03/12/2010 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB297 | |
| HB367 | |
| HB350 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 413 | TELECONFERENCED | |
| *+ | HB 393 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 297 | TELECONFERENCED | |
| += | HB 367 | TELECONFERENCED | |
| += | HB 350 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
March 12, 2010
8:13 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Cathy Engstrom Munoz, Vice Chair
Representative Wes Keller
Representative Peggy Wilson
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
Representative Bryce Edgmon
COMMITTEE CALENDAR
HOUSE BILL NO. 297
"An Act establishing the governor's performance scholarship
program and relating to the program; establishing the governor's
performance scholarship fund and relating to the fund; relating
to student records; making conforming amendments; and providing
for an effective date."
- MOVED CSHB 297(EDC) OUT OF COMMITTEE
HOUSE BILL NO. 367
"An Act relating to tax credits for cash contributions by
taxpayers that are accepted for certain educational purposes and
facilities; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 350
"An Act relating to the local contribution to public school
funding; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 413
"An Act relating to the Alaska Challenge Youth Academy."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 393
"An Act relating to the Alaska Challenge Youth Academy."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 297
SHORT TITLE: POSTSECONDARY SCHOLARSHIPS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/19/10 (H) READ THE FIRST TIME - REFERRALS
01/19/10 (H) EDC, FIN
02/03/10 (H) EDC AT 8:00 AM BARNES 124
02/03/10 (H) Heard & Held
02/03/10 (H) MINUTE(EDC)
02/12/10 (H) EDC AT 8:00 AM CAPITOL 106
02/12/10 (H) Heard & Held
02/12/10 (H) MINUTE(EDC)
02/15/10 (H) EDC AT 8:00 AM CAPITOL 106
02/15/10 (H) Heard & Held
02/15/10 (H) MINUTE(EDC)
02/17/10 (H) EDC AT 8:00 AM CAPITOL 106
02/17/10 (H) Heard & Held
02/17/10 (H) MINUTE(EDC)
02/19/10 (H) EDC AT 8:00 AM CAPITOL 106
02/19/10 (H) Heard & Held
02/19/10 (H) MINUTE(EDC)
02/22/10 (H) EDC AT 8:00 AM CAPITOL 106
02/22/10 (H) Heard & Held
02/22/10 (H) MINUTE(EDC)
02/26/10 (H) EDC AT 8:00 AM CAPITOL 106
02/26/10 (H) Heard & Held
02/26/10 (H) MINUTE(EDC)
03/01/10 (H) EDC AT 8:00 AM CAPITOL 106
03/01/10 (H) Heard & Held
03/01/10 (H) MINUTE(EDC)
03/08/10 (H) EDC AT 8:00 AM CAPITOL 106
03/08/10 (H) Heard & Held
03/08/10 (H) MINUTE(EDC)
03/10/10 (H) EDC AT 8:00 AM CAPITOL 106
03/10/10 (H) Heard & Held
03/10/10 (H) MINUTE(EDC)
03/12/10 (H) EDC AT 8:00 AM CAPITOL 106
BILL: HB 367
SHORT TITLE: TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
SPONSOR(s): MUNOZ
02/23/10 (H) READ THE FIRST TIME - REFERRALS
02/23/10 (H) EDC, FIN
03/10/10 (H) EDC AT 8:00 AM CAPITOL 106
03/10/10 (H) Heard & Held
03/10/10 (H) MINUTE(EDC)
03/12/10 (H) EDC AT 8:00 AM CAPITOL 106
BILL: HB 350
SHORT TITLE: PUBLIC SCHOOL FUNDING: LOCAL CONTRIBUTION
SPONSOR(s): EDUCATION
02/17/10 (H) READ THE FIRST TIME - REFERRALS
02/17/10 (H) EDC, FIN
02/17/10 (H) EDC AT 8:00 AM CAPITOL 106
02/17/10 (H) <Bill Hearing Rescheduled to 02/19/10>
02/19/10 (H) EDC AT 8:00 AM CAPITOL 106
02/19/10 (H) Heard & Held
02/19/10 (H) MINUTE(EDC)
02/22/10 (H) EDC AT 8:00 AM CAPITOL 106
02/22/10 (H) <Bill Hearing Rescheduled to 02/26/10>
02/26/10 (H) EDC AT 8:00 AM CAPITOL 106
02/26/10 (H) Heard & Held
02/26/10 (H) MINUTE(EDC)
03/03/10 (H) EDC AT 8:00 AM CAPITOL 106
03/03/10 (H) Heard & Held
03/03/10 (H) MINUTE(EDC)
03/10/10 (H) EDC AT 8:00 AM CAPITOL 106
03/10/10 (H) Scheduled But Not Heard
03/12/10 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
EDDY JEANS, Director
School Finance and Facilities Section
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
297.
JEAN MISCHEL, Attorney
Legislative Legal Counsel
Legislative Legal and Research Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
297.
STEPHANIE BUTLER, Director Operations/Outreach
Postsecondary Education Commission
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 297.
KENDRA KLOSTER, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced the committee substitute for HB
367 on behalf of Representative Munoz, sponsor.
ROBYNN WILSON, Income Audit Manager
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
367.
MARY FRANCIS, Executive Director
Alaska Council of School Administrators (ACSA)
Juneau, Alaska
POSITION STATEMENT: Testified in favor of HB 350.
ACTION NARRATIVE
8:13:46 AM
CHAIR PAUL SEATON called the House Education Standing Committee
meeting to order at 8:13 a.m. Present at the call to order were
Representatives Seaton, Gardner, Buch, and Keller.
Representatives Munoz and Peggy Wilson arrived as the meeting
was in progress.
8:13:56 AM
HB 297-POSTSECONDARY SCHOLARSHIPS
8:14:05 AM
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 297, "An Act establishing the governor's
performance scholarship program and relating to the program;
establishing the governor's performance scholarship fund and
relating to the fund; relating to student records; making
conforming amendments; and providing for an effective date."
8:14:48 AM
REPRESENTATIVE GARDNER moved to adopt HB 297, Version E, as the
working document.
8:15:00 AM
There being no objection, Version E was before the committee.
8:15:28 AM
CHAIR SEATON directed attention to Sec. 14.43.815, beginning on
page 6, line 27, of the bill. He paraphrased from the bill and
read [original punctuation provided]:
(a) graduated, or will graduate not later than six
months after the date of the application, from a high
school in the state, including a public school,
private school, and home school;
CHAIR SEATON surmised the referenced language allowed applicants
to make an application after they graduate, but not sooner than
six months before they graduate; however, a date certain after
graduation was not specified.
8:16:27 AM
EDDY JEANS, Director, School Finance and Facilities Section,
Department of Education and Early Development (EED), explained
that the end date for scholarship eligibility was six years
following high school graduation, thus the "window" of
opportunity to apply, receive, and expend scholarship funds was
six months prior to graduation from high school, to six years
following graduation from high school. Mr. Jeans said this
provision was clearly stated in paragraph (3), page 7, line 11,
and paraphrased from the bill which read [original punctuation
provided]:
(3) will receive and use, while an Alaska resident,
the scholarship at a qualified postsecondary
institution in the state not later than six years
after the beginning of the first school year after a
student's graduation from high school ...
CHAIR SEATON questioned whether the department anticipated
receiving late applications.
8:18:02 AM
MR. JEANS said the department expects that students would be
aware of the time limit and would apply immediately.
8:18:24 AM
REPRESENTATIVE GARDNER referred to page 7, lines 15-16, and
paraphrased from the bill which read [original punctuation
provided]:
... standards for extension of time must include two
additional years if the student is in military
service; ...
REPRESENTATIVE GARDNER expressed her concern that the standard
for the extension of time must include two years, rather than
"up to two additional years."
MR. JEANS advised this was the component for the extension of
military service, and agreed that "must include" was strong
language.
8:19:22 AM
JEAN MISCHEL, Attorney, Legislative Legal Counsel, Legislative
Legal and Research Services, Legislative Affairs Agency, advised
inserting "not more than two additional years" after the word
"include" on page 7, line 15.
8:19:52 AM
REPRESENTATIVE GARDNER suggested inserting "may include two
additional years."
MS. MISCHEL cautioned "may" provides the commissioner authority
to deny the extension.
CHAIR SEATON asked whether the proposed changes are equivalent.
MS. MISCHEL pointed out that they are not equivalent language;
in fact, "may" defers to the discretion of the commissioner.
She recalled the intent of the committee was to require the
commissioner to grant a two-year extension if needed for
military service.
8:21:49 AM
REPRESENTATIVE GARDNER, acknowledging the intent of the
committee, suggested "standards [for] extension of time must
include up to two additional years ..."
8:22:08 AM
MS. MISCHEL recommended "not more than."
8:22:34 AM
REPRESENTATIVE GARDNER moved Amendment 1,which inserted "not
more than."
8:22:50 AM
CHAIR SEATON restated Amendment 1 which read:
Page 7, line 15
After "include"
Add "not more than"
CHAIR SEATON objected for the purpose of discussion.
8:23:10 AM
REPRESENTATIVE KELLER offered Amendment 1 to Amendment 1 which
read:
Page 7, line 15
Delete "must"
Insert "may"
REPRESENTATIVE KELLER said the intention of the amendment was to
allow the commissioner discretion to deny an extension.
8:23:35 AM
REPRESENTATIVE GARDNER paraphrased from line 13 which read
[original punctuation provided]:
the student qualifies for an extension of time allowed
by the department;
REPRESENTATIVE GARDNER said she was comfortable with the
amendment, although the department already has the discretion to
deny.
There being no objection, Amendment 1 to Amendment 1 was treated
as adopted.
8:23:59 AM
CHAIR SEATON restated Amendment 1, as amended, which read:
Page 7, line 15
"of this paragraph, standards for extension of time
may [must] include not more than two additional years
if the student is in military service;
There being no objection, Amendment 1 was adopted.
8:24:40 AM
CHAIR SEATON moved Amendment 2 which read:
Page 7, lines 8-9
After the word "state" delete "for not less than two
years,"
8:25:05 AM
REPRESENTATIVE MUNOZ objected for the purpose of discussion.
8:25:11 AM
CHAIR SEATON explained Amendment 2 was recommended by the bill's
drafter.
8:26:29 AM
REPRESENTATIVE MUNOZ surmised Amendment 2 removes the
requirement for a student to attend high school in Alaska for
two years. She expressed her support for the amendment,
observing that the standard of state residency can be retained
by family members of a parent in military service.
8:27:15 AM
CHAIR SEATON clarified that this is an allowance for an
additional qualification for students who leave with their
custodial parents due to military service. Students would still
be subject to the remaining criteria to qualify for a
scholarship, but have "an exception for the qualification of
graduating from an Alaska school ..."
8:28:12 AM
REPRESENTATIVE MUNOZ gave an example of a student in a military
family, who maintains his/her state residency, and remains
Outside for all four years during high school. She asked
whether that student would be eligible.
8:28:59 AM
MS. MISCHEL indicated no. In further response to Representative
Munoz, she explained that two years is not specified in this
amendment; in fact, attendance could be for any amount of time,
although the time period could be clarified in regulation. The
amendment attempts to equate high school graduation in-state
with out-of-state high school graduates who are also residents.
Ms. Mischel reminded the committee the purpose of the bill was
to instill more rigor in the state's high school curriculum,
thus the attendance requirement.
8:29:55 AM
REPRESENTATIVE MUNOZ restated her question about a student of a
military family who retains his/her residency.
8:30:05 AM
MS. MISCHEL confirmed that student would not qualify.
8:30:31 AM
REPRESENTATIVE GARDNER gave an example to illustrate the purpose
of the amendment.
8:31:09 AM
REPRESENTATIVE P. WILSON stated her support for the amendment,
and noted that many military families maintain state residency
for other purposes.
8:31:57 AM
REPRESENTATIVE MUNOZ indicated that she removed her objection.
8:32:01 AM
There being no further objection, Amendment 2 was adopted.
8:32:12 AM
CHAIR SEATON called attention to page 20, line 10, and read
[original punctuation provided]:
Education or the Alaska Student Loan Corporation for
the guarantee and disbursing of financial aid
CHAIR SEATON informed the committee of a request from the
Postsecondary Education Commission to delete "guarantee"
and insert "servicing."
8:33:06 AM
STEPHANIE BUTLER, Director Operations/Outreach, Postsecondary
Education Commission, Department of Education and Early
Development (EED), explained that the word "servicing" is a
broader term, and more appropriate for the bill.
8:33:32 AM
CHAIR SEATON moved Amendment 3 which read:
Page 20, line 10
Delete "guarantee"
Insert "servicing"
8:33:53 AM
There being no objection, Amendment 3 was adopted.
8:34:28 AM
REPRESENTATIVE MUNOZ related an inquiry from a constituent who
asked whether the graduating classes of 2011-2013 would be held
to lesser curriculum requirements.
8:35:05 AM
MR. JEANS advised the committee that the bill contains
transition language that allows the department to develop
regulations to implement transition eligibility requirements.
For example, the math requirement for 2011 seniors would be
three years, instead of four years.
8:36:08 AM
CHAIR SEATON cited page 22, line 4, which read:
(1) may be eligible for the program even though the
student did not fully meet the required core academic
curriculum for the school years beginning July 1,
2010, through [June 30], 2013;
8:36:48 AM
REPRESENTATIVE GARDNER asked about a transitioning year senior
who is taking his/her second year of math.
MR. JEANS indicated a second year of math would suffice for a
senior in the class of 2011.
8:37:42 AM
CHAIR SEATON asked whether the department will continue to
require standardized test scores as part of the evaluation.
8:38:07 AM
MR. JEANS answered that the Alaska State Board of Education &
Early Development (state board) will be setting the "cut scores"
for the testing levels, as well as the transition regulations.
8:38:26 AM
REPRESENTATIVE GARDNER surmised that a student eligible for the
program at its inception may only meet high school graduation
requirements as they are today.
8:38:43 AM
MR. JEANS agreed that may be the case for students who wait
until their senior year to take required courses.
REPRESENTATIVE GARDNER remarked:
...If we're getting students in without changing the
behavior or the choices that they're making, or adding
any rigor, that's not the intention.
CHAIR SEATON expressed his hope that the state board will adopt
rigorous regulations.
8:39:44 AM
REPRESENTATIVE GARDNER said the testimony indicates not.
CHAIR SEATON pointed out a transition period is necessary;
otherwise, scholarships would not be awarded for four years.
REPRESENTATIVE GARDNER opined three years of AP classes could be
required during the transition.
8:40:47 AM
MR. JEANS assured the committee the department's intent was to
increase rigor for students; however, flexibility is necessary
so that juniors and sophomores have time to make adjustments.
In fact, by the time the state board would be setting
regulations, students eligible for this scholarship will have
chosen classes for their senior year.
8:42:26 AM
REPRESENTATIVE P. WILSON noted that students who want one of the
scholarships may have to change plans, and said, "that's the
whole idea with this." The intent should be clear to the state
board that the standards of rigor must apply for the first
students who receive this award. She stressed the standards
should be as high as possible.
8:44:19 AM
CHAIR SEATON agreed, and suggested students could take virtual
classes or attend summer school; however, during the transition,
requiring a student to meet every one of the qualifications may
be difficult.
8:45:26 AM
REPRESENTATIVE KELLER said he expected the transition
regulations to require the same rigor from students as in the
future.
8:45:56 AM
REPRESENTATIVE MUNOZ reviewed the current requirements of four
years of English, two years of math, and one year of science.
She suggested the requirements for the transitional period could
be an additional year of math and science.
8:46:36 AM
REPRESENTATIVE BUCH noted the term "transition" gives the board
and the department discretion to establish the program that will
be in place by the spring of 2014. He agreed that there should
be no question about the intent of the bill.
8:47:50 AM
REPRESENTATIVE GARDNER suggested an amendment to require at
least of three years of math and three years of science.
MR. JEANS restated the current graduation requirements of four
years of language arts, three years of social studies, two years
of math, and two years of science.
8:49:00 AM
REPRESENTATIVE BUCH pointed out this requirement is beyond the
reach of schools in the Bush, and without time for schools to
make programs available, may exclude students.
8:49:34 AM
CHAIR SEATON asked the department whether the "special
circumstances ... beyond the student's control" provision of the
bill applies when districts do not offer the required
curriculum.
8:50:29 AM
MR. JEANS advised the alternative pathways are not waivers, but
allow credit for correspondence courses or other alternatives.
He asked the committee to allow the legislation to move forward
without amendments, so that the state board can hear public
testimony and review all of circumstances and issues related to
the transition language.
8:51:05 AM
REPRESENTATIVE GARDNER stated Mr. Jeans' comment holds true for
every provision in the bill; however, the bill is not about
giving students scholarships, but about reforming the K-12
education system by encouraging and requiring students to "reach
higher."
8:51:37 AM
REPRESENTATIVE P. WILSON assured the committee that the teachers
in small schools will provide what is necessary to help an
interested student qualify for this program. She praised the
efforts of the state's teachers, and their abilities to serve
students, and warned against discounting the possibilities for
any student who works hard.
8:53:17 AM
REPRESENTATIVE KELLER agreed that on-line courses are available,
and 2011 graduates have time to prepare.
8:53:49 AM
CHAIR SEATON stated the conceptual amendment to page 22, line 6,
adds "however, this shall include at least three years of math
and three years of science."
8:54:37 AM
MS. MISCHEL said the conceptual amendment would amend page 22,
line 4, and she recommended removing the phrase "even though the
student did not fully meet" and specifying that the core
curriculum requirements are met except that the student must
have at least three years math and three years science.
CHAIR SEATON asked Representative Gardner to comment.
8:54:23 AM
REPRESENTATIVE GARDNER surmised the amendment waives the fourth
year of math and science and requires three, which was correct.
8:56:09 AM
REPRESENTATIVE MUNOZ agreed with the amendment.
8:56:31 AM
CHAIR SEATON restated Conceptual Amendment 4, offered by
Representative Gardner, and objected for the purpose of
discussion.
8:56:58 AM
CHAIR SEATON confirmed that the amendment did not change the
standards, but affected the transitional requirements.
8:58:16 AM
CHAIR SEATON withdrew his objection. There being no further
objection, Conceptual Amendment 4 was adopted.
8:59:07 AM
REPRESENTATIVE BUCH recognized the chairman's work on the bill,
which may be a great start towards reform.
8:59:52 AM
CHAIR SEATON noted there was an unmet student need component in
the bill that would ensure that all Alaskans can access the
program, and pursue the path that they choose for postsecondary
education. He anticipated the legislation would increase the
rigor of all high schools, elevate the workforce, and result in
more postsecondary students attending schools in the state.
9:01:03 AM
REPRESENTATIVE MUNOZ related work on the bill began in the
interim, and the thorough process continued under the focus of
the committee. She praised the leadership of the committee and
said members should be proud of the work that was done.
9:01:47 AM
REPRESENTATIVE GARDNER expressed her hope that the scholarship
program will match the success seen in other states with similar
programs, and that the legislation will continue to progress "in
a form that we recognize." She acknowledged that rural areas
have valid concerns about the bill, such as the challenge of
learning by distance education. Representative Gardner said the
legislation may result in a "clamor and push for change, and
that's the point of the legislation."
9:03:33 AM
REPRESENTATIVE KELLER opined the bill builds the incentives for
parents and school districts to increase success levels for
students.
9:04:19 AM
CHAIR SEATON cited the influence of various programs and
contributions from committee members to the GPS bill.
9:04:48 AM
REPRESENTATIVE MUNOZ thanked Mr. Jeans and Ms. Mischel for their
assistance on the bill. She then moved to report the Committee
Substitute for HB 297, Version E, as amended, out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, CSHB 297(EDC) was reported
from the House Education Standing Committee.
9:06:04 AM
The committee took an at-ease from 9:06 a.m. to 9:09 a.m.
HB 367-TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
9:09:17 AM
CHAIR SEATON announced that the next order of business would be
HOUSE BILL NO. 367, "An Act relating to tax credits for cash
contributions by taxpayers that are accepted for certain
educational purposes and facilities; and providing for an
effective date."
REPRESENTATIVE MUNOZ moved to adopt the committee substitute
(CS) for HB 367, Version E, as the working document.
9:09:32 AM
CHAIR SEATON objected for the purpose of discussion.
9:09:45 AM
KENDRA KLOSTER, Staff to Representative Cathy Munoz, Alaska
State Legislature, informed the committee Version E incorporates
the amendment previously adopted, and also removes Sec. 4 of
Version R by request from the Department of Revenue (DOR). She
explained that according to DOR, the general rule in tax
administration is that tax credits are not refundable, do not
enjoy "carry-forward," and cannot be transferred or sold unless
the privilege is written into the law. Further, the "default"
interpretation is that a tax credit is only good to apply in the
same tax year. Therefore, if the language in Sec. 4, Version R,
is included in the bill, it is suggested that credit in these
sections is "silent" and may be refunded, carried-forward, or
transferred.
9:12:08 AM
CHAIR SEATON confirmed that Sec. 4 does not appear in Version E,
and asked for further changes, if any.
9:12:22 AM
REPRESENTATIVE GARDNER asked whether Version E provides that
taxpayers may sell, trade, transfer, or apply tax credits to
subsequent years.
MS. KLOSTER said no, and added that DOR's intent was to ensure
consistency with other insurance tax credit law, and to avoid
setting a precedent in statute.
9:13:41 AM
REPRESENTATIVE BUCH asked for a brief summary of the bill.
9:14:07 AM
MS. KLOSTER summarized that current law allows a 50 percent tax
credit for the first $100,000 donation and an 100 percent tax
credit for the second $100,000 donation. The proposed bill
extends a 50 percent tax credit for over $200,000 in donations,
adds a $25,000,000 cap, and allows donations to facilities and
programs.
9:14:56 AM
CHAIR SEATON removed his objection thus CSHB 367, Version E, was
the working document before the committee.
9:15:15 AM
REPRESENTATIVE P. WILSON questioned the zero fiscal note
attached to the bill. She pointed out that as the proposed
legislation allows entities tax credits against their charitable
contributions, the state will collect less tax income, and the
fiscal note should reflect this loss.
9:15:36 AM
MS. KLOSTER directed attention to the fiscal note from DOR.
REPRESENTATIVE P. WILSON asked for clarification of the fiscal
note.
MS. KLOSTER deferred to DOR.
9:16:14 AM
ROBYNN WILSON, Income Audit Manager, Tax Division, Department of
Revenue (DOR), informed the committee DOR provided a fiscal note
dated 3/9/10. She directed attention to the analysis attached
to the fiscal note and explained that fiscal notes are
indeterminate on credit bills because the department has no way
of knowing who may take advantage of the tax credits. The
fiscal note indicated that for corporate application, the loss
to state revenue may be approximately $200 million, if all
corporate taxpayers take the maximum credit allowed by the
proposed legislation. In response to Chair Seaton, she added
that the $200 million estimate does not include losses from
other taxes such as mining license taxes and fish business
taxes.
9:18:43 AM
REPRESENTATIVE P. WILSON heard corporations are enthusiastic
about the bill, and estimated that the loss of income to the
state could be $50,000,000.
9:20:11 AM
REPRESENTATIVE GARDNER asked whether there is active
participation within the existing tax credit structure.
MS. WILSON said approximately 15 corporate taxpayers took
advantage of the credit during the last fiscal year. Three
corporations took advantage of the insurance premiums tax, one
corporation for fisheries resource landing tax, and three
corporations for fisheries business tax. No corporation
taxpayers took advantage of the program for oil and gas
production tax, nor for property tax. Ms. Wilson advised the
current limit of $150,000 probably causes a corporation that is
subject to all three taxes, to direct all of its credit under
one tax.
9:22:08 AM
REPRESENTATIVE GARDNER requested a list of the claims for the
last three years, including the donations and the fiscal impact
to the state.
MS. WILSON responded in the last fiscal year the total claims
for credits were approximately $2,000,000, based on total
contributions of $3,000,000. However, that figure does not
include possible contributions above the limit for tax credits.
9:23:17 AM
CHAIR SEATON concluded $3,000,000 in contributions and
$2,100,000 in credits claimed meant corporations took credits up
to the current limit of $200,000, although more contributions
could have been made, but not reported.
MS. WILSON said that is correct, and added that contributions
could have been over and above $3,000,000, but the tax return
only indicated the $200,000 that generated the credit.
9:24:24 AM
REPRESENTATIVE MUNOZ asked for the number of corporate taxpayers
in the state.
MS. WILSON answered that there are about fifteen thousand
corporations, but only one-half pay income tax in the state.
REPRESENTATIVE MUNOZ observed from 7,500 corporations, about 11
donors take advantage of the tax credit.
MS. WILSON indicated yes, and added that some of these
corporations may not be paying taxes due to losses or other
reasons.
9:25:24 AM
REPRESENTATIVE GARDNER asked whether all of the taxpayers who
make donations to the University of Alaska (UA) also receive
federal tax relief.
MS. WILSON said yes, and continued to say contributions to UA
would be subject to the federal charitable contribution
deduction and therefore, also qualify for a state income tax
benefit.
9:26:09 AM
REPRESENTATIVE P. WILSON gave the example of a corporation with
taxes of $100,000 that contributes $200,000 to charitable
entities. She asked for the difference in income tax due
between the example corporation and one with an equal tax
liability that makes no charitable contributions.
MS. WILSON advised that big corporate taxpayers are often doing
business in multiple states and/or countries. If said
corporation does 10 percent of its business in Alaska, the state
would tax 10 percent of the corporation's federal taxable
income. Thus, if a corporation contributes $500,000 to UA, it
would deduct $500,000 from its federal tax liability, Alaska
would receive 10 percent of the federal taxable income, and the
corporation would receive a benefit of its apportioned
charitable contributions. In response to Chair Seaton, she
estimated that the corporate Alaska taxpayer in the example
would receive a deduction for $50,000. However, under current
statute, the state allows either the deduction for the
charitable contribution, or the tax credit, but not both. Ms.
Wilson concluded that for the state's purposes, said corporation
would be allowed an $150,000 credit, which comes directly off
the state income tax.
9:31:18 AM
REPRESENTATIVE P. WILSON asked whether the deduction and the
credit would be added together for a total of $200,000.
MS. WILSON further explained that for state purposes, the
corporation would receive the credit of $150,000, and she
assumed the federal tax benefit would be approximately $175,000.
9:32:05 AM
CHAIR SEATON confirmed that a corporation in Alaska that does
not receive the credit can receive a $50,000 deduction, but not
the $50,000 deduction and the $150,000 tax credit.
MS. WILSON said correct.
9:32:39 AM
REPRESENTATIVE P. WILSON re-stated her question as to the
difference in taxes between a corporation that participates and
one that does not, in order to determine the incentive for
participation, and to determine the impact to the state in lost
revenue.
9:33:50 AM
REPRESENTATIVE MUNOZ estimated the corporate tax liability to
the state in the example was 10 percent, or $50,000.
MS. WILSON clarified that her reference was to apportionment in
a multistate environment. She changed her example to that of a
corporation operating only in Alaska, and said that an Alaskan
corporation, at the top of the tax bracket, that makes a
charitable contribution to UA could enjoy a 9.4 percent tax
break. The corporation then would have a choice of whether to
take the tax deduction or the proposed tax credit: a tax
deduction of about $18,000, or a tax credit of $150,000. Ms.
Wilson provided a personal tax liability example of the
difference between a mortgage interest deduction and a childcare
expense tax credit; in fact, it is "always a higher benefit to
look at a credit, than a deduction."
9:36:11 AM
CHAIR SEATON proposed the scenario of a corporation that
contributed to the construction of a $10,000,000 vocational
center.
MS. WILSON advised the bill would provide a 50 percent rate on
the incremental, additional contribution equal to a tax credit
of $5,000,000, compared to a deduction that would equal about
$940,000.
CHAIR SEATON observed the benefit would result in a $10,000,000
building that a corporation could build for a $5,000,000
investment.
9:38:08 AM
REPRESENTATIVE P. WILSON opined the difference between a
liability of $940,000 and $4,000,000 would be an incentive for
corporations.
CHAIR SEATON affirmed that the proposed bill provides an
incentive for corporations to make large contributions to
educational institutions. In fact, a corporation could build a
needed facility "from out of their corporate pocket, instead of
the state bonding, or the state ... building the building for
100 percent.... Do we want to provide that kind of incentive
... for that kind of response from corporations?"
9:39:50 AM
REPRESENTATIVE P. WILSON asked whether a group affiliated with a
university, such as a foundation, could contribute to UA and pay
"half of what they normally would pay." She again expressed
concern about the possible loss of state revenue.
9:40:47 AM
MS. WILSON expressed her understanding that the University of
Alaska Foundation was a tax exempt organization.
REPRESENTATIVE P. WILSON acknowledged the proposed legislation
would be beneficial to universities; however, she questioned the
impact of the legislation on the general fund.
9:41:49 AM
REPRESENTATIVE GARDNER re-stated her interest in the impact of
tax credits that have been granted under legislation in previous
years.
CHAIR SEATON pointed out that many contributions are limited by
the $200,000 cap. He disagreed with a policy that allows
taxpayers to direct where their taxes are credited, which is the
effect of an 100 percent tax credit. Chair Seaton then asked
for confirmation on whether a corporation that was currently
receiving tax credits for the exploration and development of oil
and gas, would qualify for additional credits under the proposed
bill.
9:44:19 AM
MS. WILSON clarified that the current statute provides for an
overall credit maximum of $150,000. As most of the oil and gas
related taxpayers are subject to income tax, production tax, and
property tax, these corporations have a choice of where to apply
the $150,000 tax credit. Most, for the sake of convenience,
apply the tax credit to income tax. Further, the statutes do
not direct how credits would be applied.
9:45:35 AM
CHAIR SEATON called attention to page 3, lines 14-15, which
read:
(2) when combined with contributions that are the
basis for credits taken during the taxpayer's tax year
under AS 21.89.075, AS 43.20.014, AS 43.55.019, AS
43.56.018, AS 43.65.018, AS 43.75.018, or AS
43.77.045, result in the total amount of credits
exceeding $25,000,000 [EXCEED $150,000].
MS. WILSON explained that the above section does not address
credits, but provides that notwithstanding all of the taxes that
apply to an entity, the maximum tax credit allowable is
$150,000.
9:46:58 AM
CHAIR SEATON noted that Version E of the bill raised the limit
on tax credits to $25,000,000 and asked whether an oil company
that receives $100,000,000 in oil production tax credits, would
be allowed to receive additional tax credits for contributions
to educational organizations.
MS. WILSON began another example . . .
9:48:14 AM
CHAIR SEATON returned attention to page 3, lines 14-17, and
asked:
Doesn't that mean that the total amount of credits
that they can get from all of these combined is
$25,000,000 for a year, and you can't take this
education one ... when combined with the contributions
for these others?
9:49:12 AM
MS. WILSON, in response to Chair Seaton, agreed to provide the
committee a written explanation of this section. She advised
that these tax sections of the bill refer only to the education
credits; for example, AS 21.89.070 would be the education tax
credit applicable to the insurance tax. Thus the sections do
not address any other sort of credit, such as exploration
credits, but only establish a limit on education credits at
$25,000,000.
9:50:13 AM
CHAIR SEATON said a further explanation in writing was not
necessary.
9:50:23 AM
REPRESENTATIVE P. WILSON concluded that a petroleum corporation
could apply other tax credits, and then contribute to an
education entity and qualify for education tax credits of up to
$25,000,000.
MS. WILSON said yes, and added that a corporation with
sufficient tax liability could apply other credits; in fact, the
Alaska statute is largely silent with respect to the order of
credits. An exception is the gas development credit, which must
be applied first, due to carry-forward provisions.
CHAIR SEATON requested that Ms. Wilson provide a memo regarding
the order of credits and the effect of carry- forward
provisions.
9:53:06 AM
The committee took an at-ease from 9:53 a.m. to 9:54 a.m.
9:54:39 AM
REPRESENTATIVE P. WILSON also requested advice from DOR on how
to limit the scope of the tax credit provisions.
9:55:47 AM
CHAIR SEATON further requested a spreadsheet depicting the
effects of the bill on hypothetical taxpayers with a tax
liability of $5,000,000.
MS. WILSON expressed her understanding that the requested
scenario depicts a $5,000,000 tax liability over and above the
current $200,000.
9:56:29 AM
REPRESENTATIVE SEATON modified the scenario to a maximum of
$25,000,000.
MS. WILSON clarified that the contribution of the hypothetical
taxpayers would be $50,000,000, so that the tax credit is
maximized, and the scenario addresses the maximum impact to
state revenues.
9:56:56 AM
REPRESENTATIVE MUNOZ spoke about the perception that 7,500
corporate taxpayers would take advantage of the proposed tax
credits and opined that is not realistic, given that only 11
participate now. She expressed her belief that the committee
should focus on whether the state should have a policy to
encourage private investment into the infrastructure of the
state. Representative Munoz said that although she was not
opposed to the committee's discussion on the financial impact of
the bill, she pointed out that the financial details of the bill
are the purview of the House Finance Committee.
9:57:58 AM
CHAIR SEATON stated that understanding the bill was necessary to
make informed policy.
9:58:14 AM
REPRESENTATIVE GARDNER requested a list of the participating
taxpayers, the amounts of their claimed donations, and the tax
impact to the state for the past three years.
MS. WILSON, in response to Chair Seaton, affirmed that the names
of the taxpayers cannot be disclosed and details of taxpayers'
returns may not be provided.
9:59:41 AM
REPRESENTATIVE GARDNER questioned whether someone could claim a
tax credit for a donation to a non-profit without disclosure.
9:59:58 AM
MS. WILSON confirmed that DOR cannot disclose that information,
but she was unsure whether the recipient organization may.
REPRESENTATIVE GARDNER limited her request to the total amount
of donations made and claimed, and the tax benefits thereof.
MS. WILSON agreed.
10:00:52 AM
CHAIR SEATON stated that HB 367 was held over.
10:01:01 AM
HB 350-PUBLIC SCHOOL FUNDING: LOCAL CONTRIBUTION
CHAIR SEATON announced that the final order of business would be
HOUSE BILL NO. 350, "An Act relating to the local contribution
to public school funding; and providing for an effective date."
10:02:31 AM
MARY FRANCIS, Executive Director, Alaska Council of School
Administrators (ACSA), informed the committee the majority of
school superintendents present at a recent ACSA meeting believe
HB 350 provides equity and fairness. Although at some point,
local municipalities may not want to make up the difference in
state funding, she concluded this was a fairness issue and ACSA
was in support of the change. Ms. Francis related the belief
that it was never intended that the mill rate was to be based on
FY 99 in perpetuity.
10:03:32 AM
CHAIR SEATON stated that HB 350 was held over.
10:04:03 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 10:04 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FY02-11LocalEffortAssessed&educationWithMills-2Pager_10-22-09.xlsx |
HEDC 2/19/2010 8:00:00 AM HEDC 3/3/2010 8:00:00 AM HEDC 3/10/2010 8:00:00 AM HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 350 |
| current program flow chart.docx |
HEDC 3/3/2010 8:00:00 AM HEDC 3/10/2010 8:00:00 AM HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 350 |
| HB350 program flow chart.docx |
HEDC 3/10/2010 8:00:00 AM HEDC 3/12/2010 8:00:00 AM |
HB 350 |
| HB 367 Sponsor Statement.pdf |
HEDC 3/10/2010 8:00:00 AM HEDC 3/12/2010 8:00:00 AM HEDC 3/22/2010 8:00:00 AM HEDC 3/26/2010 8:00:00 AM |
HB 367 |
| Sponsor Statement HB 350.doc |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 350 |
| HB 393 Sponsor Statement.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM HEDC 3/24/2010 8:00:00 AM HEDC 3/29/2010 8:00:00 AM HEDC 3/31/2010 8:00:00 AM |
HB 393 |
| HB 393 Charter School statutes.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM HEDC 3/24/2010 8:00:00 AM |
HB 393 |
| HB 393 Charter School Background.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM HEDC 3/24/2010 8:00:00 AM |
HB 393 |
| HB 297 Version E WorkDraft.pdf |
HEDC 3/12/2010 8:00:00 AM |
HB 297 |
| HB 297 Amendment Legal Memo.pdf |
HEDC 3/12/2010 8:00:00 AM |
HB 297 |
| HB 367 Workdraft version E.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/19/2010 8:00:00 AM |
HB 367 |
| sponsor statment HB 413.docx |
HEDC 3/12/2010 8:00:00 AM |
|
| Support public.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM HEDC 3/31/2010 8:00:00 AM |
HB 393 |
| AK Grade 10.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM HEDC 3/29/2010 8:00:00 AM |
HB 393 |
| Discret Grants.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 393 |
| Support ltr fed dir.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 393 |
| Per pupil fac aid.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 393 |
| HB413-EED-ESS-3-10-10.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 413 |
| back up AMYA.pdf |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 413 |
| HB0413A.pdf |
HEDC 3/12/2010 8:00:00 AM |
HB 413 |
| Sponsor Statement HB 413 |
HEDC 3/12/2010 8:00:00 AM |
|
| sponsor statment HB413.docx |
HEDC 3/12/2010 8:00:00 AM HEDC 3/15/2010 8:00:00 AM |
HB 413 |