02/08/2016 08:00 AM House EDUCATION

         HB 264-REPAYMENT OF SCHOLARSHIPS & ED. GRANTS                                                                      
                                                                                                                                
8:04:44 AM                                                                                                                    
                                                                                                                                
CHAIR KELLER announced that the first order of business would be                                                                
HOUSE BILL NO. 264, "An Act relating to repayment of Alaska                                                                     
performance scholarships and Alaska education grants."                                                                          
                                                                                                                                
8:05:07 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   TAMMIE   WILSON,   Alaska   State   Legislature,                                                               
presented HB 264, paraphrasing from the sponsor statement, which                                                                
read [original punctuation provided]:                                                                                           
                                                                                                                                
     This  bill would  require Alaskans  who received  funds                                                                    
     from the  Alaska Performance  Scholarship award  or the                                                                    
     Alaska  Education  Grant to  repay  the  amount of  the                                                                    
     grant or scholarship they were  awarded if they fail to                                                                    
     complete the qualified  postsecondary education program                                                                    
     within 6 years.                                                                                                            
                                                                                                                                
     Terms and  conditions of repayment  are laid out  in AS                                                                    
     14.43.120, except the interest  would begin on the date                                                                    
     when the obligation for repayment commences.                                                                               
                                                                                                                                
     With the  Alaska Performance  Scholarship award  or the                                                                    
     Alaska Education  Grant, an opportunity has  been given                                                                    
     to a  student by  the State of  Alaska to  help off-set                                                                    
     educational  costs;  however,   with  this  opportunity                                                                    
     comes an obligation of  completing the qualified degree                                                                    
     and/or certification.                                                                                                      
                                                                                                                                
8:06:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  recalled   that  the  Alaska  Performance                                                               
Scholarship (APS) was intended to  encourage students to pursue a                                                               
rigorous course of  high school education, and be  the reward for                                                               
those  who  applied  themselves  to the  challenge.    A  further                                                               
benefit  would  be  in  having  students  enter  a  postsecondary                                                               
facility prepared  and eliminate  the need for  remedial classes.                                                               
It appears  that HB 264  removes the  reward aspect and  ties the                                                               
scholarship to a student's college performance, he opined.                                                                      
                                                                                                                                
REPRESENTATIVE   WILSON  stated   her   understanding  that   the                                                               
scholarship  was created  to be  two-fold.   She agreed  with the                                                               
intent  for  having  it incentivize  a  student's  rigorous  high                                                               
school  performance, and  eliminate  the need  for college  level                                                               
remediation.    Additionally,  she  said,  the  issue  that  jobs                                                               
continue to  go to  people from  out-of-state, is  a part  of the                                                               
equation; ensuring  an in-state trained workforce.   The proposed                                                               
legislation is  not a disincentive  but it does  require students                                                               
to  have skin  in the  game,  and for  a student  who finishes  a                                                               
course  of  study, nothing  changes.    She  pointed out  that  a                                                               
student would only  be paying money back, following  the six year                                                               
completion  window, and  no interest  would  have accrued  during                                                               
that period.                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  requested transcripts of the  new criteria                                                               
indicating how the bill aligns with the goals of the APS.                                                                       
                                                                                                                                
8:09:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER noted  that the  fiscal note  requires two                                                               
full time employees  (FTE) positions to be filled,  and asked for                                                               
justification.   Further, he solicited the  sponsor's comments on                                                               
the frugalness at the  Alaska Postsecondary Education Commission,                                                               
in regards to staff.                                                                                                            
                                                                                                                                
REPRESENTATIVE  WILSON responded  that  the  fiscal note  appears                                                               
daunting, with 99 FTE's already in  place and a request for more.                                                               
It  also  includes  $800,000  to make  changes  to  the  computer                                                               
system, which will be questioned, she said.                                                                                     
                                                                                                                                
8:10:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COLVER  espoused how state entities  that are off-                                                               
budget,  or   self-funded,  can   grow  large  through   lack  of                                                               
oversight.   The scholarship application requires  the submission                                                               
of  a  parental  federal,  financial statement,  although  it  is                                                               
supposed to  be based on the  student's merit.  Pointing  out the                                                               
existing  Online Alaska  School  Information  System (OASIS),  he                                                               
questioned  the requirement  to submit  federal financial  forms,                                                               
and   the  requested   $800,000  fiscal   note  to   upgrade  the                                                               
commission's  computer system.   He  said he  will be  submitting                                                               
legislation to address the information requirement.                                                                             
                                                                                                                                
8:13:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  noted  the  possible  impacts  on                                                               
students in  military service, or  needing to care for  an ailing                                                               
parent.                                                                                                                         
                                                                                                                                
REPRESENTATIVE WILSON said the current  rules make no exceptions,                                                               
and agreed  that an  extra year's grace  could be  considered for                                                               
members of the military.                                                                                                        
                                                                                                                                
8:14:44 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  referred to  HB 157, page  1, line  7, and                                                               
read:                                                                                                                           
                                                                                                                                
     ...  fails  to  complete  the  qualified  postsecondary                                                                    
     education  program  in  which the  person  is  enrolled                                                                    
     within six  years after the  date of the  first payment                                                                    
     of funds, ...                                                                                                              
                                                                                                                                
REPRESENTATIVE SEATON noted that  the performance scholarship can                                                               
be  activated  in  two  ways, either  via  the  WorkKeys  program                                                               
certificate, or acceptance to a four  year college.  He asked how                                                               
repayment  would  be  handled  if  a  student  initially  entered                                                               
college  planning to  complete a  bachelor's degree,  but altered                                                               
course and completed a technical certificate instead.                                                                           
                                                                                                                                
8:16:00 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  said  the  emphasis is  for  students  to                                                               
finish a program.                                                                                                               
                                                                                                                                
REPRESENTATIVE SEATON clarified that  a bachelor's degree student                                                               
could  change  direction and  complete  a  two year  certificate,                                                               
without repayment required.                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON responded yes.                                                                                            
                                                                                                                                
8:17:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TALERICO referred to the  fiscal note to point out                                                               
information regarding retroactivity, and asked for clarity.                                                                     
                                                                                                                                
REPRESENTATIVE WILSON explained that  the bill is not retroactive                                                               
to  scholarship recipients  who are  already benefiting  from the                                                               
program.                                                                                                                        
                                                                                                                                
8:18:00 AM                                                                                                                    
                                                                                                                                
DIANE  BARRANS, Executive  Director, Commission  on Postsecondary                                                               
Education, Alaska  Department of Education, testified  on HB 264,                                                               
and  said   the  commission's   comments  have  not   been  fully                                                               
formulated, nor  solicited; however, the proposed  legislation is                                                               
being  analyzed and,  several points  of concern  can be  brought                                                               
forward.   The first  concern regards  the possibility  of having                                                               
the scholarship  convert to  a loan.   Although repayment  is not                                                               
included  in the  program, requirements  and incentives  exist in                                                               
both the scholarship  and grant programs to  expedite a student's                                                               
time to  degree.  She  reported that  the APS includes  a minimum                                                               
number of  credits, enrollment level requirements,  and an earned                                                               
credit  accumulation that  a student  must maintain  in order  to                                                               
continue to  receive the  award.  If  these requirements  are not                                                               
upheld the award status is  suspended until the student satisfies                                                               
the criteria.   The  grant program provides  a higher  amount for                                                               
the  students who  enroll  in programs  at  an accelerated  pace.                                                               
These  students  are  also required  to  maintain  good  academic                                                               
standing and continue to accumulate  credits towards their chosen                                                               
credential.                                                                                                                     
                                                                                                                                
8:20:28 AM                                                                                                                    
                                                                                                                                
MS. BARRANS  offered that  a more  straight forward  approach, to                                                               
address  the  amount of  investment  in  a student  that  doesn't                                                               
result in a  credential, would be something similar  to the Texas                                                               
"Be on Time" loan.  The  Texas program is a straight-forward loan                                                               
and  contains  requirements  for  academic  standards,  including                                                               
completion of  a degree within  five years of  initial enrolment.                                                               
The students receive the funds  with the understanding that it is                                                               
a  loan  program, conditions  may  be  met  to have  the  balance                                                               
forgiven, but  there is no  confusion that it's a  scholarship or                                                               
grant, which later converts to a loan.                                                                                          
                                                                                                                                
8:21:08 AM                                                                                                                    
                                                                                                                                
MS. BARRANS stated that, with  regard to the grant program, which                                                               
targets low  and middle income  students, imposing the  threat of                                                               
additional debt  could be  a disincentive for  them.   She opined                                                               
that the  very students, who  might derive the most  benefit from                                                               
additional education  and training, will be  discouraged in their                                                               
pursuit.                                                                                                                        
                                                                                                                                
8:21:28 AM                                                                                                                    
                                                                                                                                
MS. BARRANS  said, to the extent  to which students elect  not to                                                               
risk the  associated repayment  responsibility, and  reduce their                                                               
enrollment  level  to  accommodate  the loss  of  financial  aid,                                                               
statistically they will also reduce  the likelihood of completing                                                               
their  program  of   study.    She  said  it   appears  that  the                                                               
legislation unilaterally  applies to  APS eligible  graduates who                                                               
have already earned eligibility, as  well as graduates who become                                                               
eligible for  awards after  passage of  the legislation.   Making                                                               
this  change  mid-stream,  without grandfather  provisions,  will                                                               
likely be  seen by participants,  and the parents, as  an unfair,                                                               
bait-and-switch action.                                                                                                         
                                                                                                                                
8:22:54 AM                                                                                                                    
                                                                                                                                
MS.  BARRANS cited  the possibility  for administrative/technical                                                               
issues,  and  offered a  description  of  a federal  teach  grant                                                               
program,  that was  initially  offered  specifically for  teacher                                                               
education training.   If the program requirement  for teaching in                                                               
a  qualifying  school was  not  met,  the  grant converted  to  a                                                               
federal  loan.    She  reported  a high  level  of  difficult  in                                                               
administer  the  program,   which  required  annual,  conditional                                                               
reviews  for each  participant.   Therefore,  the  program is  no                                                               
longer utilized.                                                                                                                
                                                                                                                                
8:24:11 AM                                                                                                                    
                                                                                                                                
MS.   BARRANS   indicated   that   the  bill   also   calls   for                                                               
implementation  with awards  paid out  mid-way through  the 2016-                                                               
2017 academic year.   She opined that the  timeline is inadequate                                                               
for  making the  necessary  modifications to  the aid  management                                                               
system,  promulgating   regulations,  developing   contracts  and                                                               
disclosures, and  communicating the new terms  to aid recipients.                                                               
The terms  and conditions  of the loan  incorporated in  the bill                                                               
refer  to AS  14.43.120, she  said, a  statute under  which loans                                                               
have not  been made for over  15 years.  The  statute contains no                                                               
method for setting interest rates,  the borrowing limits are non-                                                               
specific  for the  proposed application,  and the  forgiveness of                                                               
obligations  clause   for  active   military  duty   may  require                                                               
clarification.    Finally,  the   proposed  bill  indicates  that                                                               
interest accrues  only at  the time  that the  aid converts  to a                                                               
loan status;  however, recipients would  need to have  a specific                                                               
rate quote, prior  to signing an agreement for  receipt of funds.                                                               
The loan terms  and conditions would need to be  disclosed by the                                                               
state  to  the   students  prior  to  the   consummation  of  the                                                               
obligation.                                                                                                                     
                                                                                                                                
8:26:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VAZQUEZ  directed   attention  to  the  committee                                                               
packet, and the page titled,  "Exhibit 7, AY14 Public High School                                                               
Graduates'  In-State  and  Out-of-State  Attendance  Patterns  by                                                               
Standard APS Eligibility and Award  Levels, Fall 2014," and asked                                                               
for an explanation of the statistics being presented.                                                                           
                                                                                                                                
MS.  BARRANS said  the chart  indicates the  disbursement of  the                                                               
2014 graduating  class:  7,666 graduates,  2,273 in-state college                                                               
attendees, 1,205  out-of-state college  attendees, and  4,188 not                                                               
found/attending.   She  drew attention  to the  third row  of the                                                               
chart,  to point  out  that the  APS  eligible students  attended                                                               
college in-state, at a higher rate.                                                                                             
                                                                                                                                
8:29:20 AM                                                                                                                    
                                                                                                                                
CHAIR KELLER continuing  with the same chart,  inquired about the                                                               
55  percent, the  4,188 not  found/attending,  and asked  whether                                                               
these students have been subject to suspension of funds.                                                                        
                                                                                                                                
MS.  BARRANS  clarified  that  the   third  line  represents  the                                                               
eligible APS population.   Of the total  eligible population, she                                                               
pointed out that 17 percent did  not attend college in the autumn                                                               
of  their  high school  graduation  year.    Under the  terms  of                                                               
existing  statutes governing  the  APS  contract, these  students                                                               
have an  additional five  and one-half years  to initiate  use of                                                               
their award.                                                                                                                    
                                                                                                                                
8:30:51 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON noted the  48 percent eligibility level and                                                               
commented that  these statistics indicate how  the scholarship is                                                               
serving  the purpose  for which  it was  intended.   He said  the                                                               
expectation was  to stimulate students  to apply  themselves more                                                               
rigorously in high  school.  That is, to not  only take the basic                                                               
requirements  for graduation,  but go  beyond those  requirements                                                               
and  be rewarded  via APS  eligibility.   The chart  reflects how                                                               
this  merit  based  program  is being  fulfilled,  and  doing  an                                                               
excellent  job  for  what  it  was  intended:    raising  student                                                               
achievement levels.                                                                                                             
                                                                                                                                
8:32:09 AM                                                                                                                    
                                                                                                                                
MS. BARRANS  clarified that the  total eligibility group  in 2014                                                               
was about 28  percent and, of those, 48  percent attended college                                                               
in Alaska.                                                                                                                      
                                                                                                                                
REPRESENTATIVE SEATON asked if the  percentages have changed over                                                               
time.                                                                                                                           
                                                                                                                                
MS. BARRANS  reported that the  last two graduating  classes have                                                               
had a  slight increase, perhaps  as high as 32  percent; however,                                                               
the percentage of  the graduates who are eligible  for the career                                                               
technical education award, has increased significantly.                                                                         
                                                                                                                                
8:33:22 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COLVER asked  for the  percentage of  the overall                                                               
high   school    graduates   who    attend   vocational/technical                                                               
postsecondary education, versus pursuing college degrees.                                                                       
                                                                                                                                
MS.  BARRANS offered  to provide  further information,  and added                                                               
that not all  vocational facilities are required  to file federal                                                               
reports, from which the statistics are drawn.                                                                                   
                                                                                                                                
CHAIR KELLER said public testimony would be held open.                                                                          
                                                                                                                                
8:35:02 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON  assured the  committee that the  bill does                                                               
not  act  retroactively,  and  agreed   that  the  military  duty                                                               
question will require further consideration.                                                                                    
                                                                                                                                
8:37:04 AM                                                                                                                    
                                                                                                                                
CHAIR KELLER announced HB 264 was held over.