04/21/2000 09:09 AM Senate FIN

SENATE BILL NO. 270                                                                                                             
"An Act relating to return of contributed capital, or                                                                           
payment of a dividend, to the state by the Alaska                                                                               
Student Loan Corporation; and providing for an                                                                                  
effective date."                                                                                                                
                                                                                                                                
                                                                                                                                
DIANE BARRANS, Executive Director, Postsecondary Education                                                                      
Commission, Department of Education and Early Development                                                                       
stated that SB 270 reflects the growing financial stability                                                                     
of the student loan program.  She noted that SB 270                                                                             
provides that in any given year, the corporation has at                                                                         
least a $2 million net income with a return of capital                                                                          
payment to the State of Alaska between 10 and 35 percent of                                                                     
this income amount.  She added that this approach was                                                                           
developed and endorsed by the corporation as a reasonable                                                                       
and conservative method of returning contributed capital to                                                                     
the corporation's original financing source, the State of                                                                       
Alaska.  She continued that the corporation's senior staff                                                                      
and financial advisors have met and discussed the proposal                                                                      
with both rating agencies and the department's bond                                                                             
insurers to avoid any adverse impact to the department's                                                                        
credit standing or possible related increase in the cost of                                                                     
bond insurance.                                                                                                                 
                                                                                                                                
Co-Chair Torgerson asked if the amount of $2 million                                                                            
comprised the fund's dividend this year allocated in the                                                                        
budget.                                                                                                                         
                                                                                                                                
Ms. Barrans responded that the Senate version of the                                                                            
capital budget calls for the use of $2 million of student                                                                       
loan corporation receipts and on the House side they                                                                            
propose to use about $1.6 million.                                                                                              
                                                                                                                                
Co-Chair Torgerson asked which one of these amounts                                                                             
followed the formula allowed in the legislation.                                                                                
                                                                                                                                
Ms. Barrans responded that the formula allowed for up to a                                                                      
total of $2.2 million in FY01.                                                                                                  
                                                                                                                                
Co-Chair Parnell pointed out that the $2 million used in                                                                        
the Senate Operating Budget from the Alaska Commission on                                                                       
Postsecondary Education (ACPE) dividend went to the                                                                             
University.  He made a motion to move SB 270, version "1-                                                                       
GS2077/A" from Committee, with individual recommendations                                                                       
and a zero fiscal note from the ACPE.  Hearing no objection                                                                     
SB 270 was MOVED FROM COMMITTEE.