Legislature(1997 - 1998)
02/04/1998 09:00 AM Senate HES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 241 - POSTSECONDARY SCHOOL TAX CREDIT
SENATOR LEMAN, sponsor of SB 241, explained the legislation
establishes equity between regionally accredited and nationally
accredited institutions. He thought the lack of equity was
probably an oversight by the Legislature when the issue was last
addressed in 1991. There are nationally accredited institutions
within the State of Alaska that do not meet the letter of the law
for regional accreditation; the Department of Revenue will not
grant the same tax benefits provided to regionally accredited
institutions unless the law is changed.
ELMER RASMUSSEN testified via teleconference from California and
agreed with Senator Leman's testimony. He stated he has been a
supporter of the Alaska Bible College for many years; his last
donation was $100,000 over three years to build dormitories. The
Alaska Bible College recently learned it is not a qualified
institution to receive tax deductible donations under the higher
education act because it is not regionally accredited. Mr.
Rasmussen said he spoke with Bill Sheffield about the distinction,
because the original bill was enacted during his administration.
Mr. Sheffield did not recall any reason for the distinction. Mr.
Rasmussen supports the bill because he would like to see the Alaska
Bible College be eligible for tax deductible donations.
SENATOR LEMAN noted this particular change of law will not affect
Mr. Rasmussen personally but will affect other taxpayers in the
State, such as oil companies and banks. MR. RASMUSSEN said
individuals do not pay State income tax, but corporations do; this
legislation will help the Alaska Bible College receive support from
others.
Number 389
LORALEI MEIER, staff to Senator Leman, explained in 1987 a tax
credit program was established to encourage funding for direct
instruction, research, education support purposes, etc. In 1991,
two amendments were made: one expanded the available credits; the
second restricted participation to regionally accredited schools.
SB 241 allows nationally accredited schools to participate in this
tax credit program as well. The intent of the amendments was to
restrict participating institutions to those with regional
accreditation to establish a standard for participating
institutions. Accreditation between regionally and nationally
recognized institutions is very comparable. The Alaska Commission
on Postsecondary Education does not make any distinction when
administering student loans.
SENATOR ELLIS asked why the Alaska Bible College does not apply for
regional accreditation. MS. MEIER replied it prefers the national
accrediting association because it has like mindedness regarding
the direction this institution wants to take.
SENATOR ELLIS asked which national accrediting association the
Alaska Bible College belongs to. MS. MEIER answered it belongs to
the Accrediting Association of Bible Colleges. SENATOR ELLIS asked
if there is a regional version of that organization. MS. MEIER
said not to her knowledge, but said she would find out.
SENATOR ELLIS noted the institutions referred to in the bill are
New Concepts Beauty School, Charter College, Career Academy and the
Alaska Bible College. He asked Ms. Meier to find out the national
accrediting organizations for those institutions as well.
SENATOR ELLIS thought the Legislature made that decision in 1991
based on discussions about constitutional concerns, religious
affiliations, and private versus public institutions.
Number 431
SENATOR LEMAN said the decision to restrict was not made
inadvertently and it was probably well known that three
institutions were qualifying under regional accreditation: Alaska
Pacific University, Sheldon Jackson College, and the University of
Alaska. He recalled that the discussion revolved around setting
standards for institutions to be eligible for the tax credit
program. It may have been the intent of representatives of those
institutions that it be limited, but he did not believe it was
based on arguments of constitutionality because two of those
institutions have religious affiliations. At the time he had not
explored the different mechanisms involved in regional and national
accreditation but has since learned that they accomplish
essentially the same thing as long as they use comparable
standards.
SENATOR ELLIS asked which accreditation program is more rigorous.
MS. MEIER said the difference between the two is not based on
difficulty, but on different ways of going about it. Regional
accrediting associations base their accreditation on regional
issues while national accrediting associations are more focussed on
general issues.
SENATOR LEMAN stated the standards required by the Accrediting
Association of Bible Colleges are comparable to those of the
regional accreditation associations. He thought the Alaska Bible
College might not have regional accreditation due to the cost.
Number 476
BOB BARTHOLOMEW, Assistant Director of the Income and Excise Tax
Division, Department of Revenue, offered to answer questions
related to the fiscal note. He noted page 4 of the fiscal note
contains a range from zero to $130,000 in loss of revenue. The
division had to make assumptions to come up with an estimate, so
used that range. Projecting whether new corporations would add to
the pool of contributions to colleges or whether current corporate
donors would shift their contributions was difficult.
MR. BARTHOLOMEW informed committee members a second tax bill, SB
140, deals with the current tax credit program and raises the
$200,000 limit in the amount that can be contributed to individual
colleges. It also allows a tax credit for contributions to K-12
public schools. The intent was to expand the dollar amounts that
can be contributed to higher education, and to expand the pool of
eligible schools to include K-12 public schools.
CHAIRMAN WILKEN asked Mr. Bartholomew about the amount of the
fiscal note for SB 140. MR. BARTHOLOMEW said it was based on the
growth of donations experienced by educational institutions when
the two-tier system was established. SB 140 establishes a third
tier so the Department of Revenue projected $2 million would go to
education instead of the general fund. The total contributions
made would be $4 million, since only 50 percent of the contribution
can be taken as a tax credit.
SENATOR LEMAN believed a tax credit program is a good approach
because it encourages contributions to educational institutions
from those who might not otherwise contribute.
SENATOR ELLIS encouraged Chairman Wilken to schedule SB 140 so that
these issues can be addressed comprehensively. He asked Senator
Leman if he had considered using a graduated tier for these kinds
of contributions. SENATOR ELLIS believed there is a higher
compelling state interest to encourage tax credits by private
individuals to the University of Alaska, Alaska Pacific University
and Sheldon Jackson College, than there is to the New Concepts
Beauty School. He said he is sure it is a fine school but there is
probably a greater public benefit to encouraging tax credits to the
other institutions of higher learning. He thought it unwise to put
all of those institutions on equal footing in terms of the tax
credit, when a loss of state revenues will result. He asked that
the issue be discussed more comprehensively and that SB 140 be
discussed in the committee because the Legislature is the body to
make the tough decisions on the public purpose of tax credits.
SENATOR LEMAN stated he would welcome broadening this program to
include K-12 education, if that would enhance the chance of getting
legislative support and support from the Administration. Regarding
which institutions should get the tax benefit, he thought large
taxpayers evaluate the broad support in their organization, and
make contributions accordingly, so it becomes a self-policing
mechanism. For example, ARCO probably tries to determine what
institution its employees support the most and then contributes to
that institution.
SENATOR ELLIS asked CHAIRMAN WILKEN what his intentions were
regarding SB 241. CHAIRMAN WILKEN answered he intends to hold SB
241 and re-read SB 140. He recalled two concerns he originally had
with SB 140; the first was the fiscal note, the second was that
donors wanted to specify which public school their donation went
to, and that created problems.
| Document Name | Date/Time | Subjects |
|---|