Legislature(1999 - 2000)
2000-04-30 House Journal
Full Journal pdf2000-04-30 House Journal Page 3663 SB 270 The following was read the second time: SENATE BILL NO. 270 "An Act relating to return of contributed capital, or payment of a dividend, to the state by the Alaska Student Loan Corporation; and providing for an effective date." with the: Journal Page FIN RPT 6DP 2NR 3487 SENATE ZERO FISCAL NOTE (DOE) 2/11/00 3487 Amendment No. 1 was offered by Representative Berkowitz: Page 1, lines 2 and 3 (title amendment): Delete "; and providing for an effective date" Page 1, line 5, through page 2, line 12: Delete all material and insert: "* Section 1. The uncodified law of the State of Alaska is amended by adding a new section to read: PURPOSE. (a) This Act authorizes the Alaska Housing Finance Corporation to purchase the Alaska Student Loan Corporation. (b) Recognizing that the Alaska Student Loan Corporation provides valuable benefits to the State of Alaska, it is important to emphasize that the legislature intends that the functions of the Alaska Student Loan Corporation shall continue to be performed. (c) Proceeds from the sale of the Alaska Student Loan Corporation should be used to augment the power cost equalization and rural electric capitalization fund established in AS42.45.100. 2000-04-30 House Journal Page 3664 SB 270 * Sec. 2. AS14.42.130(b) is amended to read: (b) Public notice of a meeting of the board at which the issuance of corporation bonds under AS14.42.220 is authorized shall be provided at least 24 hours before the meeting. * Sec. 3. AS14.42.140 is amended to read: Sec. 14.42.140. Minutes of meetings. The board shall keep minutes of each meeting held to carry out its responsibilities under AS14.42.130 - 14.42.390 and send a certified copy to the governor and to the Legislative Budget and Audit Committee. * Sec. 4. AS14.42.150 is amended to read: Sec. 14.42.150. Administration of affairs. The board shall manage the assets and business of the corporation and may adopt bylaws and regulations, in accordance with AS44.62 (Administrative Procedure Act), governing the manner in which the business of the corporation under AS14.42.130 - 14.42.390 is conducted and the manner in which its powers under AS14.42.130 - 14.42.390 are exercised. The board shall delegate supervision of the administration of the corporation to the executive director ¦OFFICERá of the corporation. * Sec. 5. AS14.42.170 is amended to read: Sec. 14.42.170. Staff. The employees of the Alaska Commission on Postsecondary Education shall serve as staff for the corporation in connection with the exercise of its responsibilities under AS14.42.130 - 14.42.390. * Sec. 6. AS14.42.190 is amended to read: Sec. 14.42.190. Budget. The portion of the operating budget of the corporation used in connection with the exercise of its responsibilities under AS14.42.130 - 14.42.390 is subject to AS37.07 (Executive Budget Act). * Sec. 7. AS14.42.200 is amended to read: Sec. 14.42.200. General powers. In addition to other powers granted under AS14.42.130 - 14.42.390 ¦IN THIS CHAPTERá, the corporation, in the exercise of its power and functions under AS14.42.130 - 14.42.390, may (1) sue and be sued in its own name; (2) adopt an official seal; (3) adopt regulations under AS44.62 (Administrative Procedure Act) to carry out the purposes of this chapter; (4) make and execute agreements, contracts, and other instruments necessary or convenient in the exercise of the powers and functions of the corporation under AS14.42.130 - 14.42.390, 2000-04-30 House Journal Page 3665 SB 270 including contracts with a person or governmental entity; (5) receive, administer, and comply with the conditions and requirements respecting any appropriation, gift, grant, or donation of property or money; (6) borrow money as provided in AS14.42.220 ¦THIS CHAPTERá to carry out its corporate purposes under AS14.42.130 - 14.42.390 and issue its obligations as evidence of the borrowing; (7) include in a borrowing under AS14.42.220 the amounts to pay financing charges, interest on the obligations for a period not exceeding one year after the date on which the corporation estimates funds will otherwise be available to pay the interest, consultant, advisory, and legal fees, and other expenses necessary or incident to the borrowing; (8) invest or reinvest, subject to its contracts with noteholders and bondholders, money held under AS14.42.130 - 14.42.390 by the corporation as set out in AS37.10.071; (9) collect from a borrower amounts owed with respect to a student loan the corporation has purchased; (10) gather information on student loans available to residents of Alaska and disseminate the information to reasonably assure that qualified residents are aware of financial resources available to those attending or desiring to attend institutions for which loans may be made under AS14.43.090 - 14.43.325, 14.43.600 - 14.43.700, or 14.43.710 - 14.43.750; (11) service student loans held by the corporation; (12) purchase or participate in the purchase of student loans; (13) contract in advance for the purchase or sale of student loans; (14) sell or participate in the sale, either public or private and on terms authorized by the board, of student loans to the Student Loan Marketing Association or to other purchasers; (15) collect and pay reasonable fees and charges in connection with the purchase, sale, and servicing of student loans; (16) enter into agreements with the federal government, including guaranty agreements and supplemental guaranty agreements as described in the United States Higher Education Act of 1965, as necessary to provide for the receipt by the corporation of administrative allowances and other benefits available under the United States Higher Education Act of 1965; 2000-04-30 House Journal Page 3666 SB 270 (17) administer federal money allotted to the state involving insured student loans and related administrative costs and other matters; (18) enter into agreements with the Alaska Commission on Postsecondary Education relating to student loans ¦, THE ADMINISTRATION OF THE STUDENT LOAN FUND CREATED UNDER AS14.42.210,á and the payment of and security for bonds of the corporation issued under AS14.42.220; (19) to the extent permitted under contracts with bond holders, consent to the modification of the rate of interest, time of payment of an installment of principal or interest, or other terms of a student loan purchased by the corporation; (20) procure insurance against any loss in connection with the operation of its programs under AS14.42.130 - 14.42.390; (21) provide advisory services to borrowers and other participants in the corporations programs under AS14.42.130 - 14.42.390; (22) enter into credit facility agreements to carry out the purposes of AS14.42.130 - 14.42.390 and make pledges, covenants, and agreements with respect to the repayment of borrowings under the credit facility agreements; (23) do all acts necessary, convenient, or desirable to carry out the powers expressly granted or necessarily implied in AS14.42.130 - 14.42.390 ¦AS14.42.100 - 14.42.390á. * Sec. 8. AS14.42.210(a) is amended to read: (a) The student loan fund is established in the corporation. The ¦STUDENT LOANá fund is a trust fund to be used to carry out the purposes of AS14.42.130 - 14.42.390 ¦AS14.42.100 - 14.42.390á, AS14.43.090 - 14.43.325, 14.43.600 - 14.43.700, 14.43.710 - 14.43.750, and AS14.44.025. The fund consists of money or assets appropriated or transferred to the corporation for the fund and money or assets deposited in it by the corporation. The corporation may establish separate accounts in the fund. * Sec. 9. AS14.42.210(b) is amended to read: (b) Money and other assets of the student loan fund may be used to secure bonds of the corporation issued under AS14.42.220, invested in student loans and investments under AS37.10.071, and used to purchase loans approved under AS14.43.090 - 14.43.325, 14.43.600 - 14.43.700, or 14.43.710 - 14.43.750. 2000-04-30 House Journal Page 3667 SB 270 * Sec. 10. AS14.42.220(f) is amended to read: (f) The corporation may not issue bonds under this section, other than refunding bonds, during any two consecutive fiscal years in an aggregate amount greater than $125,000,000 unless the legislature, by law, approves issuance of a greater amount. * Sec. 11. AS14.42.270 is amended to read: Sec. 14.42.270. Pledge and agreement of state. The state pledges to and agrees with holders of bonds issued by the former Alaska Student Loan Corporation or by the Alaska Housing Finance Corporation under AS14.42.220 ¦CORPORATIONá that the state will not limit or alter the rights and powers vested in the corporation under AS14.42.130 - 14.42.390 ¦AS14.42.100 - 14.42.390á to fulfill the terms of a contract made by the former Alaska Student Loan Corporation or by the Alaska Housing Finance Corporation under AS14.42.220 ¦CORPORATIONá with the bondholders or in any way impair the rights and remedies of the bondholders until the bonds, together with the interest on them with interest on unpaid installments of interest, and all costs and expenses in connection with an action or proceeding by or on behalf of the bondholders, are fully met and discharged. The corporation may include this pledge and agreement of the state in a contract with bondholders. * Sec. 12. AS14.42.280 is amended to read: Sec. 14.42.280. Exemption from taxation. The real and personal property of the corporation and its assets, income, and receipts are declared to be the property of a political subdivision of the state and devoted to an essential public and governmental function and purpose, and the property, assets, income, receipts, and other interests of the corporation are exempt from all taxes and special assessments of the state or a political subdivision of the state, including municipalities, school districts, public utility districts, and other governmental units. Bonds of the corporation issued under AS14.42.220 are declared to be issued by a political subdivision of the state and for an essential public and governmental purpose, and the bonds, interest on them, income from them, and transfer of them, and all assets, income, and receipts pledged to pay or secure the payment of the bonds, or interest on them, are exempt from taxation by or under the authority of the state, except for inheritance and estate taxes and taxes on transfers by or in contemplation of death. * Sec. 13. AS14.42.290 is amended to read: 2000-04-30 House Journal Page 3668 SB 270 Sec. 14.42.290. Bonds legal investments for fiduciaries. The bonds of the corporation issued under AS14.42.220 are securities in which public officers and bodies of the state, municipalities, insurance companies, insurance associations, other persons carrying on an insurance business, banks, bankers, trust companies, savings banks, savings associations, building and loan associations, investment companies, other persons carrying on a banking business, administrators, guardians, executors, trustees, other fiduciaries, and other persons who are authorized to invest in bonds or other obligations of the state ¦,á may properly and legally invest funds including capital in their control or belonging to them. Notwithstanding any other provisions of law, the bonds of the corporation issued under AS14.42.220 are also securities that may be deposited with and may be received by public officers and bodies of the state and municipalities for any purpose for which the deposit of bonds or other obligations of the state is not or may be authorized. * Sec. 14. AS14.42.300 is amended to read: Sec. 14.42.300. Operation of certain statutes excepted. (a) In the exercise of its powers and functions under AS14.42.130 - 14.42.390, the ¦THEá corporation (1) is not a municipality as the term is defined in AS01.10.060; (2) except ¦. EXCEPTá as provided in AS14.42.190, [THE CORPORATIONá is not subject to AS37; and (3) for ¦. FORá all other purposes, ¦THE CORPORATIONá is a political subdivision and an instrumentality of the state. (b) The funds, income, and receipts of the corporation that are obtained by it in the exercise of its powers and functions under AS14.42.130 - 14.42.390 are not money of the state, nor may real property in which the corporation has an interest be considered land owned in fee by the state or to which the state may become entitled or in any way land belonging to the state, or state land referred to in art. VIII of the Alaska Constitution. * Sec. 15. AS14.42.310 is amended to read: Sec. 14.42.310. Annual audit. The financial records of the corporation that relate to its exercise of its powers and functions under AS14.42.130 - 14.42.390 shall be audited annually by the legislative auditor or by a certified public accountant approved by the legislative auditor. The legislative 2000-04-30 House Journal Page 3669 SB 270 auditor may prescribe the form and content of these ¦THEá financial records of the corporation and shall have access to these records at any time. * Sec. 16. AS14.42.390 is amended to read: Sec. 14.42.390. Definitions. In AS14.42.130 - 14.42.390 [AS14.42.100 - 14.42.390á, (1) "board" means the board of directors of the corporation; (2) "corporation" means the Alaska Housing Finance [STUDENT LOANá Corporation (AS18.56.020). * Sec. 17. AS14.43.090(a) is amended to read: (a) There is created a scholarship revolving loan fund. The fund shall be used to make scholarship loans to students selected under AS14.43.090 - 14.43.160, to pay the costs of collecting scholarship loans that are in default if those costs are not recovered from the student, and to pay the costs of administering the fund. Unless the instrument evidencing the scholarship loan has been sold or assigned to the former Alaska Student Loan Corporation or to the Alaska Housing Finance Corporation, repayments of principal and interest on a scholarship loan shall be paid into the scholarship revolving loan fund. If money estimated to be available is inadequate to fully fund estimated scholarship loans for any fiscal year, additional funding from the general fund may be requested and appropriated for that year. * Sec. 18. AS14.43.090(d) is amended to read: (d) The commission may sell or assign notes and other instruments evidencing scholarship loans to the Alaska Housing Finance ¦STUDENT LOANá Corporation and enter into agreements with the corporation relating to loans ¦, THE ADMINISTRATION OF THE STUDENT LOAN FUND CREATED UNDER AS14.42.210,á and the payment of and security for bonds of the corporation. Proceeds from the sale or assignment of notes and other instruments shall be deposited in the scholarship revolving loan fund. * Sec. 19. AS14.43.120(f) is amended to read: (f) Interest on a loan made under AS14.43.090 - 14.43.160 is equal to the interest rate (1) paid in each year on bonds issued by the former Alaska Student Loan Corporation or the Alaska Housing Finance Corporation under AS14.42.220; and (2) necessary to pay the administrative cost of the student 2000-04-30 House Journal Page 3670 SB 270 loan program that is represented by the loan. * Sec. 20. AS14.43.120(r) is amended to read: (r) The rate of interest, time of payment of an installment of principal or interest, or other terms of a scholarship loan may be modified if required to establish or maintain tax-exempt status under 26 U.S.C. 103 (Internal Revenue Code of 1986), as amended, for the interest on bonds issued by the former Alaska Student Loan Corporation or the Alaska Housing Finance Corporation. * Sec. 21. AS14.43.120(t) is amended to read: (t) Payment of interest under (l) of this section and forgiveness under (s) of this section are subject to appropriation by the legislature. Money obtained from the sale of bonds by the former Alaska Student Loan Corporation or the Alaska Housing Finance Corporation under AS14.42.220 may not be appropriated for the payment of interest or the forgiveness of loans. * Sec. 22. AS14.43.120(u) is amended to read: (u) The commission by regulation shall set a loan origination fee, not to exceed five percent of the total scholarship loan amount, to be assessed upon a scholarship loan that is funded from the student loan fund of the Alaska Housing Finance ¦STUDENT LOANá Corporation. The loan origination fee shall be deducted at the time the loan is disbursed. Subject to appropriation, the loan origination fees shall be deposited into an origination fee account within the student loan fund of the Alaska Housing Finance ¦STUDENT LOANá Corporation, and subsequently used by the corporation to offset losses incurred as a result of death, disability, default, or bankruptcy of the borrower. * Sec. 23. AS14.43.255(a) is amended to read: (a) There is created a memorial scholarship revolving loan fund. The fund shall be used to provide educational scholarship loans to students selected under AS14.43.250 - 14.43.325. Unless the instrument evidencing the memorial scholarship loan has been sold or assigned to the former Alaska Student Loan Corporation or the Alaska Housing Finance Corporation, repayments of a loan shall be deposited into the memorial scholarship revolving loan fund and shall be used to make new loans. * Sec. 24. AS14.43.255(c) is amended to read: (c) The commission may sell or assign notes and other instruments evidencing memorial scholarship loans to the Alaska 2000-04-30 House Journal Page 3671 SB 270 Housing Finance ¦STUDENT LOANá Corporation and enter into agreements with the corporation relating to loans ¦, THE ADMINISTRATION OF THE STUDENT LOAN FUND CREATED UNDER AS14.42.210,á and the payment of and security for bonds of the corporation. Proceeds from the sale or assignment of a note or other instrument shall be deposited in the appropriate memorial scholarship loan fund account. * Sec. 25. AS14.43.620 is amended to read: Sec. 14.43.620. Teacher scholarship revolving loan fund. (a) There is created a teacher scholarship revolving loan fund. The fund shall be used to make scholarship loans to students selected under AS14.43.600 - 14.43.700. Unless the instrument evidencing the teacher scholarship loan has been sold or assigned to the former Alaska Student Loan Corporation or the Alaska Housing Finance Corporation, repayments of principal and interest on a teacher scholarship loan shall be paid into the teacher scholarship revolving loan fund and shall be used to make new teacher scholarship loans. If estimated funds available are inadequate to fully fund estimated teacher scholarship loans for any fiscal year, additional funding from the general fund may be requested and appropriated for that year. (b) The commission may sell or assign notes and other instruments evidencing teacher scholarship loans to the Alaska Housing Finance ¦STUDENT LOANá Corporation and enter into agreements with the corporation relating to loans ¦, THE ADMINISTRATION OF THE STUDENT LOAN FUND CREATED UNDER AS14.42.210á and the payment of and security for bonds of the corporation. Proceeds from the sale or assignment of the notes or other instruments shall be deposited in the teacher scholarship revolving loan fund. * Sec. 26. AS14.43.720 is amended to read: Sec. 14.43.720. Family education loan account. (a) The family education loan account is created within the scholarship revolving loan fund (AS14.43.090). The account shall be used to make family education loans to families selected under AS14.43.710 - 14.43.750, to pay the costs of collecting family education loans that are in default if those costs are not recovered from the family, and to pay the costs of administering the account. Unless the instrument evidencing the family education loan has been sold or assigned to the former Alaska Student Loan Corporation or the Alaska Housing Finance Corporation, 2000-04-30 House Journal Page 3672 SB 270 repayments of principal and interest on family education loans shall be paid into the family education loan account. If estimated funds available from family education loan repayments are inadequate to fully fund estimated family education loans in a fiscal year, additional funding from the general fund may be requested and appropriated for that year. (b) The commission may sell or assign notes and other instruments evidencing family education loans to the Alaska Housing Finance ¦STUDENT LOANá Corporation and enter into agreements with the corporation relating to loans ¦, THE ADMINISTRATION OF THE STUDENT LOAN FUND CREATED UNDER AS14.42.210,á and the payment of and security for bonds of the corporation. Proceeds from the sale or assignment of notes and other instruments shall be deposited in the family education loan account. * Sec. 27. AS14.42.100, 14.42.110, 14.42.120, 14.42.160, 14.42.210(c); and AS44.99.030(a)(13) are repealed. * Sec. 28. The uncodified law of the State of Alaska is amended by adding a new section to read: TRANSITION. (a) The assets and liabilities of the Alaska Student Loan Corporation are transferred to the Alaska Housing Finance Corporation on the effective date of this Act. (b) Regulations of the Alaska Student Loan Corporation in effect on the effective date of this Act remain in effect until repealed or amended by the Alaska Housing Finance Corporation. The regulations may be amended by the Alaska Housing Finance Corporation any time after this Act takes effect. * Sec. 29. The uncodified law of the State of Alaska is amended by adding a new section to read: ALASKA HOUSING FINANCE CORPORATION MAY PURCHASE CERTAIN LOANS. Notwithstanding any other provision of law, the Alaska Housing Finance Corporation may purchase, at an appropriate discount mutually satisfactory to the board of directors of the Alaska Housing Finance Corporation and the board of directors of the Alaska Student Loan Corporation, the student loans that are held on the day immediately before the effective date of this Act by the Alaska Student Loan Corporation. The Alaska Student Loan Corporation shall deposit the full amount received under this section in the general fund." 2000-04-30 House Journal Page 3673 SB 270 Representative Berkowitz moved and asked unanimous consent that Amendment No. 1 be adopted. Objection was heard. Representative Barnes rose to a point of order stating that the amendment was the same as pulling a bill from committee. The Speaker allowed debate to continue. The question being: "Shall Amendment No. 1 be adopted?" The roll was taken with the following result: SB 270 Second Reading Amendment No. 1 YEAS: 8 NAYS: 30 EXCUSED: 0 ABSENT: 2 Yeas: Berkowitz, Davies, Joule, Kapsner, Kerttula, Kookesh, Moses, Smalley Nays: Austerman, Barnes, Brice, Bunde, Cissna, Coghill, Cowdery, Croft, Davis, Dyson, Foster, Green, Grussendorf, Halcro, Harris, James, Kemplen, Kohring, Kott, Masek, Morgan, Mulder, Murkowski, Phillips, Porter, Rokeberg, Sanders, Therriault, Whitaker, Williams Absent: Hudson, Ogan And so, Amendment No. 1 was not adopted. Representative Green moved and asked unanimous consent that SB270 be considered engrossed, advanced to third reading and placed on final passage. There being no objection, it was so ordered. SB 270 was read the third time. The question being: "Shall SB 270 pass the House?" The roll was taken with the following result: 2000-04-30 House Journal Page 3674 SB 270 SB 270 Third Reading Final Passage YEAS: 38 NAYS: 0 EXCUSED: 0 ABSENT: 2 Yeas: Austerman, Barnes, Berkowitz, Brice, Bunde, Cissna, Coghill, Cowdery, Croft, Davies, Davis, Dyson, Foster, Green, Grussendorf, Halcro, Harris, James, Joule, Kapsner, Kemplen, Kerttula, Kohring, Kookesh, Kott, Masek, Morgan, Moses, Mulder, Murkowski, Phillips, Porter, Rokeberg, Sanders, Smalley, Therriault, Whitaker, Williams Absent: Hudson, Ogan And so, SB 270 passed the House. Representative Green moved and asked unanimous consent that the roll call on the passage of the bill be considered the roll call on the effective date clause. There being no objection, it was so ordered. SB 270 was signed by the Speaker and Chief Clerk and returned to the Senate.