Legislature(2009 - 2010)BELTZ 211
02/09/2009 08:00 AM Senate EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| SB33 | |
| the Conference of Young Alaskans 2009 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 33 | TELECONFERENCED | |
SB 33-POSTSECONDARY SCHOLARSHIPS
CHAIR ELTON announced consideration of SB 33. He noted for the
record that one of the committee members, Senator Stevens, has
been invited to speak at the School Board Association at 8:30
a.m.; so he will have to leave this meeting early.
NICK MOE, aid to Senator Johnny Ellis, presented the sponsor's
statement. He thanked Chair Elton for hearing the bill and
apologized for Senator Ellis, who is in transit and unable to
attend.
Senator Ellis is sponsoring this bill, which they refer to as
the "Alaskan Achievers Incentive Program," because an educated
and prepared workforce is critical to the success of Alaska's
future. Postsecondary institutions in Alaska provide hundreds of
programs at campuses across the state with degrees and
certificates geared to meet the current needs of Alaska; however
affordability of these institutions is a growing concern among
students and families. If a family thinks college is
unaffordable, a student has little incentive or expectation for
success and is more likely to drop out.
The Alaskan Achievers Incentive Program creates a scholarship
fund for those students who achieve a B average or better in the
school in which they are enrolled and demonstrate unmet
financial need through filing for the Free Application For
Federal Student Aid (FAFSA). The scholarship award cannot be
less than $1,000 or more than $20,000, or for more than five
years. If the fund is too small to award all applicants,
priority will be given to students who demonstrate the most
unmet financial need. The fund will be managed by the
commissioner of revenue and administered through the Alaska
Commission for Postsecondary Education; the commissioner of
revenue will identify the five percent of the fund available for
scholarships each year.
MR. MOE reported that the Taylor Plan is in full support of this
bill. The Anchorage Assembly also passed a resolution supporting
it and the Coalition of Student Leaders helped draft the
original language. More than 30 states have adopted similar
measures and Senator Ellis believes this is the right time to
reduce college and high school drop out rates, stimulate
Alaska's economy by building our own workforce and create the
scholarship fund.
He provided a brief sectional analysis.
8:07:57 AM
In Section 1, page 1, lines 4 through 14, lay out the objectives
and purpose of the program.
Section 2, page 2, establishes the fund.
· Lines 1-8 provide that the Alaska Commission on
Postsecondary Education will administer the program.
· Lines 9-13 establish the minimum and maximum awards.
· Lines 14-17 identify the priority for students with the
most unmet financial need.
· Lines 19-31 set out the requirements for eligibility, which
continue on page 3, lines 1-3. The student must be an
Alaskan resident, must submit an application, demonstrate a
financial need of not less than $4000 and be accepted in a
degree or certificate program at a qualifying institution.
· Page 3, lines 4-9 establish the fund as an endowment that
consists of appropriations, donations and earned income.
· Page 3, lines 10-22 place management of the fund with the
commissioner of revenue and provide for the appropriation
of available funds.
Section 3 provides for the transitional period during which it
will not be possible to calculate a multi-year average balance.
The fund will be averaged over a three year period and the five
percent appropriation taken from that average; during the
transitional period it will not be possible to calculate the
multi-year average balance on the newly-created fund.
MR. MOE mentioned that the members' bill packets contain a copy
of the "Report Card" on postsecondary education in Alaska
[created biennially by The National Center for Public Policy and
Higher Education], which shows that Alaska rated an F in
affordability and participation in 2008. It also shows that
annual personal income in the state would be about $2 billion
higher if more students attained a higher education.
SENATOR DAVIS joined the meeting.
8:11:54 AM
SENATOR HUGGINS asked Mr. Moe if any consideration has been
given to a loan-forgiveness provision to encourage recruitment
of educators for Alaska
MR. MOE answered that they have not discussed that.
SENATOR HUGGINS encouraged Senator Ellis to consider it.
8:12:51 AM
SENATOR STEVENS asked Diane Barrans of Postsecondary Education,
who prepared the fiscal note for this bill, how the legislature
would go about funding it.
8:13:32 AM
DIANE BARRANS, Executive Director, Alaska Commission on
Postsecondary Education (ACPE), Department of Education and
Early Development, Juneau, AK, responded that there isn't a
ready source of funds she can point to as an earmark.
Discussions with Senator Ellis's aid indicated that they were
speculating there may be money available in one of the federal
economic stimulus bills that could be used to capitalize the
program. The language in the [stimulus] bill is rather vague; it
did reference funds for higher education, but it is still not
clear to what purposes those funds can be put.
8:14:19 AM
SENATOR STEVENS asked how stable the ACPE program is.
MS. BARRANS answered that repayment performance has been good
over the past few years, but the default rates rise to in excess
of 10 percent after 4 to 5 years in repayment; so although the
program has been operating in a sound manner, it faces serious
challenges with the rising cost of funds and the condition of
the capital market.
SENATOR STEVENS asked Ms. Barrans to give the committee an idea
of what she expects the impact of the national economic
condition to be on the program.
8:15:54 AM
DIANE BARRANS said they are currently considering what steps
they could take to provide alternative deferments, forbearances
and the like; they do expect their borrowers to feel the effects
of the economic downturn. People who are showing good-faith
efforts to repay their debt may find themselves cash poor; so
the division is looking at ways to prevent delinquency from
rising, although to some extent it is inevitable. As to other
changes, they have not been able to issue bonds in the market
for over a year. They last successfully issued bonds in 2007.
The market for the type of bonds they issued between 2002 and
2007 disappeared in the wake of the sub-prime mortgage fall-out,
so they are working on strategies to successfully issue bonds at
a low cost. They also expect to look at their credit criteria
for loans that are not federally guaranteed, to make sure the
loans they are issuing are usable as collateral for bonds.
CHAIR ELTON said Ms. Barrans has touched on some significant
issues that the committee will be getting into in the near
future. He added that her use of the term "cash poor" was very
good; he thinks the commission also has some challenges in terms
of being cash poor.
8:18:17 AM
SENATOR HUGGINS asked Ms. Barrans what amount of bonding the
commission is looking at.
DIANE BARRANS said they hope to bond for about $100 million in
the next successful issue. Their federally guaranteed loan
volume has increased over 50 percent, which is attributable
primarily to other lenders leaving the program for economic
reasons.
SENATOR HUGGINS asked Ms. Barrans to refresh his memory about
the loan-forgiveness program the division used to offer for
educators.
DIANE BARRANS confirmed that the Teacher Education Loan Program
still exists; it is a very small program and the loans are 100
percent forgivable. To be eligible, a student must have
graduated from high school in Alaska, be nominated to
participate by one of the rural school districts and must commit
to teach in one of the qualifying schools after graduation. The
program has not been very successful. Fewer than one in five
students actually complete their degree in teaching and go on to
teach in eligible schools; most go on to repay their loans.
8:20:17 AM
SENATOR HUGGINS asked if she would provide him with any
information she might have on what is contributing to the
failure rate of that program.
CHAIR ELTON noted for the record that the Department of Revenue
had provided the committee with another fiscal note, which
includes $25,000 in contractual costs. Deputy Commissioner
Burnett was on hand to answer questions.
8:20:57 AM
CHAIR ELTON said four people have signed up to testify by
teleconference and the committee has only about 10 minutes to
hear their testimony.
8:21:26 AM
SAICHI OBA, Associate Vice President, Student and Enrollment
Services, University of Alaska, Fairbanks, AK, said the
university supports this bill. They have worked with The
Coalition of Student Leaders this year and last; President
Hamilton has sent a letter to Representative Gara supporting
this bill and all needs-based financial aid the state can
provide.
8:22:03 AM
KARL WING, Student Body President, Anchorage Representative for
The Coalition of Student Leaders, University of Alaska Anchorage
(UAA), Anchorage, AK, thanked the committee for considering this
bill and said that students are passionate about finding
alternatives to help them stay in Alaska; this bill is one way
to keep Alaska's best students in the state. Recently, the
coalition approached the Anchorage municipality, which
formulated a resolution endorsing SB 33 and HB 94. Students
believe in this legislation and would really appreciate the
legislature's support.
8:23:37 AM
RYAN BUCHHOLDT, Student Senator, Union of Students, UAA,
Anchorage, AK, is also a student who has to work full time in
order to pay for college. Many students are forced to do that in
order to pay the rising costs of tuition, books, housing and
food. This reduces the amount of time they have to devote to
their studies, which results in lower grades and/or a complete
lack of sleep, as well as delaying graduation. He confided that
he should have graduated last year, but because he has not been
able to devote full time to his education, he won't graduate for
two years. This bill not only provides the opportunity for a
college education to those who could not otherwise afford it,
but keeps them here in Alaska to help staunch the "brain drain"
and add to a well-educated workforce. There is an economic
benefit to the state, as most studies show that a person with a
four year degree earns approximately a million dollars more over
the course of his life [than a person with less education].
8:25:40 AM
DANA THOMAS, Professor of Statistics, Assistant Provost,
University of Alaska Fairbanks (UAF), Fairbanks, AK, supports
this bill. He pointed out that Alaska has the lowest college
participation rate in the nation among low income families; it
is 51 out of 51 when the District of Columbia is included. It is
clear that low income families generally appear to be spending
their permanent funds on the basic needs of the family and not
saving for their children's college education. What would the
committee members do for their families, he asked, if they
earned less than $20,000 per year; where would that money go?
MR. THOMAS said the University of Alaska Fairbanks conducts an
independent study called the " National Survey of Student
Engagement," which indicates a much higher percentage of
students working than in other institutions nation wide; it is
well known that students who work more than 20 hours per week
have a significantly lower graduation rate. UAF freshman
retention is comparable to some of the best liberal arts schools
in the nation at about 75 percent, but the graduation rates are
low compared to other schools. A detailed study by UAF's
institutional research shows that students drop out when they
have accumulated about $10,000 in debt. Clearly, cost is an
issue and this needs-based support, which is also largely based
on merit, is the right direction to go.
8:28:00 AM
SENATOR HUGGINS asked if Mr. Thomas is familiar with the new GI
Bill.
MR. THOMAS said he is; it is a wonderful new addition.
SENATOR HUGGINS asked if Mr. Thomas would compute a projection
of the number of students who could benefit from a transfer of
benefits from that GI bill.
MR. THOMAS said he would look into it.
8:28:31 AM
STEPHANIE ASHLEY, Student Body President, Juneau representative
to the Coalition of Student Leaders, University of Alaska
Southeast (UAS), Juneau, AK, supports SB 33. She will graduate
this year with over $54,000 in loan debt. She was slightly over
the qualifying income for a Pell grant; so she did not qualify
for any federal grants. This bill, based on merit and financial
need, is something she would definitely have taken advantage of
and she strongly supports this legislation.
8:30:11 AM
CHAIR ELTON closed public testimony on SB 33 and held the bill
in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Facts about Financial Aid.PDF |
SEDC 2/9/2009 8:00:00 AM |
|
| SB 33 lttr Fabian Philipp.pdf |
SEDC 2/9/2009 8:00:00 AM |
SB 33 |
| SB 33 Sponsor Statement.doc |
SEDC 2/9/2009 8:00:00 AM |
SB 33 |
| SB33 Sectional.pdf |
SEDC 2/9/2009 8:00:00 AM |
SB 33 |
| SB033-EED-ACPE-02-05-09.pdf |
SEDC 2/9/2009 8:00:00 AM |
SB 33 |
| SB33 Report Card.PDF |
SEDC 2/9/2009 8:00:00 AM |
SB 33 |