04/01/2010 09:00 AM Senate FINANCE

SENATE BILL NO. 174                                                                                                           
                                                                                                                                
     "An Act relating to professional student exchange                                                                          
     program   availability   and    conditions   for   loan                                                                    
     forgiveness."                                                                                                              
                                                                                                                                
9:15:47 AM                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman  MOVED  to   ADOPT  work  draft  LS0764\T,                                                                    
Mischel, 2/1/10. Co-Chair Stedman OBJECTED.                                                                                     
                                                                                                                                
MICHAEL ROVITO, STAFF, SENATOR MENARD,  discussed the CS. He                                                                    
explained the  differences. Page 1,  Section 2 was  added to                                                                    
clarify   that  the   Alaska  Commission   on  Postsecondary                                                                    
Education  shall administer  Alaska's  participation in  the                                                                    
Western Regional  Higher Education Compact. Page  2, Section                                                                    
3  was  modified  to  address   the  loan  repayment  terms.                                                                    
Initially the  bill set the  annual repayment  interest rate                                                                    
at five percent, but concern  was raised that locking a rate                                                                    
in statute was  bad policy. The current  language in version                                                                    
T  uses  existing  statute  AS  14 435  10  to  dictate  the                                                                    
interest payment  of the loans.  The third change  occurs on                                                                    
Section 4,  Page 2. The  scope of the section  describes how                                                                    
an  individual   can  receive   loan  forgiveness   and  the                                                                    
parameters that must be met to receive that forgiveness.                                                                        
                                                                                                                                
9:18:57 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Senator Menard delivered the sponsor statement.                                                                                 
                                                                                                                                
     Senate Bill 174 will boost the number of Alaska's                                                                          
     health care providers by making it more financially                                                                        
     feasible and  attractive for a recent  graduate to come                                                                    
     back to the state.                                                                                                         
                                                                                                                                
     We   now  have   the  WAMI   program,  which   provides                                                                    
     educational  opportunities  for medical  students.  But                                                                    
     for  dentists, there  is a  massive gap  in educational                                                                    
     opportunities.                                                                                                             
                                                                                                                                
     This is where Senate Bill 174 comes in.                                                                                    
                                                                                                                                
     There's no  doubt about Alaska's shortage  of dentists.                                                                    
     This has been  a long-time problem in  rural Alaska. In                                                                    
     other areas of  the state there are  an extremely small                                                                    
     percentage of providers taking  Medicaid. As the exodus                                                                    
     of  retiring dentists  continues, and  recent graduates                                                                    
     are  wooed by  Lower  48 medical  clinics, the  problem                                                                    
     worsens and Alaska loses.                                                                                                  
                                                                                                                                
     A  well crafted  loan forgiveness  program will  entice                                                                    
     Alaskans   graduating   in  dentistry,   pharmacy   and                                                                    
     optometry to come home for their careers.                                                                                  
                                                                                                                                
     Senate   Bill   174   accomplishes  this   by   setting                                                                    
     requirements for loan forgiveness.                                                                                         
                                                                                                                                
     Working  with the  Western  Interstate Commissions  for                                                                    
     Higher   Education,  also   known   as  WICHE,   Alaska                                                                    
     residents will  be able  to attend  professional health                                                                    
     care  programs not  offered  in  the Alaska  university                                                                    
     system.  WICHE is  a regional  organization adopted  in                                                                    
     the 1950s.  Its purpose  is to create  resource sharing                                                                    
     among higher education systems in the American west.                                                                       
                                                                                                                                
     This  bill establishes  a minimum  number of  supported                                                                    
     Alaska   participants   in  dentistry,   pharmacy   and                                                                    
     optometry. The  bill also sets  the loan  interest rate                                                                    
     for the PSE  loan in statute at 5  percent and provides                                                                    
     zero  percent  interest  during  the  participants'  in                                                                    
     school period.                                                                                                             
                                                                                                                                
     Senate Bill  174 will  establish a  forgiveness program                                                                    
     entitlement of  up to 25  percent loan  forgiveness for                                                                    
     the  participants who  meet these  criteria: They  must                                                                    
     accept Medicaid  for not less  than 5 percent  of their                                                                    
     total average gross billings for the year.                                                                                 
                                                                                                                                
     Participants in the program could get an additional 25                                                                     
     percent loan forgiveness if they maintain a practice                                                                       
     in rural areas.                                                                                                            
                                                                                                                                
     Please help me support retaining new dentists and                                                                          
     other medical professionals in Alaska, for the entire                                                                      
     state's benefit.                                                                                                           
                                                                                                                                
9:24:21 AM                                                                                                                    
                                                                                                                                
Senator Thomas asked about Page 2,  Line 17. He asked if the                                                                    
loan forgiveness  was for the  initial year, or  annually as                                                                    
the loan takes place.                                                                                                           
                                                                                                                                
DIANE BARRANS,  EXECUTIVE DIRECTOR,  POSTSECONDARY EDUCATION                                                                    
COMMISSION,  DEPARTMENT  OF   EDUCATION  answered  that  the                                                                    
certification process  would occur annually. She  noted that                                                                    
the department would work with  the Department of Health and                                                                    
Social Services (DHSS) to ensure the certification.                                                                             
                                                                                                                                
Senator  Thomas  asked if  the  certification  would be  750                                                                    
hours minimum, or a six  month requirement. He asked to know                                                                    
the percentages forgiven. Ms. Barrans  referred to Page 3 of                                                                    
the bill where a governing cap is discussed.                                                                                    
                                                                                                                                
Senator Thomas  clarified that the 50  percent referenced on                                                                    
Page 3, Line 5 is the defining factor.                                                                                          
                                                                                                                                
9:26:46 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  noted the fiscal note  from the Department                                                                    
of Education  and Early Development  (DEED) for  $230,500 in                                                                    
FY11 to fund the loans.  The cost is increased in subsequent                                                                    
years. The committee will request  an updated fiscal note to                                                                    
reflect the changes in the CS.                                                                                                  
                                                                                                                                
9:27:26 AM                                                                                                                    
                                                                                                                                
JIM TOWLE,  EXECUTIVE DIRECTOR,  ALASKA DENTAL  SOCIETY (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
He stressed that  the bill provides an excellent  tool for a                                                                    
long term  and sustainable source of  professional education                                                                    
currently unavailable in Alaska.                                                                                                
                                                                                                                                
                                                                                                                                
TRACY   OMAN,   EXECUTIVE    DIRECTOR,   ALASKA   OPTOMETRIC                                                                    
ASSOCIATION  (via teleconference),  testified in  support of                                                                    
the  legislation.  She noted  that  Alaska  is home  to  119                                                                    
practicing optometrists with  22 percent reaching retirement                                                                    
age. The  bill offers an  incentive for people to  return to                                                                    
Alaska.                                                                                                                         
                                                                                                                                
9:31:22 AM                                                                                                                    
                                                                                                                                
DAVID  LOGAN,  LEGISLATIVE  CHAIR,  ALASKA  DENTAL  SOCIETY,                                                                    
testified  in support  of the  legislation. Students  in the                                                                    
fields  of   dentistry,  optometry,  and  pharmacy   face  a                                                                    
challenge of high  out of state tuition as  programs for the                                                                    
fields  do not  exist in  Alaska.  The cost  of health  care                                                                    
education  has  risen   dramatically.  Students  can  finish                                                                    
school with $200 to $350 thousand dollars worth of debt.                                                                        
                                                                                                                                
9:34:10 AM                                                                                                                    
                                                                                                                                
PAT CARR,  PROGRAM MANAGER DEPARTMENT  OF HEALTH  AND SOCIAL                                                                    
SERVICES  informed  that  she  was  present  for  questions.                                                                    
Senator Olson asked  if the department was opposed  to or in                                                                    
favor  of  the  legislation.  Ms. Carr  responded  that  the                                                                    
administration has  not taken  a position  on the  bill. Ms.                                                                    
Barrans echoed the testimony of Ms. Carr.                                                                                       
                                                                                                                                
9:35:51 AM                                                                                                                    
                                                                                                                                
Senator  Olson agreed  that the  shortages of  the discussed                                                                    
professions have become critical.  He revealed that dentists                                                                    
require  additional investment  in the  equipment that  they                                                                    
require  to practice  their profession.  He elucidated  that                                                                    
optometrists often discover disease  in the early stages and                                                                    
are trained to perform  specialized procedures that a family                                                                    
practice  doctor may  not have  experience with.  He pointed                                                                    
out the importance of pharmacy school.                                                                                          
                                                                                                                                
Senator   Egan  asked   if  a   shortage  of   dentists  and                                                                    
optometrists exists in Alaska.  Senator Menard believed that                                                                    
there will  be a  shortage in  the future  with many  of the                                                                    
dentists nearing retirement age.                                                                                                
                                                                                                                                
Senator  Huggins echoed  the comments  of Senator  Olson. He                                                                    
identified  the necessary  responsibility  taken by  Senator                                                                    
Menard.                                                                                                                         
                                                                                                                                
Senator Menard  added that  prior to SB  174 she  received a                                                                    
proposal  from Oregon  State  University  offering a  dental                                                                    
seat in perpetuity for any  dental student that would attend                                                                    
their school.  The mentioned professions enjoy  low risk for                                                                    
a chance of loan default.                                                                                                       
                                                                                                                                
9:41:23 AM                                                                                                                    
                                                                                                                                
SB 174 was HEARD and HELD in Committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
9:41:35 AM     AT EASE                                                                                                        
9:44:15 AM     RECONVENED