Legislature(2005 - 2006)SENATE FINANCE 532

03/20/2006 05:00 PM Senate COMMITTEE ON UNIVERSITY OVERSIGHT


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05:08:47 PM Start
05:09:51 PM Financing in Sync: Aligning Fiscal Policy with State Objectives
06:39:30 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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National Center for Public Policy and
Higher Education
National Center on Higher Education
Managements Systems
                    ALASKA STATE LEGISLATURE                                                                                  
        SENATE SPECIAL COMMITTEE ON UNIVERSITY OVERSIGHT                                                                      
                         March 20, 2006                                                                                         
                           5:08 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Gary Stevens, Chair                                                                                                     
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Con Bunde                                                                                                               
Senator Thomas Wagoner                                                                                                          
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Ben Stevens                                                                                                             
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
Presentations by:                                                                                                               
National Center for Public Policy and Higher Education                                                                          
National Center on Higher Education Management Systems                                                                          
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
See minutes from 2/7/06 and 2/28/06 SUOV meetings                                                                               
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Julie Bell, Education Program Director                                                                                          
National Conference of State Legislatures (NCSL)                                                                                
7700 East First Place                                                                                                           
Denver, CO 80230                                                                                                                
POSITION STATEMENT:  Introduced Mr. Jones                                                                                     
                                                                                                                                
Dennis Jones, President                                                                                                         
National Center for Higher Education Management Systems                                                                         
3035 Center Green Drive, Suite 150                                                                                              
Boulder, CO 80301-2251                                                                                                          
POSITION STATEMENT:  Delivered PowerPoint presentation                                                                        
                                                                                                                                
Wendy Redman, Vice President                                                                                                    
University Relations                                                                                                            
University of Alaska                                                                                                            
P.O. Box 755000                                                                                                                 
Fairbanks, AK 99775                                                                                                             
POSITION STATEMENT:  Responded to questions                                                                                   
                                                                                                                                
President Mark Hamilton                                                                                                         
University of Alaska                                                                                                            
P.O. Box 755000                                                                                                                 
Fairbanks, AK 99775                                                                                                             
POSITION STATEMENT:  Provided UA perspective                                                                                  
                                                                                                                                
Pat Pitney, Associate Vice President                                                                                            
Planning & Budget Development                                                                                                 
University of Alaska                                                                                                            
P.O. Box 755000                                                                                                                 
Fairbanks, AK 99775                                                                                                             
POSITION STATEMENT:  UA representative                                                                                        
                                                                                                                                
Diane Barrans, Executive Director                                                                                               
Alaska Commission on Postsecondary Education                                                                                    
P.O. Box 110505                                                                                                                 
Juneau, AK 99811-0505                                                                                                           
POSITION STATEMENT:  Discussion participant                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  GARY  STEVENS  called  the  Senate  Special  Committee  On                                                             
University  Oversight meeting  to  order at  5:08:47 PM.  Present                                                             
were  Senator  Con  Bunde  Senator Gary  Wilken  and  Chair  Gary                                                               
Stevens.  Senators Ralph  Seekins, Thomas  Wagoner and  Kim Elton                                                               
arrived during the course of the meeting.                                                                                       
                                                                                                                                
     ^ Financing in Sync: Aligning Fiscal Policy with State                                                                 
                           Objectives                                                                                       
                                                                                                                                
CHAIR GARY STEVENS recognized Julie Bell and Dennis Jones.                                                                      
                                                                                                                                
5:09:51 PM                                                                                                                    
                                                                                                                                
JULIE BELL,  Education Program  Director, National  Conference of                                                               
State Legislatures  (NCSL), commented  on the  increased interest                                                               
in higher education issues and then introduced Dennis Jones.                                                                    
                                                                                                                                
CHAIR GARY STEVENS  encouraged members to read  the literature in                                                               
the packets.                                                                                                                    
                                                                                                                                
DENNIS  JONES, President,  National Center  for Higher  Education                                                               
Management  Systems (NCHEMS),  explained  that the  company is  a                                                               
private non-profit  organization that does policy  work in higher                                                               
education at the  institution and state levels. He  said he would                                                               
give perspective on higher education  as it relates to the future                                                               
of a state.                                                                                                                     
                                                                                                                                
MR. JONES began the PowerPoint  presentation with a review of the                                                               
management cycle in  a public institution. He  used Venn diagrams                                                               
to  illustrate the  separation of  state and  institution agendas                                                               
with  respect to  planning,  resource  allocation and  assessment                                                               
activities.                                                                                                                     
                                                                                                                                
5:15:24 PM                                                                                                                    
                                                                                                                                
Slide 3: State Policy Objectives                                                                                                
                                                                                                                                
   · High rates of high school completion of students who have                                                                  
     taken an academically rigorous curriculum. Mr. Jones said                                                                  
     that this is increasingly recognized as an issue for higher                                                                
     education and K-12.                                                                                                        
                                                                                                                                
   · High levels of college participation of both recent high                                                                   
     school graduates and adult learners. In Alaska there's a                                                                   
     decline in the number of adults who are taking college                                                                     
     courses compared to previous years.                                                                                        
                                                                                                                                
   · High rates of college degree completion.                                                                                   
                                                                                                                                
   · High levels of degree production in the stem fields of                                                                     
     science, technology, engineering, and mathematics are                                                                      
     becoming increasingly important.                                                                                           
                                                                                                                                
   · The relationship of the university to the economic future                                                                  
     of the state.                                                                                                              
                                                                                                                                
5:17:17 PM                                                                                                                    
                                                                                                                                
Slide 4: Educational  Attainment and Rank Among  States - Alaska,                                                               
2000                                                                                                                            
                                                                                                                                
MR. JONES stated that 90.5 percent  of Alaska citizens in the 25-                                                               
64 age bracket  have received a high school  diploma. However, in                                                               
the 18-24  age bracket just  76.9 percent received a  high school                                                               
diploma, which leads to the  interesting observation that this is                                                               
the  first generation  where  kids are  less  well educated  than                                                               
their parents. In  general though, Alaska is close  to the middle                                                               
relative to the other 49  states in terms of education attainment                                                               
of the adult population.                                                                                                        
                                                                                                                                
5:18:02 PM                                                                                                                    
                                                                                                                                
Slide  5:  Differences  in   College  Attainment  (Associate  and                                                               
Higher) Between Young  and Older Adults - Percent  of Adults with                                                               
College Degrees                                                                                                                 
                                                                                                                                
The  slide illustrates  that  there  is a  much  higher level  of                                                               
postsecondary education  attainment in  the 45-60 age  group than                                                               
in the  25-34 age group. That  is an issue and  it's important to                                                               
figure out how to educate the  population and create jobs to keep                                                               
that educated populace in the state.                                                                                            
                                                                                                                                
5:19:28 PM                                                                                                                    
                                                                                                                                
Slide  6: Percent  of Population  Age 18-24  with No  High School                                                               
Diploma                                                                                                                         
                                                                                                                                
About 23.1  percent of  Alaskans in the  18-24 age  group haven't                                                               
finished  high  school and  that's  slightly  below the  national                                                               
average.                                                                                                                        
                                                                                                                                
5:19:52 PM                                                                                                                    
                                                                                                                                
Slide  7:  Alaska  Civilians  Age   25-64  in  the  Workforce  by                                                               
Education Attainment, 2000                                                                                                      
                                                                                                                                
MR. JONES  observed that if an  Alaskan in the 25-64  age bracket                                                               
hasn't finished  high school, the  chances are  4 in 10  that the                                                               
individual isn't in  the workforce at all. More  than likely that                                                               
means that  the individual is  taking from the state  rather than                                                               
contributing.  That use  of  state resources  takes  the form  of                                                               
social services, corrections, welfare  and the like. Clearly, the                                                               
more education  you have, the  more likely  it is that  you're in                                                               
the workforce.                                                                                                                  
                                                                                                                                
5:20:31 PM                                                                                                                    
                                                                                                                                
Slide 8: Student Pipeline, 2002-Alaska                                                                                          
                                                                                                                                
                               th                                                                                               
This graph  shows that of 100 9   graders about  60 graduate from                                                               
high school  in four  years, 28  go on to  college, and  about 11                                                               
graduate  from  college in  the  expected  period of  time.  This                                                               
measure places Alaska  close to the bottom compared  to the other                                                               
states. The state  ranking the highest in this  measure has about                                                               
28 graduating,  which isn't  all that  high on  the international                                                               
scale. The  U.S. ranks 8th  or 9th among developed  countries and                                                               
                     th                                                                                                         
                                                                                                                                
5:21:50 PM                                                                                                                    
                                                                                                                                
Slide  9:   High  School  Graduation  Rates-Public   High  School                                                               
Graduates as a Percent of 9th Graders Four Years Earlier, 2002                                                                  
                                                                                                                                
In Alaska 66.4 percent of  the starting 9th graders graduate four                                                               
years later,  which is below  the 67.2 percent  national average.                                                               
Responding to  a question  from Senator Bunde,  he said  the data                                                               
came from  2002 and he  understands that Alaska has  been showing                                                               
improvement each year.                                                                                                          
                                                                                                                                
Slide 10:  College-Going Rates--First-Time Freshmen  Directly Out                                                               
of  High School  as a  Percent of  Recent High  School Graduates,                                                               
2002                                                                                                                            
                                                                                                                                
In Alaska 47.4  percent of recent high school graduates  go on to                                                               
college anywhere in the U.S. directly from high school.                                                                         
                                                                                                                                
5:22:27 PM                                                                                                                    
                                                                                                                                
Slide  11: First-Time  Freshmen Net  Imports by  Institution Type                                                               
for Alaska, Fall 2002                                                                                                           
                                                                                                                                
The graph  indicates Alaska  is a net  student exporter  in every                                                               
educational sector.  For example, more  students go to  the Lower                                                               
48 to  attend public  research universities  than come  to Alaska                                                               
for that purpose.                                                                                                               
                                                                                                                                
5:22:55 PM                                                                                                                    
                                                                                                                                
Slide  12:   Associate  Degrees  Awarded  per   100  High  School                                                               
Graduates Three Years Earlier, 2003                                                                                             
                                                                                                                                
Alaska falls well  down the production pipeline  at 12.9 students                                                               
per 100  compared to  the national average  of 22.4  students per                                                               
100.                                                                                                                            
                                                                                                                                
5:23:19 PM                                                                                                                    
                                                                                                                                
Slide  13:  Bachelor's  Degrees   Awarded  per  100  High  School                                                               
Graduates Six Years Earlier, 2003.                                                                                              
                                                                                                                                
The slide indicates  that Alaska graduates 21.6  students per 100                                                               
within six years. The national average is 51.8 per 100.                                                                         
                                                                                                                                
Slide 14:  States' Ability  to Produce  Graduates vs.  Ability to                                                               
Keep and Attract Graduates.                                                                                                     
                                                                                                                                
The graph indicates  that Alaska is a relatively  low producer of                                                               
"higher education  capital." The state imports  young people with                                                               
college degrees to make up for its lack of production.                                                                          
                                                                                                                                
Slide 15: Net Migration by Degree Level and Age Group - Alaska                                                                  
                                                                                                                                
The data  indicates that  many of  Alaska's imports  are students                                                               
who left the  state to get a college education  and then returned                                                               
with a degree.                                                                                                                  
                                                                                                                                
5:24:00 PM                                                                                                                    
                                                                                                                                
SENATOR  WILKEN asked  if the  data on  slide 13  means that  100                                                               
percent of the high school  graduates in Rhode Island have earned                                                               
a bachelor's degree six years later.                                                                                            
                                                                                                                                
MR. JONES said no. It's the  number of degrees awarded divided by                                                               
the  number of  high school  graduates six  years earlier.  Rhode                                                               
Island is a  heavy student importer. That state  produces a large                                                               
number  of  baccalaureate degrees,  but  not  necessarily to  its                                                               
residents.  He reminded  members that  this is  a measure  of how                                                               
much  educational  capital the  state  produces  relative to  its                                                               
population.  In the  states of  Rhode  Island and  Massachusetts,                                                               
education is nearly an industry.                                                                                                
                                                                                                                                
5:25:32 PM                                                                                                                    
                                                                                                                                
Slides  16-17:  Alaska  Occupations  with High  Net  Imports  and                                                               
Exports, 1995-2000 -  Residents Age 22-29 and  30-64 with College                                                               
Degrees                                                                                                                         
                                                                                                                                
The slides  indicate that Alaska  imports teachers  and engineers                                                               
in the  22-29 age bracket and  it exports legal personnel  in the                                                               
30-64 age bracket.                                                                                                              
                                                                                                                                
5:26:15 PM                                                                                                                    
                                                                                                                                
Slides 18-22: Linking Funding to State Priorities                                                                               
                                                                                                                                
MR.  JONES explained  that when  NCHEMS  works with  a state,  it                                                               
looks  at about  150  different measures  to  develop the  public                                                               
agenda  to effect  desired change  10 years  down the  road. That                                                               
might  mean  getting  more  kids  out  of  high  school  or  more                                                               
graduates out of  the university system or  getting more educated                                                               
people employed  in high-value jobs  in the state. The  next step                                                               
is to  decide how to  invest in  higher education to  support the                                                               
pursuit of that agenda.                                                                                                         
                                                                                                                                
He  turned  to  the  chart  showing how  money  flows  to  higher                                                               
education from  state resources and  said it's important  to know                                                               
how  much money  is  directly appropriated  to institutions,  how                                                               
much goes to  student financial aid and what  the tuition picture                                                               
looks  like.  In most  public  institutions  money for  education                                                               
comes from just two sources -  the state and the student. Most of                                                               
the other  money going  to the  institution has  strings attached                                                               
and that money doesn't pay for classes.                                                                                         
                                                                                                                                
Legislators decide  how much money  goes to higher  education and                                                               
whether   it   flows   directly  to   the   institution   through                                                               
appropriations or  directly to the  student through  student aid.                                                               
Once  those  decisions  are made,  the  allocation  mechanism  is                                                               
addressed. Mr. Jones advised that  meaningful fiscal policies for                                                               
higher  education  are  difficult  to  fashion  and  rarely  come                                                               
together  because   a  variety  of  people   who  have  different                                                               
objectives  are working  on different  schedules.  In many  cases                                                               
there is  no communication between  those who set  tuition rates,                                                               
those who  set student  financial aid  allocations and  the state                                                               
that sets appropriation levels.                                                                                                 
                                                                                                                                
5:30:32 PM                                                                                                                    
                                                                                                                                
Slide 24: Criteria for effective policy:                                                                                        
                                                                                                                                
   · Reinforce state priorities. Ask whether the allocation is                                                                  
     consistent with the priorities that were put forth.                                                                        
   · Maintain necessary institutional capacity.                                                                                 
   · Contributions required are affordable. It must be                                                                          
     affordable to both the state and the student.                                                                              
   · Viewed as being fair. Ask whether some institutions are                                                                    
     being treated differently or better than others.                                                                           
   · Transparent                                                                                                                
   · Contain incentives for institutional responsiveness and                                                                    
     entrepreneurship                                                                                                           
                                                                                                                                
5:31:46 PM                                                                                                                    
                                                                                                                                
Slide 25: Criteria from Perspective of Different Stakeholders                                                                   
                                                                                                                                
State Perspective                                                                                                               
   · Maintains institutional capacity                                                                                           
   · Promotes achievement of priority outcomes                                                                                  
   · Affordable                                                                                                                 
                                                                                                                                
Student Perspective                                                                                                             
   · Affordability                                                                                                              
   · Value                                                                                                                      
                                                                                                                                
Institution Perspective                                                                                                         
   · Adequacy. Is the funding sufficient to sustain the mission?                                                                
   · Equity. This asks whether institutions are treated the same                                                                
     relative to the different missions.                                                                                        
   · Stability. Is the funding stable or does it fluctuate                                                                      
     widely?                                                                                                                    
                                                                                                                                
SENATOR  BUNDE questioned  whether any  state sufficiently  funds                                                               
higher education.                                                                                                               
                                                                                                                                
MR. JONES responded Wyoming might be the only one.                                                                              
                                                                                                                                
5:33:23 PM                                                                                                                    
                                                                                                                                
Slide 26: The Two Purposes of State Funding Policy                                                                              
                                                                                                                                
   · Building the core capacity of the institution.                                                                             
   · Promote capacity utilization around state priorities -                                                                     
     special purpose funding                                                                                                    
                                                                                                                                
Slide 27: Finance Policy - The Options                                                                                          
                                                                                                                                
MR.  JONES said  there  are a  number of  pieces  to the  finance                                                               
policy.  First there's  core capacity  that's either  institution                                                               
focused  or student  focused. Next  there's capacity  utilization                                                               
that focuses on  the institution and the  student. Until recently                                                               
almost  all higher  education was  focused on  building capacity.                                                               
Now  there's  the  additional interest  that  asks  whether  that                                                               
capacity can be focused on the real needs of the state.                                                                         
                                                                                                                                
5:35:34 PM                                                                                                                    
                                                                                                                                
Slides 28-30: Funding to Institutions - Core Capacity                                                                           
                                                                                                                                
MR. JONES advised that there's a  lot that goes into deciding how                                                               
to  set tuition  rates  and  how to  fund  institutions based  on                                                               
certain accomplishments.                                                                                                        
                                                                                                                                
Responding  to   Senator  Bunde's  request  to   expand  on  that                                                               
statement he  explained that there  are two or  three predominant                                                               
foci. For  example Oklahoma  has a  "Brain Gain  Initiative" that                                                               
seeks  to increase  the number  of  baccalaureate degrees  coming                                                               
from  the  state  institutions.  To   that  end  the  state  pays                                                               
institutions for  increasing the number  of degrees from  year to                                                               
year. Ohio encourages  its community colleges to  work with local                                                               
industry to  do corporate training.  In both instances  the funds                                                               
go to  the institutions with  no strings attached.  Typically the                                                               
money is  used to make  the institution more competitive  in that                                                               
particular area. Yet another method  is the payment of capitation                                                               
grants.                                                                                                                         
                                                                                                                                
5:38:27 PM                                                                                                                    
                                                                                                                                
Slide  31-32:  Funding to  Students  -  Capacity Utilization  and                                                               
Relationships Between "Need-Based" and "Merit-Based" Aid                                                                        
                                                                                                                                
MR.  JONES   said  that  different   states  come   to  different                                                               
conclusions  with regard  to need-based  or merit-based  aid, but                                                               
it's not uncommon for a state  to borrow a good idea from another                                                               
state.  Unfortunately that  usually leads  to bad  policy because                                                               
different states have different priorities.                                                                                     
                                                                                                                                
5:39:14 PM                                                                                                                    
                                                                                                                                
CHAIR  GARY STEVENS  reflected on  his university  experience and                                                               
observed that the  country has moved from  a need-based tradition                                                               
to  one that's  more merit-based  and that  funding simply  isn't                                                               
available for the need-based student any longer.                                                                                
                                                                                                                                
MR. JONES  responded he defines  college funding  in generational                                                               
terms. First  it took  one parent's paycheck  to pay  for college                                                               
expenses and  in the next  generation both parents worked  to pay                                                               
college  costs. Now  both parents  are working  to support  their                                                               
elderly  parents  and the  kids  are  putting themselves  through                                                               
school with personal earnings or  loans. That's important because                                                               
the more a  student works, the less  likely it is that  he or she                                                               
will get out  of college at all let alone  in a meaningful number                                                               
of  years. Although  he  didn't know  particular  UA numbers,  in                                                               
general it's not uncommon for 50  to 60 percent of a student body                                                               
to  be  working  35  or  more  hours  a  week  while  carrying  a                                                               
reasonably heavy academic load.                                                                                                 
                                                                                                                                
How  financial  aid is  packaged  is  an important  consideration                                                               
because if a  student is working full time while  going to school                                                               
then, almost  by definition, school  is getting short  shrift, he                                                               
said.                                                                                                                           
                                                                                                                                
5:42:26 PM                                                                                                                    
                                                                                                                                
Slide 33: Conclusions                                                                                                           
                                                                                                                                
     Cost-Effective Policy Requires:                                                                                            
        · Clear Understanding of Priorities. Understand                                                                         
          what  the   state  most  needs  from   the  higher                                                                    
          education  system. In  states  where  it's made  a                                                                    
          real   difference  the   public  leadership,   the                                                                    
          university  leadership  and   the  private  sector                                                                    
          leadership have  all come  to the  same conclusion                                                                    
          with regard to priorities.                                                                                            
        · Creation/Maintenance of Necessary Capacity. The                                                                       
          asset structure of the universities must be                                                                           
          maintained.                                                                                                           
        · Alignment of Policies Concerning How the Money Flows:                                                                 
             · Institutional Support                                                                                            
             · Tuition and Fees                                                                                                 
             · State Student Financial Aid                                                                                      
             · Institutional   Student   Financial                                                                              
               Aid                                                                                                              
                                                                                                                                
5:44:14 PM                                                                                                                    
                                                                                                                                
Slides  35: State  Tax Capacity  and Effort  - Alaska  Indexed to                                                               
U.S. Average                                                                                                                    
                                                                                                                                
MR. JONES reviewed  the graph and said that Alaska  has had a tax                                                               
capacity  that's higher  than the  national average  yet the  tax                                                               
effort has been on a steady decline.                                                                                            
                                                                                                                                
5:44:52 PM                                                                                                                    
                                                                                                                                
Slide 36:  Projected State  and Local Budget  Surplus (Gap)  as a                                                               
Percent of Revenues, 2013                                                                                                       
                                                                                                                                
He pointed  out that three years  ago when NCHEMS asked  Don Boyd                                                               
from the Rockefeller  Institute of Government to  evaluate all 50                                                               
states to answer  whether or not the current  state tax structure                                                               
could sustain the current services  budget he said the answer was                                                               
no in 44 states. This year the answer is no in all 50 states.                                                                   
                                                                                                                                
5:45:48 PM                                                                                                                    
Slide 37:  Projected Ration of  Spending for Higher  Education to                                                               
Spending for all Other Programs, 2013                                                                                           
                                                                                                                                
MR. JONES said that the information  on this graph is intended to                                                               
illustrate that the demand for  state government programs such as                                                               
K-12,  corrections, welfare  and Medicaid  are increasing  faster                                                               
than higher education.                                                                                                          
                                                                                                                                
5:46:43 PM                                                                                                                    
                                                                                                                                
Slides  38  and 39:  State  Higher  Education Priority  -  Higher                                                               
Education Appropriations  as a Percent of  Tax Revenues, 2002-03;                                                               
and Total Educational Revenues (State  and Local and Tuition) Per                                                               
FTE Student, 2003-04                                                                                                            
                                                                                                                                
As a  percent of  tax revenues Alaska  has historically  put more                                                               
money into higher education than  most states, but it falls below                                                               
most states in terms of  funding per student. Considering cost of                                                               
living differentials, he said, this is an issue.                                                                                
                                                                                                                                
Slide  40: Share  of Institutional  Funding for  Higher Education                                                               
Provided  Through  State  Appropriations  (Public  Institutions),                                                               
2003-04                                                                                                                         
                                                                                                                                
The  graph  illustrates  that  in Alaska  the  state  pays  three                                                               
fourths of the funding for  higher education and the student pays                                                               
the other quarter.                                                                                                              
                                                                                                                                
5:47:51 PM                                                                                                                    
Slide 41: Measuring Up 2004 Affordability                                                                                       
                                                                                                                                
MR. JONES said that for  undergraduate studies Alaskans borrow at                                                               
a slightly higher rate than a decade ago.                                                                                       
                                                                                                                                
Slide  42:  State  and  Local  Support  for  Higher  Education  -                                                               
Proportions Allocated Directly to Institutions, 2003-04                                                                         
                                                                                                                                
MR. JONES  noted that until  year before last Alaska  didn't even                                                               
have  a need-based  student financial  aid  program. There's  one                                                               
now, but it's very small in comparison to the other states.                                                                     
                                                                                                                                
5:48:22 PM                                                                                                                    
                                                                                                                                
Slide 43:  Net College Costs as  a Percent of Income  - Alaska 4-                                                               
Year Public                                                                                                                     
                                                                                                                                
The  graph  shows  that  with  more money  the  price  of  higher                                                               
education becomes more  stable. He reminded members  that this is                                                               
net so  it's the  cost of  going to college  minus grant  aid. In                                                               
almost  every state  the top  three quintiles  of the  population                                                               
aren't paying a greater percentage for higher education.                                                                        
                                                                                                                                
5:49:39 PM                                                                                                                    
                                                                                                                                
Slide 44: A Picture of State Higher Education Funding                                                                           
                                                                                                                                
The states  that have relatively  low appropriations  per student                                                               
are relying on tuition to an increasing extent.                                                                                 
                                                                                                                                
CHAIR  GARY   STEVENS  remarked  need-based   versus  merit-based                                                               
financial aid is a very important issue.                                                                                        
                                                                                                                                
SENATOR  CON BUNDE  reflected on  his  years as  a professor  and                                                               
commented that  the students  who were  working and  paying their                                                               
own way through school demanded the most accountability.                                                                        
                                                                                                                                
MR. JONES responded working between 15  and 18 hours a week while                                                               
attending  school  actually   improves  graduation  rates.  Those                                                               
students seem  to appreciate the educational  experience more and                                                               
they  learn better  as well.  The result  is different  when they                                                               
work more  than 30  hours a  week, but students  do have  to work                                                               
more these days to pay the  cost of education. Costs have gone up                                                               
dramatically and minimum wage hasn't kept pace.                                                                                 
                                                                                                                                
SENATOR   BUNDE  commented   on   the   potential  for   reducing                                                               
scholarship  requirements  and  the  relationship  to  need-based                                                               
financial aid.                                                                                                                  
                                                                                                                                
MR.  JONES  responded  picking   the  right  curriculum  is  more                                                               
important than  getting a good  grade. He suggested  that members                                                               
review  the 21st  Century  Scholars Program  in  Indiana that  is                                                               
aimed at  lower-income students. Starting in  7th grade, students                                                               
are encouraged  to take  the right high  school math  and science                                                               
courses. Substantial evidence indicates  that it's better to take                                                               
Calculus in  high school and  get a C than  to take an  easy math                                                               
course and  get an A.  Increasingly that's the gateway  for being                                                               
eligible for scholarships.                                                                                                      
                                                                                                                                
SENATOR  RALPH  SEEKINS asked  about  comparative  data for  loan                                                               
programs in other states.                                                                                                       
                                                                                                                                
MR. JONES  advised that most  loans programs are federal  and the                                                               
numbers  are beginning  to lose  any meaning  because high-income                                                               
parents  are borrowing  money for  education  at a  low rate  and                                                               
investing it at  a higher rate. Once the  student finishes school                                                               
the parents pay off the loan.                                                                                                   
                                                                                                                                
SENATOR  SEEKINS  said  the  good  Alaska  student  loan  program                                                               
doesn't differentiate  between high  or low  family income  so it                                                               
narrows some of the disparity in  terms of how much of a family's                                                               
disposable income it takes to pay for higher education.                                                                         
                                                                                                                                
MR. JONES  responded the reality is  that poor kids use  a larger                                                               
portion of their  annual income to pay for school  than rich kids                                                               
and the  question is  whether it's good  public policy  to narrow                                                               
that discrepancy or not.                                                                                                        
                                                                                                                                
CHAIR GARY  STEVENS commented there  are fewer  minority students                                                               
going to college  now and that's probably a function  of the rise                                                               
in costs.                                                                                                                       
                                                                                                                                
SENATOR  THOMAS  WAGONER  asked how  many  Alaska  Scholars  have                                                               
graduated from the  UA system and how many have  stayed in Alaska                                                               
after graduation.                                                                                                               
                                                                                                                                
MARK HAMILTON,  President of the University  of Alaska, responded                                                               
97 percent  of the  students who  received that  scholarship have                                                               
remained  in Alaska  and about  80  percent are  employed in  the                                                               
state. Furthermore,  about 40 percent graduate  within six years.                                                               
He added that  a surprising number of Alaska  Scholars attend the                                                               
UA system, but  have elected to give up the  scholarship to go to                                                               
work  while  attending  school. One-third  of  the  students  who                                                               
initially  received  the  scholarship  are  still  enrolled,  but                                                               
they've exceeded  the financial  limits of the  scholarship. Some                                                               
are graduate  students while others  are simply taking  longer to                                                               
complete  a degree.  There's no  question, he  said, that  it's a                                                               
remarkable program in terms of keeping students in Alaska.                                                                      
                                                                                                                                
6:05:10 PM                                                                                                                    
                                                                                                                                
SENATOR THOMAS WAGONER  asked how many Alaska  Scholars leave the                                                               
state to pursue a degree that's not offered here.                                                                               
                                                                                                                                
PRESIDENT HAMILTON  responded it couldn't  be many if  97 percent                                                               
are still in the state.                                                                                                         
                                                                                                                                
SENATOR  THOMAS   WAGONER  continued   to  say  he'd   like  that                                                               
information to find out what  kinds of programs students might be                                                               
looking for when they transfer to other states.                                                                                 
                                                                                                                                
PRESIDENT  HAMILTON   responded  professions  such  as   law  and                                                               
medicine come to mind.                                                                                                          
                                                                                                                                
6:06:52 PM                                                                                                                    
                                                                                                                                
WENDY  REDMAN, Vice  President of  University  Relations for  the                                                               
University  of  Alaska,  stated  that the  program  has  been  in                                                               
existence  for just  six years  and the  typical UA  student will                                                               
take  longer than  six years  to graduate.  That includes  Alaska                                                               
Scholars.                                                                                                                       
                                                                                                                                
6:07:38 PM                                                                                                                    
                                                                                                                                
SENATOR  KIM  ELTON  remarked  he  was  intrigued  to  hear  that                                                               
curriculum  is  more important  than  grade  point in  predicting                                                               
success. If that's the case  he asked whether the Alaska Scholars                                                               
Program  shouldn't be  predicated on  the exit  exam rather  than                                                               
GPA.                                                                                                                            
                                                                                                                                
MR.  JONES responded  he wouldn't  place all  the emphasis  on an                                                               
exit exam because in most states  the exit exam has no connection                                                               
to success  in the  workplace or being  prepared for  college. He                                                               
related  that  community  colleges  in Hawaii  test  high  school                                                               
graduates for  course placement  and 89 percent  who did  well in                                                               
high  school   place  into  remedial   math.  That   indicates  a                                                               
communication failure between high schools and colleges.                                                                        
                                                                                                                                
He advised members that the  American College Testing Program has                                                               
recently concluded  that the skill  level for being  prepared for                                                               
work  is the  same  as the  skill level  for  being prepared  for                                                               
college so  high schools can  no longer offer  different programs                                                               
for  student who  are college  bound or  are going  to enter  the                                                               
vocations.                                                                                                                      
                                                                                                                                
SENATOR ELTON  asked about other  measures such as SAT  scores if                                                               
it's what a student has learned  and how it's applied that's more                                                               
important than grade point.                                                                                                     
                                                                                                                                
MR.  JONES   replied  the  important  point   is  application  of                                                               
knowledge.   He  described   PISA,   the  international   student                                                               
assessment for  math, and said  on that  test the student  who is                                                               
the best in the  U.S. ranks 25th in the world,  which points to a                                                               
stark difference in expectations.                                                                                               
                                                                                                                                
SENATOR   WAGONER  commented   the  U.S.   system  continues   to                                                               
incorporate new systems  for teaching math and that  might be the                                                               
reason it is lagging behind other countries.                                                                                    
                                                                                                                                
MR. JONES  suggested that  other countries  narrow the  scope and                                                               
teach in greater  depth and also organize the  curricula so there                                                               
is no repetition from year to year.                                                                                             
                                                                                                                                
SENATOR BUNDE remarked  other countries serve a  narrower base of                                                               
students.                                                                                                                       
                                                                                                                                
MR. JONES  said not  necessarily. On  the whole  the U.S.  is the                                                               
best-educated country  but in the  25-34 age bracket a  number of                                                               
developed  countries  are  graduating   a  higher  proportion  of                                                               
students with  baccalaureate degrees than  in the U.S.  Norway is                                                               
the  leading country  in  the  world and  the  U.S.  is about  87                                                               
percent of Norway.  For associate degrees and  higher then Canada                                                               
is the best  in the world and  the U.S. is 77  percent of Canada.                                                               
That, he said,  is a measure of how many  students graduated from                                                               
college  with  a degree.  He  reiterated  that for  baccalaureate                                                               
degrees the  U.S. ranks eighth  and by the  end of the  decade it                                                               
will be 17th.                                                                                                                   
                                                                                                                                
SENATOR  BUNDE mentioned  the  old state-subsidized  low-interest                                                               
student loan program that created a  backlog of bad loans for the                                                               
state. He asked if UA now  advises students to take federal loans                                                               
and state loans as a last alternative.                                                                                          
                                                                                                                                
6:18:34 PM                                                                                                                    
                                                                                                                                
DIANE   BARRANS,  Executive   Director,   Alaska  Commission   on                                                               
Postsecondary  Education,  said  that's  correct.  As  a  federal                                                               
lender  they  are  able  to  discount  federal  loans  below  the                                                               
supplemental loan rate so that's  the aid package that's offered.                                                               
That goes along with the  small need-based grant program that was                                                               
new last fall.                                                                                                                  
                                                                                                                                
Arguably, investing  in higher education  is the  best investment                                                               
that you can make in yourself,  but as was mentioned earlier, the                                                               
people in  the lowest income  quintiles are very debt  averse and                                                               
aren't  as  likely to  understand  that  economic argument.  When                                                               
there isn't  an adult model  in the household who  is emphasizing                                                               
the  importance  of a  college  education,  the student  is  more                                                               
likely to  opt out  of postsecondary education  early and  take a                                                               
less  rigorous  academic  course  of study  in  middle  and  high                                                               
school.                                                                                                                         
                                                                                                                                
MR.  JONES   suggested  that  the   Indiana  support   system  is                                                               
particularly good and has made a difference in that state.                                                                      
                                                                                                                                
SENATOR BUNDE asked about the  average debt for college graduates                                                               
and whether it's broken down by income level.                                                                                   
                                                                                                                                
MS. BARRANS responded she didn't have that information.                                                                         
                                                                                                                                
CHAIR  GARY  STEVENS expressed  dismay  that  this generation  is                                                               
likely to be less well educated that the previous generation.                                                                   
                                                                                                                                
MR. JONES  responded if you were  to look at a  graph showing the                                                               
number of baccalaureate degrees  in proportion to the population,                                                               
the  line would  be  flat  for a  30-year  period. Although  some                                                               
states have made progress, many in the West have regressed.                                                                     
                                                                                                                                
6:23:40 PM                                                                                                                    
                                                                                                                                
MS.  REDMAN reported  that  the  number of  jobs  that require  a                                                               
baccalaureate  degree  hasn't changed  much  in  the last  twenty                                                               
years but  what has changed  is the  number of jobs  that require                                                               
postsecondary education. As  Mr. Jones said, about  60 percent of                                                               
the people  that don't have a  high school diploma aren't  in the                                                               
workforce at all, but 89 percent  of the people who have received                                                               
some postsecondary  education or  training are in  the workforce.                                                               
People that  have a high school  education or less won't  be able                                                               
to function in the world of work any longer, she said.                                                                          
                                                                                                                                
CHAIR GARY  STEVENS said it'd  be interesting to know  how Alaska                                                               
compares to  the rest of the  U.S. in terms of  number of degrees                                                               
and jobs available.                                                                                                             
                                                                                                                                
MS.  REDMAN responded  the Department  of  Labor statistics  look                                                               
very similar to the national numbers.                                                                                           
                                                                                                                                
MR. JONES  mentioned that the states  that have done the  best in                                                               
terms of getting  students through the education  pipeline have a                                                               
need-based student financial aid program  and a low priced public                                                               
education component  such as a community  college system. Alaska,                                                               
he  said, does  not have  a  low-cost portal  and that  may be  a                                                               
factor in the decrease in the  number of adult students in the UA                                                               
system.                                                                                                                         
                                                                                                                                
6:26:52 PM                                                                                                                    
                                                                                                                                
MARK HAMILTON,  President of the University  of Alaska, responded                                                               
the  following  data  points  are  related:  Alaska  lost  30,000                                                               
citizens  between the  ages  of  18 and  25  during the  economic                                                               
downturn in the 1990s and the  adult student population at UA has                                                               
declined since 2001.  There's a waste in  the demographic; people                                                               
fled the state so they aren't in Alaska to be adult learners.                                                                   
                                                                                                                                
PAT PITNEY, Associate  Vice President of Planning  and Budget for                                                               
the  University of  Alaska, added  that although  the decline  is                                                               
real,  UA is  still predominantly  serving the  part-time working                                                               
adult learner population.                                                                                                       
                                                                                                                                
SENATOR  SEEKINS commented  that his  business employs  about 115                                                               
people  and  none  of  the  positions  requires  a  baccalaureate                                                               
degree, but many  of the employees have benefited  from some sort                                                               
of postsecondary education.                                                                                                     
                                                                                                                                
MR. JONES reiterated  the point that the more  education a person                                                               
has,  the more  likely  it is  that  he  or she  will  be in  the                                                               
workforce. Furthermore, more education  typically brings a larger                                                               
salary.                                                                                                                         
                                                                                                                                
SENATOR BUNDE noted  that the oil industry has  indicated that it                                                               
needs a  large number  of technicians compared  to the  number of                                                               
engineers it employs.                                                                                                           
                                                                                                                                
MR. JONES stated that the higher  the level of education the more                                                               
likely it  is that the  person will move out  of state or  out of                                                               
country.  Associate  degree winners  aren't  as  likely to  cross                                                               
state lines  so if a state  has the need and  isn't educating in-                                                               
state then it probably isn't getting those positions filled.                                                                    
                                                                                                                                
6:33:51 PM                                                                                                                    
                                                                                                                                
SENATOR  BUNDE  asked whether  the  current  UA loan  program  is                                                               
merit-based.                                                                                                                    
                                                                                                                                
MS.  BARRANS said  no, but  the student  must maintain  a certain                                                               
grade point average to be academically eligible.                                                                                
                                                                                                                                
SENATOR BUNDE asked for information on the new grant program.                                                                   
                                                                                                                                
MS.  BARRANS  explained  that  the  fundamental  criterion  is  a                                                               
demonstrated  need, but  larger  grants are  available for  study                                                               
programs  in  the  education,   nursing,  and  protective  public                                                               
services fields as well as for  students who scored in the top 20                                                               
percent on the SAT or ACT tests.                                                                                                
                                                                                                                                
SENATOR BUNDE asked the average grant amount.                                                                                   
                                                                                                                                
MS. BARRANS  responded the basic  need-based grant is  $1,000 per                                                               
year and $2,000  per year is available for those  students in one                                                               
of  the  priority  programs.  Grants are  capped  at  $8,000  per                                                               
individual.                                                                                                                     
                                                                                                                                
CHAIR GARY STEVENS asked who  made the decision to grant priority                                                               
status to teachers, nurses and public service studies.                                                                          
                                                                                                                                
MS. BARRANS replied  she would provide that  information, but she                                                               
thought the commission received  direction regarding the types of                                                               
programs that are given priority.                                                                                               
                                                                                                                                
CHAIR GARY  STEVENS stated agreement  with the concept,  but that                                                               
the  Legislature  might want  to  participate  in the  discussion                                                               
about  which fields  of study  might  be most  beneficial to  the                                                               
state.                                                                                                                          
                                                                                                                                
6:37:01 PM                                                                                                                    
                                                                                                                                
MR.  JONES  concluded  his  comments  with  a  word  of  caution.                                                               
Although  many  conversations   about  the  relationship  between                                                               
higher education  and the  state revolve  around the  question of                                                               
how to  accomplish the goal, the  state would be well  advised to                                                               
first engage in conversations related  to what it needs. That's a                                                               
big turn  around and difficult  for educators and  legislators to                                                               
do, but the state and the  institutions will be better off if the                                                               
means  conversation  isn't  allowed  to get  ahead  of  the  ends                                                               
conversation.                                                                                                                   
                                                                                                                                
There being  no further  business to  come before  the committee,                                                               
Chair Gary Stevens adjourned the meeting at 6:39:30 PM.                                                                       
                                                                                                                                
                                                                                                                                

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