Legislature(2009 - 2010)CAPITOL 106
02/15/2010 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB297 | |
| HB206 | |
| HB297 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 297 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 206 | TELECONFERENCED | |
HB 297-POSTSECONDARY SCHOLARSHIPS
8:02:39 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."
8:03:36 AM
CHAIR SEATON offered condolences to ConocoPhillips,
acknowledging the loss of their president, Jim Bowles, who died
as a result of a snowmobile accident.
CHAIR SEATON pointed out that several amendments have been
circulated to members as well as information previously
requested from the Department of Education and Early Development
(EED).
8:04:59 AM
REPRESENTATIVE KELLER reported he has received comments
indicating that HB 297 may put the rural communities at a
disadvantage, which he thought may be the result of a
misunderstanding, and is causing some frustration among
constituents at large. He expressed his support for HB 297, and
stated his understanding that this bill will provide a wide
benefit to K-12 students throughout the state.
8:06:42 AM
CHAIR SEATON stressed that the commissioner views this as a
reform bill to bring about a statewide change in our schools.
Many of the comments, regarding disparity for rural Alaska
surrounds consideration of small schools versus large schools,
and whether the diversity of courses will allow them to
implement the waiver program. He stressed that the goal is for
core courses to be available to all students in Alaska.
8:09:10 AM
DIANE BARRANS, Executive Director, Postsecondary Education
Commission, Department of Education and Early Development (EED),
stated that passage of this bill will represent "a huge step
forward" for the state, in terms of the types of financial aid
available for Alaskans to pursue postsecondary education and
training. In recent years, the commission has developed an
outreach, and early awareness unit. Having the GPS program to
bring to students and families will be tremendous. The program
can be woven into information presented to students as early as
elementary school. Pupils must have fundamental preparation in
elementary and middle school to benefit from a program like the
Governor's Performance Scholarship (GPS).
MS. BARRANS stated that the department is very supportive of HB
297 and appreciates being involved in the development of the
proposal. Rather than create a separate or new application
process, the application process could "piggyback" on the
existing free application for federal student aid. Cost
estimates to bring up the program and to administer it are
modest, she reported. She described the process currently in
place as an electronic process for the Alaska Advantage
Education Grant, which is a small needs-based grant program,
which the division administers. The commission exchanges
information electronically, with the U.S. Department of
Education, and the educational institutions in Alaska where
grant recipients attend. She reported that the current process
is efficient. Under this bill, an Alaskan student would only
need to submit the Free Application for Federal Student Aid
(FASFA), the school would provide transcript information to the
postsecondary institution, and "we become co-gatekeepers, ... in
terms of ensuring the aid is distributed in an efficient and
effective manner." The other reason to propose using the FASFA
as a single application is to ensure that every student could
access the grant aid. Although improvements have been made in
the number of students that complete the FASFA, some students
assumed they will not qualify so they do not apply. Over the
past few years significant improvements have been made. The
federal government is revising the FASFA and continues to
improve and streamline the process. She thought this would be
an efficient and effective way to administer the program.
8:13:57 AM
CHAIR SEATON recalled questions about administering and
coordinating the program, and the requirement that the award
payment be directed to the institution. He asked whether this
is the normal process and whether any glitches happen when the
award is directed to the institution and not the student.
MS. BARRANS responded the standard for financial aid
administration to have the funds be directed to the school to
ensure that the student has met the eligibility criteria and
qualifications. She clarified that this bill makes available
financial aid, to existing programs certified by the Department
of Labor & Workforce Development (DLWD), for new training
programs. She opined that the burden would be on the
institution to develop the appropriate process to satisfy the
administrative requirements. Under this bill, the commission is
granted regulatory authority relative to schools participating
in the program. She envisioned how a school would need to
demonstrate its administrative capacity to be responsible and to
ensure funds are appropriately disbursed.
8:16:12 AM
CHAIR SEATON asked whether that process would be accomplished
under the regulatory purview and not in statute.
MS. BARRANS answered yes.
8:16:37 AM
REPRESENTATIVE EDGMON questioned the mechanics of the program
start-up and when the scholarships would be ready.
MS. BARRANS offered that the first class of high school
graduates to qualify would be the class of 2011. Those students
would enter their training program in the fall of 2011. It is a
relatively aggressive schedule to get the program up and
running, but the commission will begin discussions on program
implementation, although funds will not yet be expended. She
deferred to the Department of Revenue (DOR) to respond to
questions regarding finances.
8:18:32 AM
REPRESENTATIVE EDGMON asked what happens when the $20 million
spin off is not spent; are the funds rolled into the principle
or held separate.
CHAIR SEATON stated that a DOR representative will respond to a
line of financial questions.
8:19:11 AM
REPRESENTATIVE P. WILSON asked whether this is expected to be an
easy process to administer.
MS. BARRANS related that most career and training programs
currently administer some form of aid. She did not think it
would be a stretch for most programs to have some means of
meeting the administrative needs involved in carrying out this
program.
8:20:16 AM
REPRESENTATIVE KELLER asked whether the committee is satisfied
that it can identify the different tiers in WorkKeys, and with
the process necessary to implement the program components.
CHAIR SEATON said the department representative will speak to
that topic today.
8:21:18 AM
CHAIR SEATON referred to page 9, lines 2-16. He related that a
question arose about how students seeking apprenticeships would
qualify for the certificated training.
MS. BARRANS said she anticipated that the Department of Labor &
Workforce Development (DLWD) will determine its own criteria to
determine which programs will qualify under the career and
technical trade component. She referred to page 8, lines 23-24,
which read: "Sec. 14.43.835. Qualified postsecondary
institutions. (a) The following institutions are qualified
postsecondary institutions." She then referred to paragraph (2)
which read: "a career and technical school program physically
located in the state that has been included on a list of
certified career and technical school programs ...." She
anticipated that DLWD will promulgate regulations and designate
certain programs as qualifying or not-qualifying; factors that
could be considered will include whether or not tuition is
charged, and other educational costs, which could be covered by
the GPS award. She related that some apprenticeships pay a
stipend, while others do not.
8:23:36 AM
CHAIR SEATON remarked that the onus would be on the DLWD to
designate the programs which meet the criteria. Other stipends
or self-pay programs would be identified in the FAFSA. He asked
whether this could be handled through regulations.
MS. BARRANS stated that it is unusual for a student not
participating in a federal aid program to file the FAFSA, but
nothing prevents them from doing so. The department would need
to communicate the process for application. She related that
the commission also receives copies of the FAFSA's filed. The
FAFSA document will handle this hurdle, or the department could
create an alternative application process via regulation.
8:25:05 AM
REPRESENTATIVE MUNOZ asked whether the merit-based career and
technical scholarship requirements are the same for academic and
technical career paths.
MS. BARRANS said they are not the same requirements.
REPRESENTATIVE MUNOZ requested a review of the differences
between them.
MS. BARRANS suggested Mr. Jeans would cover this during his
testimony today.
CHAIR SEATON elaborated that the committee would like to know
how scholarships awarded will vary or coincide between career
paths. He asked how the program will apply to someone who
qualifies for the academic scholarship, but chooses to take a
career technical path. The committee's understanding is that a
student choosing a career technical program will be limited to
$3,000, even if they qualify for the highest academic award.
MS. BARRANS agreed that is correct.
CHAIR SEATON suggested that the committee may make a request for
the commission to work with the department on aligning this
aspect of the bill.
8:27:39 AM
EDDY JEANS, Director, School Finance and Facilities Section,
Department of Education and Early Development (EED), directed
attention to the bill, page 9, and said he would continue to
present the sectional analysis of the bill.
CHAIR SEATON related an issue regarding non appropriation of
funds, by the legislature, to cover the program. He referred to
page 9, line 30, which indicates distribution on a pro-rated
basis. He asked how this would be administered and how the
qualification determination would be handled.
MR. JEANS envisioned that anyone who qualifies for an award
would receive some award on a pro-rated basis.
8:29:01 AM
REPRESENTATIVE EDGMON asked what occurs with accrued interest
that is not expended.
MR. JEANS responded the first step is the appropriation to the
Governor's Scholarship Fund (GSF); $400 million. The income
from the GSF requires an appropriation by the legislature on an
annual basis into an income fund. The income fund is what the
Postsecondary Education Commission will draw from for awards.
The unexpended funds remain in the income fund, and are
available in subsequent years without the need of further
appropriation by the legislature. He related from his
conversations with the DOR, that any money generated from the
income fund is subject to appropriation. The principal is
available in subsequent years without further authorization.
The process would be similar to the way the public education
fund currently operates in regards to the foundation formula, he
stated.
8:30:21 AM
REPRESENTATIVE EDGMON envisioned that, as the demand for the
program grows, more schools and students will be motivated to
participate in the program. The program participation may
initially be low, but would likely increase over time. He
stated he would like to see the projected figures.
MR. JEANS directed attention to the schedule in the committee
packet, which indicates the annual drawdown. He estimated it
would take four years before the fund would be up to the full
$20 million. He offered his belief that it would be earning
close to the $20 million in the first couple years assuming a
five percent interest on the full $400 million. The legislature
would have the option to appropriate the full amount of the
income, or leave it in with the principal and appropriate it at
a future date.
REPRESENTATIVE EDGMON identified this as an important process to
discuss, as the committee may need to address provisions such as
the needs-based aspect of the bill.
8:32:38 AM
CHAIR SEATON asked whether the statutory percent of market value
(POMV) is established, based on an average return on investments
allowing for a three percent inflation-proofing on the $400
million, or if another structure would be put in place.
MR. JEANS deferred to DOR. He explained that EED used the five
percent, as available for appropriation based money, on a multi-
year average of the Permanent Fund.
CHAIR SEATON related that this was not apparent in the committee
packet or in the bill. He surmised there is an assumption that
the five percent will be available for appropriation.
MR. JEANS concurred with the assumption.
8:34:06 AM
REPRESENTATIVE KELLER pointed out that this legislature cannot
commit future legislatures, as each legislature may appropriate
funds they find prudent.
8:34:45 AM
CHAIR SEATON stipulated that questions about the interest
generated will be directed to the representative from DOR.
MR. JEANS referred to proposed AS 14.43.850, regarding the
report to the legislature. The program administrators, EED,
DOR, DLWD, and UA, will report within 10 days of the start of
each legislative session, information on the GPS. The
information is to include the number of applicants and awards
for each type of scholarship, in current and past years, and
offer projections for the coming year. Additionally, the report
will include trends in data reflecting the goals stipulated in
proposed AS 14.43.810.
8:36:02 AM
CHAIR SEATON asked whether the report would be a consolidated
report.
MR. JEANS replied yes.
MR. JEANS turned to page 10, line 23, proposed AS 14.43.890,
which specifies the definitions of commission, commissioner,
department, grade-point average (GPA), military service,
program, and school district.
8:36:38 AM
CHAIR SEATON asked whether a definition will need to be inserted
to include letter grades as well as letter grades one for the
GPA.
MR. JEANS answered no. He referred to page 5, line 28 of HB
297, which read, "the minimum grade-point average that the
student must have achieved in high school to be eligible for
each of the three tiers of academic ...."
CHAIR SEATON related that the GPA can be handled in an
amendment.
8:37:42 AM
REPRESENTATIVE GARDNER returned to page 8, proposed AS
14.43.835, and asked the rationale for reducing the award for
vocational education. Some of the career-based programs are
just as expensive as academic paths. She asked the reason the
award would be limited to only $3,000 for a career path.
MR. JEANS said it is up to the legislature. The department
chose a "middle of the road" amount to insert.
8:39:09 AM
CHAIR SEATON directed attention to the handout, titled "GPS
Scholarship HB 297/SB 224 handout, dated 2/12/2010."
MR. JEANS explained that there are two parallel scholarship
programs. One is the academic scholarship, which allows the
three-tiered academic scholarship. He referred to the middle
section of the handout, to AS 14.43.820, and explained under
this track the intent is that the student would attend a
university or college that leads to a certificate or degree.
The University of Alaska System offers certificate as well as
degree programs. He stated that reading across the chart, under
the career and technical path, a student would attend a career
or technical school that has been approved by DLWD, which is a
different track.
REPRESENTATIVE GARDNER offered her belief that a top-level
academic scholarship qualifying student could choose to take a
vocational career path. She questioned why students who choose
the vocational path would receive a lesser award, especially
given that the programs may cost as much or more than the
university career path programs.
MR. JEANS responded that the department did not set a range of
awards. He related that if the program level was set at $10,000
and the program cost was $3,000, the student would only receive
$3,000. He stated that it is up to the legislature to make the
decision on the amount of the award level for the career and
technical award.
8:41:56 AM
REPRESENTATIVE GARDNER asked whether an argument could be made
to make the award less and if it was a cost-savings measure.
MR. JEANS assured the committee that this is not a cost-savings
measure. The department just reviewed the academic award and
decided $3,000 represented the mid-range level.
8:42:31 AM
CHAIR SEATON asked whether this program is patterned after the
Hathaway Plan, which identifies different cost structures for
university and community colleges.
MR. JEANS concurred that the Hathaway Plan was the model used,
but he did not recall the award levels in the model.
8:43:14 AM
REPRESENTATIVE P. WILSON lamented that a student on an academic
path could have 100 percent of his/her tuition paid, and asked
why a student in the career and technical program would not also
receive that level of assistance if he/she has earned the
appropriate grade point average.
CHAIR SEATON asked whether this is a policy call for the
committee to determine.
MR. JEANS said that it is a policy decision and stressed it
would be difficult to identify the appropriate rate.
REPRESENTATIVE P. WILSON expressed her interest in having a
policy set that will serve both paths in the same way.
8:46:14 AM
CHAIR SEATON clarified that HB 297 contains qualifications which
are different for career and technical programs than for the
academic core principles. The question is whether a student who
qualifies for a high-level academic award can apply that award
to whatever Alaska institution or program the student desires.
He cautioned that the programs are not the same.
REPRESENTATIVE KELLER agreed. He noted the criteria for
qualification differs [between the career and technical program
and the academic program]. There may be a value in having a cap
in terms of controlling the cost.
8:48:27 AM
CHAIR SEATON clarified that the aforementioned is why the
program is not set up to pay the full tuition, but this program
is a monetary award to an individual. An amendment will be
considered to this section, he noted.
8:49:59 AM
MR. JEANS turned to page 11, line 9-14, to Section 5, which
refers to the administration of the program by the ACPE. He
then referred to page 11, line 31, to Section 6, which provides
DLWD the authority to carry out its tasks for the career and
technical aspects of the program.
REPRESENTATIVE BUCH, in response to Chair Seaton, related
Section 6 begins on line 15.
CHAIR SEATON agreed, noting the new language begins on page 11,
line 31.
8:51:04 AM
MR. JEANS directed attention to Article 8A. Governor's
Performance Scholarship Fund, which begins on page 12, line 4 of
HB 297. This is the establishment of the GPS fund. He recalled
that $400 million appears in the language section of the
governor's operating budget. He related that Section 17 would
provide the DOR the authority to manage and invest the funds.
8:52:12 AM
CHAIR SEATON related it appears that this represents a month-end
market value of the preceding three fiscal years, making this a
statutory percent of market value (PMOV) method. He commented
that the DOR will address this later.
8:53:00 AM
MR. JEANS referred to page 13 of the bill which establishes the
transition provisions.
REPRESENTATIVE P. WILSON asked for the difference in the
definitions presented on page 13, line 2, and those listed on
page 10.
MR. JEANS answered that the definitions on page 13 would apply
to the DOR.
8:53:54 AM
REPRESENTATIVE EDGMON recalled that not-for-profit organizations
are only allowed to spend up to 5 percent of the earnings each
year. He asked whether this would apply to the GPS.
CHAIR SEATON answered that question would be posed to the DOR.
8:54:31 AM
CHAIR SEATON said that the question of donations to the fund
will be forwarded to DOR. He then reminded the committee that
another bill before the legislature would change the cap
regarding [corporate] donations to the university and the tax
credit received for those donations. The question, he related,
will be whether that would apply to this [scholarship]. Current
corporate tax laws allow a donation up to $100,000 in corporate
taxes and receive a 50 percent tax credit and donations of
$100,000-$200,000 in corporate taxes receive a 100 percent tax
credit.
MR. JEANS agreed the question would apply to the DOR. He
explained that the transition section provides the departments
involved the authority to implement regulations to govern the
program. He referred to page 13, line 16, which provides the
transition for the first three years of the program. This
provision would allow the department to develop a transition
model for those students. He provided the example in which a
student may graduate in 2011, but may not have taken four years
of math. A regulation will be adopted to address these types of
situations, he said.
8:56:54 AM
CHAIR SEATON clarified that current high school seniors who
could otherwise qualify would need to meet core curriculum
requirements.
MR. JEANS said it is not the intent of the department to reduce
the curriculum requirements, but there may be current seniors
who did not meet the curriculum requirements since they may not
have been aware of the GPS requirements.
REPRESENTATIVE KELLER asked whether on-line curriculum courses
have been considered as a means to meet the requirements. He
provided an anecdote to illustrate this possibility. The
current technology should be implemented where applicable, he
stressed.
8:58:47 AM
MR. JEANS expressed his understanding that the grade point
averages as well as the assessment scores will not be lowered.
However, some students in their junior year of high school may
have only taken two years of math. Those students would need to
take an additional year of math in their senior year, without
requiring the student to go outside his/her normal school day to
accomplish two years of math in one year.
8:59:22 AM
REPRESENTATIVE GARDNER asked whether the transition regulations
are realistic for implementation within this aggressive
timeline.
MR. JEANS answered yes. He mentioned that the department has
started work on draft regulations. He offered to share them
with the legislature at some point. He related a similar
process was used to implement regulations on another bill.
While the regulation process has begun the regulation process is
a public process, so this effort will represent the department's
first cut at the regulations.
9:01:01 AM
CHAIR SEATON related that if the timeline does not allow for
regulatory process, since this is the transition period the
committee could also work to ensure that the bill is
appropriately adjusted.
MR. JEANS related that the department has several avenues
available to address the critical sections, such as adopting
emergency regulations.
9:01:50 AM
REPRESENTATIVE GARDNER theorized about a student who does not
meet the rigorous qualifications and has missed a required
course. She asked how this instance will be addressed once the
student has already graduated. She asked if graduation
represents the "drop-dead date" or whether students have
alternatives to make-up the course, such as through
correspondence courses.
MR. JEANS agreed that an alternative pathway would exist for
students. He related that the commissioner has allowed for
these pathways, such as taking correspondence over the summer,
classes at their first year at the university, or other means.
The State Board of Education and Early Development (BOEED) will
be developing the process by which these students will be
considered.
REPRESENTATIVE GARDNER asked whether that process works for
someone who did not take courses as a high school sophomore but
awakens as a senior to the reality of their situation. She
asked if he/she would be treated as someone on track for an
alternative pathway or if it would be too late once the student
has graduated.
MR. JEANS offered to scrutinize that section, and said at some
point it is considered a "drop-dead" situation.
9:03:32 AM
REPRESENTATIVE KELLER related that the validity of the
curriculum is determined by the local school district, not the
EED. He asked whether the local district would have the option
of providing a virtual school as an alternative pathway for a
student who perhaps began focusing on the GPS late in high
school.
MR. JEANS answered yes.
9:04:13 AM
MR. JEANS referred to page 13, line 19, and explained that the
first class to be eligible will be the class graduating from the
school year June 30, 2010, through July 1, 2011. Scholarships
will be available to them after July 1, 2011. The students
graduating early in 2011 will be eligible for the program, but
the funding will not be available until after July 1, 2011.
CHAIR SEATON surmised then that students who graduate this year
won't be included in this program; the program will start after
June 30, 2010.
MR. JEANS agreed. He stated the sectional review is complete.
CHAIR SEATON noted the immediate effective date for the
regulation component and for the transitional provision.
9:05:53 AM
REPRESENTATIVE P. WILSON inquired about this year's high school
graduates who will not qualify for the program. She asked
whether any way exists for them to qualify.
MR. JEANS answered no. He related that the law specifies the
dates and it does not include the students who are currently
high school seniors. In further response, he confirmed that the
date covers the transition period as well as the scholarship
program implementation.
9:07:50 AM
CHAIR SEATON directed attention to the spreadsheet titled,
"Governor's Scholarship Program, updated 1/7/10." He recalled
discussing home school students, which are reflected in the
spreadsheet. He asked for the number of students who would
qualify if they attained a GED through the University of Alaska.
MR. JEANS answered that the UA does not issue GEDs.
CHAIR SEATON maintained his understanding that the UA has
provided GEDs and suggested further response may be received
from the university system.
9:09:47 AM
REPRESENTATIVE EDGMON asked whether a definition is needed on
page 6, line 8, to indicate "equivalent to the high school
diploma."
MR. JEANS indicated that provision was intended to address the
private and home school programs. He did not think a definition
is necessary, but it will be determined via the regulatory
process, he said.
9:11:17 AM
CHAIR SEATON indicated it may be assumed that students who
choose to take a GED could be considered home school graduates.
MR. JEANS stressed that it is not the intent of the department
to allow applicants to enter the program under this type of
premise. The commissioner envisions that home school parents
will demonstrate how their student has met the curriculum
requirements and will provide documentation to that effect. It
is not the intent of the department for students to drop out of
high school, obtain a GED, and have the parents declare that the
student has been in a home school program.
9:12:32 AM
REPRESENTATIVE KELLER pointed out that this emphasizes the need
for a qualifying test to measure abilities. Grades are
subjective, he opined, and achievement testing is crucial to the
program.
CHAIR SEATON offered his belief that under consideration are the
students who achieve, but do not complete the other criteria,
such as obtain high scores. Waivers are available for certain
aspects of the criteria but not all, he stated.
REPRESENTATIVE GARDNER said that there does not appear to be
waivers for students who take alternative pathways.
CHAIR SEATON agreed that waivers are not allowed, but
alternative pathways are established for the program.
9:14:04 AM
REPRESENTATIVE KELLER reiterated that every district will have
different standards for how they approve curriculum and grades.
He did not think that the committee should address curriculum or
grades since this will be left up to the individual districts to
decide. He stressed that the measurement of achievement is very
important to consider.
9:14:49 AM
REPRESENTATIVE MUNOZ asked whether this program would apply to
an older student, who returns to school or meets comparable
requirements, such as a GED or a university program. She asked
whether those students would have an opportunity to qualify for
the program.
MR. JEANS explained that individuals who have achieved the age
of 16 are no longer compulsory school-age students. He further
explained that holding a GED does not translate to being a high
school graduate. Students must meet the course requirements and
must pass the high school qualifying exam. Thus, a student with
a GED could re-enroll in public school, so long as they meet the
school age of up to 19 years, and complete the curriculum
requirements to qualify for this program. There are many
avenues for students to take advantage of this program, he
stated.
9:16:40 AM
JERRY BURNETT, Deputy Commissioner, Office of the Commissioner
Department of Revenue (DOR), introduced himself.
CHAIR SEATON asked Mr. Burnett to begin by reviewing the
mechanism for establishing the fund.
9:17:22 AM
MR. BURNETT related that the fund would be established with an
appropriation of $400 million as well from potential donations.
The earnings on the fund will remain in the fund. The closest
analogue to this is the Children's Trust Fund, which was
established by donation, although the earnings are different.
The first year the money will be invested and will be based on
the need for a 5 percent real rate of return, which would work
to establish an asset allocation of fixed income and equities.
He related the target would be to obtain between 7.5 to 8.5
percent rate of return, depending on inflation, similar to how a
pension fund is managed. This would be a long-term endowment
approach for investments. The value would be calculated on a
monthly basis, and the 5 POMV would be reported as available for
appropriation. The legislature would then have the opportunity
to appropriate the money to the "spendable account," which would
be the funds used. This proposed fund is not a dedicated fund
so the legislature could appropriate more or less than the 5
POMV on an annual basis. The assumption would be that the
governor's budget document would contain the 5 percent figure.
However, the market varies and fluctuations do occur. He
related an anecdotal scenario to illustrate his point. He
offered that over a long period of time the 5 percent will be
achieved. Currently, tax credits are available for donations
for qualified postsecondary education institutions such as the
UA or Alaska Pacific University. The bill as written would not
allow for a corporate tax credit on donations into this fund, he
opined.
9:21:30 AM
REPRESENTATIVE KELLER asked whether the language could be
amended to allow corporate donations.
MR. BURNETT stated that he was not aware of any constitutional
prohibition to make this type of tax credit available.
9:21:53 AM
CHAIR SEATON agreed that the tax credit is not contained in HB
297, which allows for donations.
MR. BURNETT related that this would refer to a tax credit or
contribution to education or to an institution.
REPRESENTATIVE KELLER offered that the bill could be amended.
REPRESENTATIVE GARDNER remarked this bill indicates that the
fund is not a dedicated fund so the legislature would have
access to the funds to use for other purposes. Thus, a
corporation may choose not to make a donation to the proposed
GPS fund.
MR. BURNETT agreed one of the criticisms of the Children's Trust
Fund, which allows for donations, is that the fund is not a
dedicated fund. Thus, the legislature can use the funds for
another purpose. He responded to an earlier question by
Representative Edgmon about tax deductions on federal taxes. He
related that he could not specifically answer this, but they
likely are deductible so long as the criterion is met. He did
not know if this would qualify and people would need to seek
advice.
9:24:35 AM
REPRESENTATIVE P. WILSON requested a final answer on whether
this could be altered.
REPRESENTATIVE MUNOZ asked how the UA currently accepts
donations of this type.
MR. BURNETT related he could not specifically answer that
question, but recalled the UA solicits donations and funds are
directed to a foundation or the UA directly.
REPRESENTATIVE MUNOZ inquired as to the flexibility UA has to
manage the funds.
MR. BURNETT answered that the UA owns its own assets so a
donation to the UA is not something the legislature has the
authority to appropriate.
9:26:19 AM
REPRESENTATIVE BUCH referred to page 12, line 24, and to the
average month-end market value of the fund for the immediate
preceding three fiscal years.
MR. BURNETT answered that it is based on monthly asset values
averaged over the past three years.
9:27:11 AM
REPRESENTATIVE BUCH asked him to describe how the fund is
overseen and how it would be managed in relation to how the
Alaska Permanent Fund is managed.
MR. BURNETT responded this proposed GPS fund would be managed by
the DOR through a combination of fixed income and equity
investments. He related that the DOR manages about $16 billion
internally for the pension funds, the general fund (GF), the
constitutional budget reserve fund, and other funds. He related
that a manager or managers would be hired to manage the equity
securities and to oversee the daily reports that are received.
Market securities would be followed to determine monthly values.
9:29:30 AM
REPRESENTATIVE BUCH recalled the past market volatility. He
related that the Permanent Fund Corporation lost money in its
investments. He questioned if this is managed in the same way,
whether this fund will be subject to the same frailties of the
market.
MR. BURNETT responded that every fund is subject to the
frailties of the market. The assets are formally reviewed
quarterly. The DOR made positive decisions to leave asset
allocations as they were during the market. Thus, the market
losses were not due to an accident, but given the situation the
DOR made a determination on how to proceed. In further response
to Representative Buch, he offered the DOR made a conscious
decision at each juncture that a better choice of managing the
investments was not available.
9:31:40 AM
REPRESENTATIVE P. WILSON recalled that the Alaska Permanent Fund
is managed over a five-year period while this proposed fund will
be managed over a three-year period. She inquired as to what
the difference will be.
MR. BURNETT related that the longer period tends to smooth
payments more and shows less change from year to year.
Potentially, the growth is also more rapid. The biggest
difference is that the calculation used to determine the amount
of the Permanent Fund Dividend is based on realized earnings.
Realized earnings are capital gains from the sale of equities
and other investments, dividends, and interest received. That
can be considerably different than changes in market value. He
related a scenario in which a set of stocks is owned that does
not pay dividends, so when the stocks double in value the
investor has no realized income. If the state were to have the
same set of investments but uses a POMV calculation, the state
would have income to appropriate. The Alaska Permanent Fund
would have no income for calculating the amount available for
appropriation. This is a significant difference and is
particularly important to note because the calculation under
generally accepted accounting principles of income is based on
market value and not on realized earnings.
9:34:22 AM
CHAIR SEATON presumed that the smoothing over the three-year
period is used since the DOR is doing a monthly value instead of
a year-end value.
MR. BURNETT agreed that it would tend to have less volatility
using monthly averages and smoothing over the three-year period.
9:34:59 AM
REPRESENTATIVE P. WILSON related that money would be deposited
to the proposed GPS fund and any unexpended funds would remain
in the proposed GPS fund. She asked if this method offers a
better protection of the funds than returning [any unexpended
funds] to the principal.
MR. BURNETT explained that the way the proposed GPS fund is set
up that if the legislature appropriated 5 percent of the average
market value from the fund to the "spendable account" it would
stay in the "spendable account" and would be available for
expenditures. The funds would be invested in a less volatile
investment, would be part of the GF investment as fixed income.
Thus, the funds are less likely to lose value in the short term.
So, in some sense it is better protected, but funds also remain
available.
9:36:37 AM
CHAIR SEATON related that some students would qualify for
scholarships midway through the year. He opined that it is
important to avoid a pro-rated situation or a situation in which
the scholarships would not be available unless the legislature
meets to appropriate more funds. [The aforementioned account]
would allow funds to be available for those scholarships that
were already appropriated. He asked if that is what is being
considered.
MR. BURNETT replied yes, and recalled that a similar fund was
established to pay tax credits on production taxes. The intent
was to deposit money based on a formula and the monies would be
available when the tax credits needed to be paid rather than
having a situation in which people are waiting to be paid and
the department has to request an appropriation.
9:38:32 AM
RYAN BUCHHOLDT, Speaker of the Assembly, Union of Students,
University of Alaska (UAA), stated that the Governor's
Performance Scholarship Program falls short since it does not
contain a needs-based component. He researched the "Taylor
plan" states and of the 22 states cited most plans contain a
needs-based component, and some have strong needs-based
components such as family income ceilings as part of the
eligibility requirements. He related his pleasure of the
earlier mention that there is a draft amendment for a needs-
based component. He said he thought it is important to consider
adding the needs-based component since it is difficult for low-
income students to bridge academic barriers and achieve success.
He closed with a quote from the Western Interstate Commission
for Higher Education (WICHE) representative at the Joint House
and Senate Education Committee meeting in November when the
governor's plan was first discussed. He read the quote as
follows: "Hybrid plans are really the best plan if your goal is
access to success." Thus, the thought is that what is good for
the state is not only getting the best "bang for the buck" for
its money, but also better access for the success of the State
of Alaska through its future leaders. These future leaders are
our current students, he stated.
9:41:26 AM
NICK MOE, Political Science Student; Government Relations
Director, University of Alaska Anchorage, explained that as the
Government Relations Director at UAA, his job is to harness all
the excitement for this scholarship plan. Students have
gathered over 1,500 signatures in support of a needs-based
option for the GPS. Additionally, five individual letters from
students were published in the Anchorage Daily News in support
of a needs-based option. He pointed out that although the
students advocating for the proposal will not benefit, the
students see it as a means to provide access to postsecondary
education. College costs are rising and it is more difficult to
obtain lending from private and state sources. He offered a
personal anecdotal situation in which he was denied a student
loan because he missed the credit score by 20 points, even
though he had previously received the student loan. Some
student leaders will soon travel to Juneau to present their
support and research to the legislature. He urged members to
amend the bill to include a needs-based option.
9:43:41 AM
AMY VOSS, Representative, Student Government, University of
Alaska Anchorage, stated that she is recent college graduate,
with a double major in German and International Studies. She is
currently taking courses in German and Spanish and substitute
teaches German in the Anchorage School District. She had
opportunities to attend other colleges and while her friends
went to the Lower 48 to attend school, she chose to remain in
Alaska, primarily since she received a scholarship. She said
she did not regret her decision and her plan is to remain in the
state and work. She commended the governor for introducing GPS,
but she also emphasized the importance of adding a needs-based
component to the program, which she thought will also encourage
students to remain in Alaska to attend college and become
leaders in Alaska.
9:46:12 AM
SAICHI OBA, Associate Vice President for Students, University of
Alaska Anchorage, stated that students support the GPS as well
as a needs-based component, which the president [of the
university] supports also. With regard to the earlier question
about GEDs being awarded by the University of Alaska, Mr. Oba
explained that although currently the main campuses do not award
GEDs, community campuses facilitate the preparation and the
testing of GEDs throughout Alaska. He offered to provide the
information regarding GEDs to the committee via Diane Barrans
and Commissioner LeDoux. In response to Chair Seaton, he
offered to provide the information to the committee, as well.
9:47:27 AM
CHAIR SEATON, after first determining no one else wished to
testify, closed public testimony on HB 297.
CHAIR SEATON then called attention to the amendments submitted
by members. He stated his desire to have these amendments
posted on the web site or moved by the committee.
9:48:37 AM
REPRESENTATIVE P. WILSON made a motion to have the amendments
before the committee for consideration, and asked for unanimous
consent.
REPRESENTATIVE KELLER objected.
REPRESENTATIVE GARDNER also objected.
9:48:59 AM
REPRESENTATIVE EDGMON asked whether the amendments to be
considered are limited in number.
CHAIR SEATON answered no. He said he would like to at least
have the amendments presented even if they are tabled and posted
as pending amendments on the web site for the public to also
review.
[The committee treated Representative P. Wilson's earlier motion
as withdrawn.]
9:49:50 AM
REPRESENTATIVE P. WILSON made a motion to adopt Amendment 1,
labeled Version 26G-2, (2/12/2010), (12:42 pm), which read as
follows [original punctuation provided]:
Page 1, line 9, following "award of a":
Insert "merit-based"
Page 3, line 17, following "academic scholarship":
Delete "and"
Insert ","
Page 3, line 17, following "school scholarship":
Insert "and a needs-based scholarship"
Page 7, line 5, following "awards for the":
Delete "program"
Insert "merit-based programs"
Page 8, following line 3:
Insert:
"Sec. 14.43.828. Eligibility for a needs-based
scholarship and maximum awards. (a) Subject to
appropriation, the commission shall award a needs-
based scholarship to a student who meets the
eligibility criteria for the award.
(b) A student is eligible to receive a needs-based
scholarship if the student
(1) is eligible for a merit-based academic
scholarship or a merit-based career and technical
school scholarship; and
(2) can demonstrate in a year in which the student
receives a scholarship that the student has unmet
financial need greater than $2,000.
(c) The maximum amount for the needs-based award is
50 percent of unmet financial need greater than
$2,000.
(d) The qualified postsecondary institution attended
by the student shall determine unmet financial need by
subtracting from the student's allowable standard
costs of attendance at the institution all non-loan
sources of financial support, including an expected
family contribution and all federal, state, and
private scholarships or grants received by the
student.
(e) In this section,
(1) "allowable standard costs of attendance" means
(A) for a student who receives a merit-based academic
scholarship, the lesser of the
(i) standard costs of attendance at the University of
Alaska, as determined by the commission; or
(ii) actual costs of attendance at the qualified
postsecondary institution that the student attends or
plans to attend, as determined by the commission;
(B) for a student who receives a merit-based career
and technical school scholarship, the costs of
attendance at the qualified postsecondary institution
that the student attends or plans to attend, as
determined by the commission based on room and board
costs that do not exceed the standard room and board
costs at the University of Alaska as determined by the
commission;
(2) "expected family contribution" means the amount a
student or the student's family is expected to pay
towards the student's costs of attendance, as
determined by use of the most recent federal Free
Application for Federal Student Aid."
CHAIR SEATON objected for the purpose of discussion.
REPRESENTATIVE GARDNER made a motion to table proposed Amendment
1. There being no objection, proposed Amendment 1 was tabled.
9:51:03 AM
REPRESENTATIVE P. WILSON made a motion to adopt Amendment 2,
labeled which read as follows [original punctuation provided]:
Page 5, line 28:
Delete "grade-point"
Insert "grade"
Page 5, line 30, following "scholarship;":
Insert "the top tier is the A average tier, the second
tier is the B average tier, and the third tier is the
C plus average tier; the grade-point average for the A
average tier is 3.5 or higher, for the B average tier
is less than 3.5 but no less than 3.0, and for the C
plus average tier is less than 3.0 but no less than
2.5; the board shall set by regulation minimum
requirements based on a substantially similar standard
for districts that do not assign grades;
Page 6, following line 2:
Insert "(4) a process by which a student who
meets the grade standards in (2) of this subsection
for a particular tier, but does not meet the minimum
scores established under (3) of this subsection for
that tier, may apply for a lower tier scholarship;"
Page 6, line 3:
Delete "(4)"
Insert "(5)"
Page 6, line 5:
Delete "(5)"
Insert "(6)"
Page 6, line 7:
Delete "(6)"
Insert "(7)"
Page 6, line 23:
Delete "grade-point"
Insert "grade"
Page 6, line 24, following "school;":
Insert "the minimum is C plus average; the C plus
average requirement is a grade-point average of 2.5 or
higher; the board shall set by regulation minimum
requirements based on a substantially similar standard
for districts that do not assign grades;"
CHAIR SEATON objected for the purpose of discussion.
9:51:30 AM
REPRESENTATIVE GARDNER made a motion to table proposed Amendment
2. There being no objection, proposed Amendment 2 was tabled.
9:52:02 AM
REPRESENTATIVE GARDNER asked to pose a question. She referred
to proposed Amendment 2, which was just tabled, and pointed out
that an adjusted grade point average (GPA) for advanced
placement classes are scored differently and are counted as five
points. Thus, the advanced placement courses are a means to
affect a student's GPA.
CHAIR SEATON related that the department will provide additional
information. He asked whether the GPA is based on the core
curriculum classes or for all classes.
[HB 297 was taken up again later in this meeting.]
HB 297-POSTSECONDARY SCHOLARSHIPS
10:06:14 AM
[The committee returned its attention to HB 297.]
REPRESENTATIVE MUNOZ asked to verify that the committee will
work on an amendment to allow the vocational education to be
funded similar to the academic levels.
CHAIR SEATON agreed that such an amendment would be prepared.
10:06:52 AM
REPRESENTATIVE EDGMON asked whether an invitation has been
extended to the postsecondary institutions throughout the state
to allow them to weigh in on this legislation.
CHAIR SEATON answered yes, noting that today testimony was
received from the university. He then offered an invitation to
university administrations to participate in this discussion.
[HB 297 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 297 Amendment #1.pdf |
HEDC 2/15/2010 8:00:00 AM HEDC 3/1/2010 8:00:00 AM |
HB 297 |
| HB 297 Amendment #2.pdf |
HEDC 2/15/2010 8:00:00 AM HEDC 3/1/2010 8:00:00 AM |
HB 297 |
| HB 297 material from EED.pdf |
HEDC 2/15/2010 8:00:00 AM |
HB 297 |