HB 235-PROF STUDENT EXCHANGE LOAN FORGIVENESS  9:23:12 AM CHAIR SEATON announced that the next order of business would be HOUSE BILL NO. 235, "An Act relating to professional student exchange program availability and conditions for loan forgiveness." The committee took an at-ease from 9:24 to 9:25. 9:25:35 AM REPRESENTATIVE P. WILSON moved to adopt CSHB 235, Version 26- LS0913|R, Mischel, 1/8/10, as the working document. CHAIR SEATON objected for discussion. 9:25:56 AM REPRESENTATIVE MUNOZ began the introduction of HB 235. [Technical difficulties interrupted her presentation but did not result in loss of testimony.] 9:27:18 AM DIANE BARRANS, Executive Director, Postsecondary Education Commission, stated that she was available for questions and comments. 9:27:27 AM REPRESENTATIVE MUNOZ continued, paraphrasing from a prepared statement, which read as follows [original punctuation provided]: The Western Interstate Commission for Higher Education, also known as WICHE, is a professional student exchange program that provides students in 12 Western states access to professional healthcare programs that are otherwise not available in their home states. WICHE students pay reduced tuition fees - usually resident tuition in public institutions or reduced tuition at private schools. WICHE is an important tool for accessing educational opportunities that otherwise would be out of reach for a number of reasons. HB235 expands the WICHE program to include a loan forgiveness incentive for the healthcare fields of dentistry, optometry, and pharmacy. As many of you may be aware, healthcare professionals are needed in many areas of our state. We are also seeing an increased number of professionals coming to retirement age. For example, two dentists in the Ketchikan area have actively been trying to sell their practices without success because younger dentists are not returning to this Alaskan community. Dr. George Shaffer, who is on the line, can speak to this issue. Over the years his practice has absorbed patients as a courtesy to retiring dentists however, Ketchikan is still lacking dentists and leaving a heavy burden on others. The student loan forgiveness program starts at a 25 percent forgiveness on the principal loan amount for participants who maintain their Alaska residency and return to the state for at least five years. An additional 25 percent loan forgiveness is provided to those who practice in an underserved area or serve patients who are covered under the medical assistance program. 9:30:22 AM MS. KENDRA KLOSTER, Staff, to Representative Kathy Munoz, Alaska State Legislature, explained the changes to each section of the bill. Section 3 language was changed to clarify the forgiveness increase for students practicing in underserved areas. Returning to Section 2, she pointed out that the interest rate has been amended to be more competitive and aligned with the WICHE program. Also, the conditions of repayment have been revised to be on par with the WICHE program; Sections 2 and 3. 9:31:39 AM CHAIR SEATON asked for clarity regarding the criteria for forgiveness. 9:31:52 AM REPRESENTATIVE MUNOZ responded that forgiveness is five percent per year, up to 25 percent, if they return. If they practice in an underserved area, or accept Medicaid patients, it becomes 10 percent per year, for five years, or 50 percent. 9:32:22 AM REPRESENTATIVE BUCH asked for a definition of underserved areas. He said he located it in the original version, but not in the committee substitute (CS). 9:33:09 AM REPRESENTATIVE MUNOZ deferred to Dr. David Logan. 9:33:27 AM CHAIR SEATON verified that Version A identifies underserved area, and version R does not have the same language. 9:33:55 AM MS. KLOSTER indicated that an underserved area is as defined by the Department of Health and Social Services (DHSS). CHAIR SEATON noted that Version A included Sec. 14.44.042, and asked if the information has been omitted, or conformed differently, in Version R. 9:35:01 AM MS. BARRANS, offered her understanding that the draft allows the commissioner of DHSS to designate an area as underserved, which could be accomplished via regulation. Another means to identify the standard could be based on the level of the percentage of billing for services to patients that are receiving medical assistance through a state program; page 2, lines 29-31, of Version R. 9:35:59 AM REPRESENTATIVE GARDNER suggested that the confusion may arise due to the original draft referring to AS 14.44.042, and Version R refers to AS 14.44.041. 9:36:24 AM CHAIR SEATON drew attention to the original language of Version A, lines 28-[30], where it states: "... if billings for services provided to those patients are not less than five percent of the participant's average gross billings for the year; ...". 9:37:05 AM REPRESENTATIVE BUCH clarified that his question arises from [Version R, page 2], line 27, which states: "... in a geographical area the commissioner of health and social services has designated as underserved; ...". He expressed concern that discretion would be the purview of the commissioner. Also, he opined that this appears to be a vague definition, and asked whether a clearer definition is included elsewhere in the bill. CHAIR SEATON said that the provisions of the bill will be discussed and debated, but the motion being considered is whether to adopt Version R as a CS. The sectional description may provide clarity, he suggested. 9:38:16 AM MS. KLOSTER deferred to Dr. David Logan. CHAIR SEATON said that if the language is in both versions it does not need to be addressed, but if there is a change it should be explained by the sponsor. MS. KLOSTER noted again the forgiveness aspects, changed in Sec. 3, and the alignment of interest rates and repayment schedules with the WICHE program. 9:40:05 AM CHAIR SEATON pointed out that these are technical changes that do not alter the majority of the bill, which the committee could decide to amend at a future time. With that he removed his objection. There being no further objection, Version R was before the committee. 9:41:04 AM DR. DAVID LOGAN, DDS, Alaska Dental Society, stated support for CSHB 235, underscoring the importance of providing this avenue of support for Alaska's young people to attend professional institutes. Financial burdens are a reality, for entering and completing programs to enter these professions; $250,000 for dental schools. Part of the financial burden is deciding how to repay the loan, where to establish a practice, and other economic decisions that may not bring them back to Alaska. A program of this type may take the edge off of the burden and allow students to practice in the community of their choice. Being a benefactor of the WICHE program, he attributed it as the reason that he has been able to return to Alaska and practice. 9:43:55 AM REPRESENTATIVE P. WILSON offered support for allowing DHSS to determine the underserved areas, as these areas fluctuate annually and can be like moving targets. 9:45:19 AM REPRESENTATIVE EDGMON commented that this would allow the commissioner of DHSS to match state and federal definitions of underserved areas. 9:45:52 AM DR. LOGAN concurred, and said that the dental state statutes are already common to federal definition. He opined that an underserved area may already be a common definition throughout statutes regarding the entire health care profession. 9:46:22 AM CHAIR SEATON provided a scenario of an area being serviced by a sole dentist, who is expecting to receive a 10 percent loan reduction. If another dentist arrives and begins practicing, how will this affect the loan forgiveness status of the original dentist; a question for Ms. Barrans, he said. 9:46:59 AM REPRESENTATIVE MUNOZ said practices would be handled on a case by case basis, but the specific scenario described by the chair has not as yet been addressed. 9:47:11 AM REPRESENTATIVE GARDNER asked if there is data from other states to support this approach for changing the behavior of graduates in establishing practices. Additionally, she said, there has been an outpouring across Alaska regarding difficulty in getting access to physicians, and dental care, but the shortage in pharmacy and optometry is new. She asked what information is available to support these professions as areas of identified need. REPRESENTATIVE MUNOZ said that the WICHE program supports students who attend programs in states away from their home state, in the absence of a local program. To that end, the proposed legislation is a strong incentive for students to return and practice in Alaska. 9:48:44 AM REPRESENTATIVE GARDNER asked if this incentive matches or exceeds what other states offer. MS. KLOSTER said she would provide that information to the committee. REPRESENTATIVE GARDNER underscored that this could prove to be important, as other states may provide a higher forgiveness rate and Alaskan students may choose to relocate and take advantage of that opportunity. 9:49:36 AM REPRESENTATIVE KELLER queried how the five percent reduction was chosen, as well as the limit of five students per professional area, and whether other options were considered. 9:50:37 AM REPRESENTATIVE MUNOZ responded that the Alaska Commission on Postsecondary Education (ACPE) assisted in the drafting of this legislation. The intention is to provide statute that can be funded via the ACPE structure without additional state support. 9:51:14 AM REPRESENTATIVE KELLER clarified that ACPE has prioritized the needs of the areas covered in the bill. 9:51:38 AM REPRESENTATIVE MUNOZ deferred to Diane Barrans. 9:51:50 AM REPRESENTATIVE GARDNER reiterated her question on why this is being extended to pharmacists and optometrists. 9:52:13 AM REPRESENTATIVE MUNOZ deferred to the professionals who will testify in their fields. 9:52:23 AM CHAIR SEATON directed attention to page 1, line 5 [through 7], and read: "... Notwithstanding the funding priorities established under (a) of this section, the Alaska Commission on Postsecondary Education shall provide adequate funding for not fewer than five students ... ", and asked if the intention is to supersede the funding priorities currently set forth in section (a), and why that is being considered. 9:53:24 AM MS BARRANS pointed out that this bill is an industry led piece of legislation, and the three fields that are identified in the bill are brought via advocacy efforts. 9:54:13 AM CHAIR SEATON asked about the current funding priorities and whether this bill elevates the three professional fields above the established priorities. 9:54:43 AM MS BARRANS recalled that the professional student exchange program, through WICHE, was funded for the first 20-25 years through general fund support. Subsequent to 1986 the program was totally de-funded. In the mid 1990's, the program was revived by the legislature, but set-up as a loan obligation, rather than the state providing the support fee directly on behalf of the Alaska residents participating. Alaskan students were allowed to apply for loans, subject to the student loan corporation's capacity to fund the program. The support fee becoming an individual financial obligation is rather unusual within the Professional Student Exchange Program (PSEP). Except for Nevada, participating students do so at their home state's expense, with no obligation on behalf of their residents to practice within their home state, although it is encouraged. Because the student loan corporation is expected to fund the program, other criteria were put into place. The criteria reside in AS 14.44.025, which would now be .025 (a), allowing the Commission on Postsecondary Education to establish funding priorities by regulation. Under the regulation, in order for a field to be included in the program, three criteria must be met: 1) the graduate program is not offered in the state; 2) a shortage of professionals in the state exists; 3) earnings related to the profession are sufficient to allow obligation repayment. The fields supported by the loan program include dentistry, optometry, pharmacy, podiatry, as well as physical and occupational therapy. The bill would mandate that at least five participants in each of the three main fields would be funded each year. She explained that because of the forgiveness provision, the fiscal note indicates that the student loan corporation could no longer be tapped as the funding resource. Instead the loans will become general funded programs and the repayment will constitute an income stream for the general funds. 9:58:35 AM CHAIR SEATON stated his understanding that the criteria used in (a), of Section 1, elevates the named professions above any other programs that would be established in this section; mandating that there would be five students supported in these fields before any of the other categories established by the commission. MS BARRANS concurred. 9:59:09 AM CHAIR SEATON opened public testimony. 10:00:25 AM NANCY DAVIS, Executive Director, Alaska Pharmacist Association (AkPhA), stated support for HB 235, and SB 174, underscoring that the cost to follow a career path in pharmacy has a price tag of about $150,000. The path for professional fields has changed over the years, she said, and pharmacy is now a post doctoral program earning the Pharm.D moniker. A pre-pharmacy program does exist in Alaska, and it would be helpful if students could attend post doctoral programs at in-state tuition prices. The average out-of-state tuition of the nine schools surveyed one year ago represents a yearly differential of $12,000-$13,000, or nearly $50,000 of additional tuition to complete a program. The proposed loan forgiveness at the rate of five percent for five years will at least pay this differential, as well as being an investment in the future. 10:03:21 AM REPRESENTATIVE GARDNER directed attention to the committee packet and the letter of support provided by Amber Briggs, AkPhA President. She read: "Because the health care workforce shortage in Alaska is reducing health care access for our state's residents, ... The Alaska Pharmacists Association strongly supports the concept ...". There appears to be a lack of data regarding a lack of pharmacists in the state, and she asked for further information regarding the projected needs in this field. MS. DAVIS provided statistics from 2007 that the state derived indicating a 25 percent deficiency in pharmacists. She opined that it is difficult to recruit and retain pharmacists in Alaska, hence the shortage. The loan forgiveness is an important incentive for Alaskan students to return and practice. State statistics, surveyed two years ago, indicated a shortage of approximately 130 pharmacists. A shortage can become a safety issue, she opined, when dispensing medication and working long hours, errors can occur. The national average, for community pharmacists, is a ratio of 5.36:100,000, but in Alaska it is 3.35:10,000 people. To attain the national average, Alaska would need to have 137 pharmacists join the current ranks. The 15 Indian health service pharmacies were not included in this calculation. 10:05:58 AM CHAIR SEATON asked the bill sponsor to have the department provide further information and data regarding the identified needs of these professions. 10:06:21 AM MS. DAVIS commented that the AkPhA is supportive of building a school of pharmacy in the state, however, the pharmacists are needed now, and it could take ten years to establish an institution. 10:07:26 AM GEORGE SHAFFER, DDS, stated the difficulty that students have in receiving loans for attending school and establishing practices, at a time when many professionals are entering the age of retirement. He recalled how, many years ago, the state defined shortage areas. Unfortunately, difficulties arose as the definition was not particularly clear, and eventually the federal definition was utilized and worked well. He cautioned that to serve the needs of the state today, it should not be left to federal purview alone, and the state should take an active role to make designations. Making another point, he said, a group of students who are already in school may not qualify for this program. Because of the in-state tuition differential, many may have given up their Alaskan residency, in lieu of a lower tuition for graduate school. A provision could be considered to assist these students to renew their residency and qualify for the program, he opined. 10:10:29 AM BARRY CHRISTIANSEN, Pharmacist, stated support for HB 235, saying that he is a past participant in the WICHE program, and it proved a benefit to him. He opined that there is a shortage of pharmacists in Alaska, from his direct experience in the field. Once students attend school out-of-state, there is a good chance that they may not return, and this may prove to be an incentive to remedy that phenomena, he said. 10:11:52 AM JIM TOWLE, stated support for HB 235, stressing the need to support the young students of today who are pursuing these careers. 10:13:42 AM REPRESENTATIVE MUNOZ reviewed the questions and comments that arose from today's meeting, which require sponsor response: the percentages of forgiveness offered in other states; statistics supporting professional deficiencies in the field of optometry in Alaska; a representative from DHSS to address the definition of underserved areas; and an appropriate fiscal note. 10:14:26 AM CHAIR SEATON concluded, thanking the participants in today's meeting. [HB 235 was held over.]