HB 104-ALASKA PERFORMANCE SCHOLARSHIPS  8:34:28 AM CHAIR DICK announced that the next order of business would be HOUSE BILL NO. 104, "An Act renaming the Alaska performance scholarship and relating to the scholarship and tax credits applicable to contributions to the scholarship; establishing the Alaska performance scholarship investment fund and the Alaska performance scholarship award fund and relating to the funds; making conforming amendments; and providing for an effective date." The committee took an at-ease from 8:35 a.m. to 8:38 a.m. 8:38:55 AM EDDY JEANS, Education Policy Coordinator, Office of the Commissioner, Department of Education and Early Development (EED), presented a sectional analysis of HB 104. He drew attention to pages 1-4 to indicate that the inserts and additions to sections 1-6 change the name from the Alaska merit scholarship program to the Alaska performance scholarship program; rectifying a copyright infringement situation. Page 4, Section 7 establishes the Alaska performance scholarship award fund appropriations, from which scholarship awards will be paid. He pointed out that money appropriated to the fund may be expended, by the Alaska Post Secondary Commission, without further appropriation, and money appropriated to the fund does not lapse. Section 8 provides for the name change. Section 9 is a new section to establish the Alaska performance scholarship investment fund, the interest on which would be used for awards payments. He reported that the governor has recommended that $400 million be allocated to provide an anticipated five percent annual interest yield. The section also indicates that the commissioner of revenue will manage the fund and report to the legislature. Continuing to page 6, he said sections 10-11 allow corporations donations to the Alaska scholarship investment account. Section 12 deletes redundant references to Alaska Post Secondary Commission programs. Section 13 provides transition language, and Section 14 instructs the statute reviser to make the required name change consistent throughout the applicable laws. Section 15 provides transition language to allow the departments involved to proceed with adoption of regulations necessary to implement the new law. Section 16 allows Section 15 to be effected immediately; a go-ahead to the departments. Finally, sections 17-18 handle the effective dates for the remaining components of the bill. 8:43:39 AM REPRESENTATIVE CISSNA asked whether residents are allowed to contribute directly to the fund through the Permanent Fund Dividend (PFD) process. MR.JEANS responded no, but suggested that a component could be added to allow such action. The tax credit contained in the bill addresses corporate contributions. 8:45:33 AM REPRESENTATIVE SEATON turned to page 5, line 15, paragraph (2), to read "donations to the fund," and asked whether the donations are restricted to tax credits. MR.JEANS answered no, it is not restrictive and individuals could make donations to the fund. However, there is no mechanism proposed to link the fund with the current PFD contribution option. 8:46:20 AM REPRESENTATIVE FEIGE inquired about a sunset clause for corporate contributions. MR.JEANS indicated that the governor's bill, Version A before the committee, does not provide a sunset clause, and suggested that it may be contained in a forth coming committee substitute. 8:47:41 AM REPRESENTATIVE PRUITT asked whether the fund affects the University of Alaska (UA) scholars program. MR.JEANS responded no, as these are two separately administered programs; however, as the scholars program awards students, at individual schools, who have demonstrated scholastic performance in the top 10 percent of their class, an overlap of qualified students may occur. REPRESENTATIVE PRUITT directed attention to section 4, subsection (a), paragraphs (1), (2), and (3), and asked whether there is room for interpretation regarding the language "high minimum" and "moderately high minimum". MR.JEANS explained that the designation, as worded, allows EED to establish the required cut scores through the regulatory process. 8:50:07 AM CHAIR DICK agreed that providing incentives for students is good, but observed that implementing the requirements in rural schools may not be possible, making the program inequitable. MR.JEANS explained that the implementation difficulties have been identified and the department is working with districts to ensure requirements are attainable. The three year transition period will be important to institute curriculum delivery options. A variety of creative methods are being considered, and a contract has been negotiated to have a virtual classroom created. 8:51:44 AM REPRESENTATIVE KAWASAKI inquired whether districts with schools that will need to participate via the virtual classroom will need to carry any associated costs. MR.JEANS said that the districts are assisting in developing and making the curriculum available through the Consortium for Digital Learning (CDL). Participants of the consortium will have no associated costs; however, other schools would be charged for access; fees which have not yet been established. REPRESENTATIVE KAWASAKI asked whether EED expects to administer the virtual classroom for rural schools which would otherwise not have access to four year programs in required subjects. MR.JEANS clarified that the virtual school is only one mechanism that will be available. Other statewide options include the existing correspondence programs and video conferencing opportunities. REPRESENTATIVE KAWASAKI rephrased to ask whether districts will incur additional expense to provide the classes required by students to qualify for the scholarship. MR.JEANS responded that the districts receive foundation formula funding to provide the required curriculum. The committee took an at-ease from 8:54 a.m. to 8:55 a.m. 8:55:18 AM CARL ROSE, Executive Director, Association of Alaska School Boards (AASB), stated support for HB 104, and provided the mission of the AASB: Advocate for children and youth; assist local school boards to provide a quality education focused on student achievement through effective local governance. He said the association's concern has been raised, and is maintained, regarding universal access for all students. No other state in the union faces the same geographic expanse and cultural diversity that exists in Alaska. Digital technology for learning is the only viable option for closing this gap difference between Alaska and the outside world. He opined that the school districts are not fully prepared to take advantage of the scholarship being offered. For this and other reasons, the legislature should be expanding the technological footprint across the state. The footprint is capable of being developed incrementally through the existing CDL. He said: Every time we make capital appropriations for school districts, in the area of technology, what assurances do we have that those appropriations will be successfully implemented, and what kind of accountability do you have in terms of feedback that that has been done and the challenges have been met. ... I suggest to you that we pay attention to our entire state and start now because it will take some time to create a system that can respond to this incentive. ... If this is for all kids, then we have to make it universally accessible. 8:59:14 AM REPRESENTATIVE CISSNA acknowledged the effort to expand the technological systems, and asked what strong points exist that can be built upon. 9:00:12 AM MR. ROSE said the issue of bandwidth is prevalent, but it is an axiom that can easily be figured out. He opined that the focus on technology is more important at the lower grades, as the use for pencil and paper fade from the focus of the emerging generation; technology is their medium, it is how they communicate. The issue of relevance arises when considering the pace of change today; by the time anything ends up in a text book it is already history. He continued: We are at the precipice of exponential change. What are we doing, as a state, to insure that our citizens are well prepared for a future that we cannot describe. ... We need to ensure that our kids have the ability to access the information that would enhance their ability to take advantage of [the scholarship program]. 9:02:58 AM REPRESENTATIVE KAWASAKI surmised that even with a digital classroom some districts may not be prepared to participate and an inequity would prevail. He asked what funding needs are anticipated by the AASB. MR. ROSE answered that appropriation is one method. The onus has been on the CDL to identify the areas of need, the willing participants, and to provide wrap-around services to individual districts. The association would like to see the flow of appropriations directly to the recipients via CDL as a portal. Thus, the capital budget would be the funding source, and a school district would have a zero fiscal note due to funding via the foundation formula. He stressed, "The weight gets a little heavy when you continue to mandate with zero fiscal notes on one foundation formula." The remoteness of the villages and the ability to manage the technology is a challenge that needs to be met to allow students to take advantage of this bill. 9:05:48 AM REPRESENTATIVE KAWASAKI queried whether legal action might result if every student isn't able to benefit due to inadequate access to the required course work. MR. ROSE agreed that inequity is always an issue; however, advances should be made for the right reasons rather than being compelled due to the possibility of a law suit. 9:07:03 AM REPRESENTATIVE SEATON said: I'm ... uncomfortable with the idea of technology solving all our problems. ... Sitting in front of the computer for six hours a day answering questions; ... it's just like a workbook if you use it that way. ... I'm concerned if we're saying the equity is going to be just bandwidth and not ... the engagement and delivery of that product. MR. ROSE said that the CDL has identified several important: the condition of readiness; the technical assistance, and professional development. Technology is not being taught, it is being used as a learning tool to connect to the world; the entire library of congress and encyclopedias are available on- line. The issue of equity relates to how technology is used to assist the learning process; young people already understand how to use technology. 9:10:03 AM REPRESENTATIVE FEIGE asked which school districts the CDL recognizes as innovative, and which organizations are setting the standard for future development in this area. MR. ROSE indicated that there are pockets of success throughout the state, and he offered to provide a district by district list of accomplishments. The relevancy of technology is clearly understood and there is no going back. He declined to name a leader in the area, but indicated that the consortium members are all making advances. REPRESENTATIVE FEIGE acknowledged that technology is not the be all and end all. He asked where Mr. Rose attended high school. MR. ROSE answered Hawaii. 9:13:30 AM REPRESENTATIVE CISSNA recalled being in remote communities that have had better technology connections than what she has experienced at the state capitol building. She said: We could have everybody talking to us and be here [remotely]. Without decision makers being in on this, ... the administrative people, ... we stand still ... and it's scary. 9:14:53 AM REPRESENTATIVE PRUITT asked whether the consortium endorses a particular focus for concern, or a technology priority list, and if so, what tops the list. MR. ROSE recalled that when the consortium began, in [2006], the one-to-one lap top was deemed important, but five years later there are any number of mobile devices, and all are obsolete by the time they are purchased. However, every individual school district should have the opportunity to choose what will work best for infusing technology into the curriculum and receive the support of the administration for implementation. 9:17:58 AM REPRESENTATIVE PRUITT moved to adopt the proposed committee substitute (CS) for HB 104, 27-GH1893\I, Mischel, 2/8/11, as a working draft. There being no objection, Version I was before the committee. 9:18:19 AM REPRESENTATIVE SEATON explained that incorporated in Version I are the recommendations from the legislative scholarship funding task force to include provisions for needs based awards, and provides a principal funding source for the scholarship fund. He said the unmet need is to be determined via FAFSA (Free Application for Federal Student Aid), and calculated after accounting for any family contributions and available grants. For funding, the CS incorporates the AlaskAdvantage program, which currently serves the non-traditional student. Thus, all three aspects, the performance scholarship, the needs based component, and the non-traditional students will receive funding from one source to be known as the Alaska scholarship fund. He indicated that the CS renames the funding source, from capital income fund, replacing it with scholarship fund. Additionally, it directs the transfer of the existing assets from the capital income fund into the scholarship fund; approximately $70 million. The revenue stream is then redirected from the capital income fund into the scholarship fund, the source of which is the Amerada Hess settlement. The revenue stream from the settlement averages between $22-30 million. It also identifies up to 15 percent of the oil tax progressivity, which if combined with the Amerada Hess funding totals $40 million, to be directed to the scholarship fund. Finally, the CS language allows for direct appropriations and corporate tax credit donations, as found in the governors original bill. There is a $160 million cap on the fund to protect students who are completing four year programs to do so, should the funding streams be eliminated at a future date. It also adds requirements that receiving institutions provide advisor/advocates to ensure student success, with the understanding that these funds represent an investment, and students should be assisted to stay on track. It also inserts transition language, and provides effective dates in accordance with agencies promulgating regulation. He pointed out that this funding mechanism is the primary change in Version I. 9:26:52 AM REPRESENTATIVE FEIGE asked if there are any conditions in the bill that require the recipient to seek work within the state. REPRESENTATIVE SEATON responded that the requirement is for attendance at an institution in Alaska. REPRESENTATIVE P. WILSON offered that research indicates that students often remain in the area where they have completed their higher education. REPRESENTATIVE FEIGE argued that it is a fair and reasonable request to make of a recipient, and the risk could be guarded against by including a requirement in the bill. REPRESENTATIVE SEATON pointed out that this is not a full ride scholarship offer, and suggested that it would be difficult to require that every student remain in-state. 9:30:16 AM REPRESENTATIVE PRUITT remembered that in the 1980's Alaska offered student loans, with a forgiveness clause should the graduate remain, or return, to work in-state. 9:30:59 AM REPRESENTATIVE SEATON reported that through lengthy discussions were held on this topic prior to the recommendation for in-state use. REPRESENTATIVE FEIGE suggested that it could be structured as a loan with no payments due back for a period of eight years. The student would have time to attend college, gain an entry level position, and possibly travel. Providing a mechanism to indicate resident status, the loan could convert to a grant at some point, he opined. 9:34:01 AM REPRESENTATIVE CISSNA observed that this is a critical stage for the bill and stated her belief that the discussion appears to represent two different programs, and both are good ideas.