order to
ensure that the student be representative of the student body from
which they come.
MIKE FORD asked if the committee wanted that change. CHAIRMAN
GREEN said yes.
CHAIRMAN GREEN said that this bill would be before the committee on
Monday as well as HB 465 and HB 540.
There being no further business before the committee, the meeting
was adjourned at 10:07 a.m.
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