Legislature(2007 - 2008)SENATE FINANCE 532
04/18/2007 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB100 | |
| SB76 | |
| SB53 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 53 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| = | SB 100 | ||
| = | SB 76 | ||
9:11:34 AM
CS FOR SENATE BILL NO. 76(HES)
"An Act establishing a higher education savings program for
eligible children who were placed in out-of-home care by
the state; and providing for confidentiality of identifying
information of a beneficiary under the program."
This was the first hearing for this bill in the Senate Finance
Committee.
9:11:52 AM
Co-Chair Stedman commented that although this legislation would
have no impact on the adult population, the benefits could be
significant for future generations.
9:12:07 AM
SENATOR JOHNNY ELLIS, Sponsor of the bill, testified that this
proposal had been offered in previous legislatures, although had
not been passed into law. The legislation before the Committee
had "even stronger support" and "no known opposition." This bill
would create the A.S.P.I.R.E. Program, an acronym of Alaska's
Youth Succeed When People Invest Resources in Education. The
pilot program was designed to connect churches, community
groups, nonprofit organizations, businesses and individuals,
with foster children for the purpose of providing "educational
opportunities beyond high school".
Senator Ellis told of the approximately 2,000 children of
various ages who reside in "out of home placement" and are
commonly referred to as foster children. Each year approximately
100 of those foster children "age out of the system". Foster
parents could not be expected to fund the college education of
these youth given the expenses these parents incur in raising
the children. Nor could grandparents or other relatives be
expected to establish higher education funds. Additionally,
"government can't do everything."
Senator Ellis stated that the education of these youth could be
addressed through a "non-governmental approach". These youth
have "very few educational opportunities and some pretty bad
outcomes" once they reach the age of legal adulthood and are no
longer served by the children's services system and move "from
loving homes".
Senator Ellis advised that the ASPIRE program utilized a similar
program administered in the state of Missouri as a model, "as a
way to connect a lot of the compassion and generosity" of the
private sector. Contributors could essentially adopt youth for
educational purposes. This legislation "is making use… of the
award winning, brilliant, terrific 529 college savings
accounts." He qualified that the aforementioned statement was
somewhat misleading because the funding could be expended at any
educational institute for any approved educational expense.
Although administered by the University of Alaska, the funding
could be utilized for any educational program in the nation.
This would provide flexibility for foster children to "achieve
their potential."
9:15:17 AM
Co-Chair Stedman requested further explanation of how the funds
contributed to this program could be expended.
9:16:04 AM
GABE ACEVES, Staff to Senator Johnny Ellis, testified that once
established, the funds held in these savings accounts could be
expended for any form of further education. This would include
not only university costs, but also vocational institutions and
community college courses.
9:17:04 AM
Co-Chair Stedman listed examples of vocational occupations as
welders, machinists, auto and diesel mechanics and hairdressers.
Co-Chair Stedman asked the portability of the savings account in
the event that the designated youth opted not to further his or
her education.
9:17:32 AM
Mr. Aceves explained that the accounts would be administered and
controlled by the State. If the youth designated on an account
did not utilize the funds, the beneficiary could be changed.
9:18:10 AM
Co-Chair Stedman pointed out that the accounts commonly known as
529 college savings plans are structured to allow for
transferability in the event that the child does not expend the
funds. Therefore, the provisions of this bill would not
implement a new procedure and flexibility would be ensured.
9:18:40 AM
JAMES LYNCH, University of Alaska, testified via teleconference
from an offnet location that he was involved with the creation
of the original University of Alaska college savings plan.
Accounts established in the regular plan typically are
transferable to relatives of the initial beneficiary. However,
accounts established by a faith based organization or as a
scholarship could be transferred to any eligible beneficiary.
The portability of the ASPIRE accounts would be permitted to any
institution of higher education eligible to receive federal
financial aid funding.
9:20:44 AM
Co-Chair Stedman understood the structure of the original 529
college savings plans is intended to allow parents, grandparents
or other relatives to assist in the funding of their children's
college education.
9:21:05 AM
Mr. Lynch affirmed. Higher education had traditionally been
funded through loans; however costs have accelerated at a
significantly faster rate than income. Those students of lower
economic status would qualify for financial assistance and those
students of higher economic status could afford the costs. The
college savings plan system is intended to address those
students from middle income families.
Mr. Lynch expressed that Alaskans receive discretionary income
through the Alaska Permanent Fund. The dividend applications
include an option to allow recipients to designate up to one-
half of the dividend to a college savings plan. Approximately 66
percent of participants are from families with an annual income
of less than $50,000.
9:22:57 AM
Co-Chair Stedman surmised that this legislation would model the
original college savings plan to allow accounts to be
established for foster children by corporations and
organizations.
9:23:39 AM
MIKE LESMANN, Community Relations Manager, Office of Children's
Services, Department of Health and Social Services, testified to
the Department's involvement and support of this bill. He
continued to read his testimony into the record as follows.
Children that become wards of the State are sometimes not
financially prepared to enroll in postsecondary educational
opportunities. The ASPIRE program would create the
potential for their community to assist them in that
endeavor.
If we believe that our children are our future, then this
is very important legislation to all of Alaska.
9:24:45 AM
Senator Olson referenced the sponsor statement indicating that
current statutes relating to confidentiality must be amended to
allow for the private contributions for education. He asked if
this issue had been a problem in the past.
9:25:07 AM
Mr. Lesmann elaborated that this bill would amend AS 47.10.093
to allow the Department to disclose information regarding
children in State custody to the University of Alaska so
accounts could be established for these children.
9:25:42 AM
Senator Olson concluded therefore that confidentiality issues
had not arisen.
Mr. Lesmann affirmed.
9:25:46 AM
Senator Ellis reaffirmed that no such problems had occurred but
that the statutory change is necessary to allow the ASPIRE
program to be implemented.
9:26:02 AM
MICHAEL CURRAN, Program Coordinator, Office of Faith Based and
Community Initiatives, Office of the Commissioner, Department of
Health and Social Services, testified in support of this
legislation. He detailed his credentials working in the "social
justice" and "community building" fields, as a teacher and
ordained priest. He shared an experience in reading an obituary
for a 21-year old former student who had committed suicide. This
person had been a foster child, was "bright and intelligent",
aspired to be an astronomer, and who could have been accepted
into any university. Instead, at the time of his death, this
person was homeless and had had no opportunity to receive the
education "he deserved." The ASPIRE program could have changed
this.
Mr. Curran characterized children as a "most precious commodity;
they are our future." Foster children should have the same
opportunities as a child "born in privilege" or at least in a
"stable home situation".
9:30:35 AM
Senator Elton asked if the account were considered an asset to
the beneficiary how the existence of these funds would affect
the ability of that person to secure other financial aid.
9:31:26 AM
Senator Ellis indicated he would research the matter and provide
a response.
9:31:46 AM
Co-Chair Stedman cited language in subsection (a)(1) of Section
47.05.100 Higher education savings program, inserted by Section
1 of the bill on page 1, line 10. This provision required the
program to include "a central office, dedicated to faith-based
and community services, for development and marketing of the
program". He requested an explanation of the envisioned office
and the issues it would address.
9:32:12 AM
Senator Ellis acknowledged that the provision "sounds expensive"
to implement; however, the program would be located within the
existing Office of Faith Based and Community Initiatives.
9:32:33 AM
Mr. Aceves affirmed. The existing Office would be tasked with
undertaking outreach efforts to promote the program. The Office
has extensive contact with churches and social services
organizations.
9:33:02 AM
Co-Chair Stedman next referenced Sec.47.05.400(a)(6) on page 2
lines 9 through 11, pertaining to a procedure for monitoring
success of the program. He asked the sponsor to describe the
intended procedure.
9:33:39 AM
Senator Ellis supported the missions and measures methodology,
which applies to all State agencies. This bill does not provide
specifics about the procedure that would be implemented for the
ASPIRE program. However, he assumed that the number of accounts
established, the amount of funds donated and the number of youth
participating would be included in any assessment of the
program's success. These factors would be "easy to measure".
9:34:47 AM
Co-Chair Stedman suggested that the number of accounts, the
appreciation of the balances of these accounts, and the amount
of donations made by "corporate Alaska" could be utilized.
9:35:10 AM
Senator Ellis anticipated that the Office of Faith Based and
Community Initiatives would benefit from its efforts to measure
success, as the program would be a "flagship" for the Office's
intentions.
9:35:53 AM
Co-Chair Stedman opined that some youth were not prepared to
begin postsecondary education immediately after graduating from
high school and wait until they are 23 years of age. He noted
the deadline for beneficiaries to participate would be the age
of 30 years. He asked what changes would be made to a fund
established for a person who does not attend an institute of
higher education by the age of 31 years.
Mr. Aceves responded that at age 30, the beneficiary would be
changed. Mr. Lynch, the Division of Legal and Research Services,
and himself, determined this age to be appropriate. The existing
college savings plan provides that a beneficiary could retain
the account indefinitely; however, the intention for the ASPIRE
program would allow for other beneficiaries to participate in
the event the original beneficiary opted against doing so.
Mr. Aceves qualified that many youth transitioning from foster
care are not prepared to immediately continue their education.
Many are attempting to establish themselves "in regular life".
9:38:04 AM
Co-Chair Stedman understood the regular "529's" are subject to a
federal requirement that the beneficiary must begin
participation by the age of 30 years.
9:38:20 AM
Mr. Aceves deferred to Mr. Lynch who Mr. Aceves recalled
testified to a previous committee that the original college
savings plan accounts could be held "forever".
9:38:55 AM
Co-Chair Stedman stated he would review the issue.
9:39:18 AM
Co-Chair Stedman asked if donors would have options to specify a
beneficiary or make a donation that could be utilized to assist
multiple foster children.
9:39:51 AM
Senator Ellis relayed this issue was addressed with the program
administered by the state of Missouri. In some instances
corporations donate a large amount to the program to be utilized
for unspecified foster children. Other accommodations could be
made in the ASPIRE program for a donation to be specified for a
child of certain circumstances, such as a girl from Rural Alaska
who was a victim of abuse and neglect. In other instances, a
donor could know a child directly and choose to specify
contributions to that beneficiary.
Mr. Aceves continued that this issue was discussed extensively
with the Department and the decision was reached to establish a
procedure to allow a donor to direct contributions to a specific
child. In most cases, churches and other organizations would
unlikely have direct relationships with specific children and
therefore donations would be to unnamed beneficiaries.
Beneficiaries would be selected by administrators based on the
age of the child and length of time before transition from State
custody. Additionally, a mechanism would allow for anonymous
donors.
9:42:09 AM
Co-Chair Stedman directed attention to the fiscal note providing
for a $41,400 appropriation to be expended on set up costs and
marketing efforts.
9:42:34 AM
Senator Ellis stated the amount was not significant, but would
be necessary. In consultation with the Office of Faith Based and
Community Initiatives, he determined that the costs could not be
absorbed within the existing budget. Funding would be required
for the program to be successful. Of the amount requested,
$20,000 would be utilized for "additional staff time" and the
remainder would be expended on "small print", television and
radio "package" to advertise the program.
9:43:58 AM
Co-Chair Stedman suggested that information on the program also
be provided by the University of Alaska.
9:44:20 AM
Senator Ellis stated he would approach the University for
inclusion of ASPIRE information on its website.
9:44:33 AM
Senator Thomas understood that the funds would be disbursed
directly to the postsecondary education institution rather than
to a third party.
Mr. Aceves detailed that the State would serve as the holder of
the account with the University of Alaska disbursing the funding
to other institutes.
9:45:10 AM
Co-Chair Stedman asked if the funds could be utilized to pay
tuition costs and purchase books and other materials.
Mr. Aceves affirmed and added that housing and other living
expenses would qualify as well.
Senator Ellis assured that the funds could not be used by the
beneficiary to host a "big party".
9:45:25 AM
Senator Olson asked the accreditation requirements of a
postsecondary education institute qualified to accept these
funds and whether a private institution that does not receive
federal funding would qualify.
9:46:07 AM
Mr. Aceves responded that a qualifying institution must qualify
to receive federal financial aid for its students. This is
unrelated to federal funding appropriated directly to an
institution.
9:46:57 AM
Co-Chair Hoffman offered a motion to report SB 76, 25-LS0443\M,
from Committee with individual recommendations and accompanying
and new fiscal notes.
There was no objection and CS SB 76 (HES) was REPORTED from
Committee with zero fiscal note #1 from the University of
Alaska, and a new fiscal note dated 3/22/07 for $41,400 from the
Department of Health and Social Services.
AT EASE 9:47:23 AM / 9:52:01 AM
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