HB 264-REPAYMENT OF SCHOLARSHIPS & ED. GRANTS  8:04:44 AM CHAIR KELLER announced that the first order of business would be HOUSE BILL NO. 264, "An Act relating to repayment of Alaska performance scholarships and Alaska education grants." 8:05:07 AM REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature, presented HB 264, paraphrasing from the sponsor statement, which read [original punctuation provided]: This bill would require Alaskans who received funds from the Alaska Performance Scholarship award or the Alaska Education Grant to repay the amount of the grant or scholarship they were awarded if they fail to complete the qualified postsecondary education program within 6 years. Terms and conditions of repayment are laid out in AS 14.43.120, except the interest would begin on the date when the obligation for repayment commences. With the Alaska Performance Scholarship award or the Alaska Education Grant, an opportunity has been given to a student by the State of Alaska to help off-set educational costs; however, with this opportunity comes an obligation of completing the qualified degree and/or certification. 8:06:19 AM REPRESENTATIVE SEATON recalled that the Alaska Performance Scholarship (APS) was intended to encourage students to pursue a rigorous course of high school education, and be the reward for those who applied themselves to the challenge. A further benefit would be in having students enter a postsecondary facility prepared and eliminate the need for remedial classes. It appears that HB 264 removes the reward aspect and ties the scholarship to a student's college performance, he opined. REPRESENTATIVE WILSON stated her understanding that the scholarship was created to be two-fold. She agreed with the intent for having it incentivize a student's rigorous high school performance, and eliminate the need for college level remediation. Additionally, she said, the issue that jobs continue to go to people from out-of-state, is a part of the equation; ensuring an in-state trained workforce. The proposed legislation is not a disincentive but it does require students to have skin in the game, and for a student who finishes a course of study, nothing changes. She pointed out that a student would only be paying money back, following the six year completion window, and no interest would have accrued during that period. REPRESENTATIVE SEATON requested transcripts of the new criteria indicating how the bill aligns with the goals of the APS. 8:09:35 AM REPRESENTATIVE COLVER noted that the fiscal note requires two full time employees (FTE) positions to be filled, and asked for justification. Further, he solicited the sponsor's comments on the frugalness at the Alaska Postsecondary Education Commission, in regards to staff. REPRESENTATIVE WILSON responded that the fiscal note appears daunting, with 99 FTE's already in place and a request for more. It also includes $800,000 to make changes to the computer system, which will be questioned, she said. 8:10:51 AM REPRESENTATIVE COLVER espoused how state entities that are off- budget, or self-funded, can grow large through lack of oversight. The scholarship application requires the submission of a parental federal, financial statement, although it is supposed to be based on the student's merit. Pointing out the existing Online Alaska School Information System (OASIS), he questioned the requirement to submit federal financial forms, and the requested $800,000 fiscal note to upgrade the commission's computer system. He said he will be submitting legislation to address the information requirement. 8:13:12 AM REPRESENTATIVE KREISS-TOMKINS noted the possible impacts on students in military service, or needing to care for an ailing parent. REPRESENTATIVE WILSON said the current rules make no exceptions, and agreed that an extra year's grace could be considered for members of the military. 8:14:44 AM REPRESENTATIVE SEATON referred to HB 157, page 1, line 7, and read: ... fails to complete the qualified postsecondary education program in which the person is enrolled within six years after the date of the first payment of funds, ... REPRESENTATIVE SEATON noted that the performance scholarship can be activated in two ways, either via the WorkKeys program certificate, or acceptance to a four year college. He asked how repayment would be handled if a student initially entered college planning to complete a bachelor's degree, but altered course and completed a technical certificate instead. 8:16:00 AM REPRESENTATIVE WILSON said the emphasis is for students to finish a program. REPRESENTATIVE SEATON clarified that a bachelor's degree student could change direction and complete a two year certificate, without repayment required. REPRESENTATIVE WILSON responded yes. 8:17:02 AM REPRESENTATIVE TALERICO referred to the fiscal note to point out information regarding retroactivity, and asked for clarity. REPRESENTATIVE WILSON explained that the bill is not retroactive to scholarship recipients who are already benefiting from the program. 8:18:00 AM DIANE BARRANS, Executive Director, Commission on Postsecondary Education, Alaska Department of Education, testified on HB 264, and said the commission's comments have not been fully formulated, nor solicited; however, the proposed legislation is being analyzed and, several points of concern can be brought forward. The first concern regards the possibility of having the scholarship convert to a loan. Although repayment is not included in the program, requirements and incentives exist in both the scholarship and grant programs to expedite a student's time to degree. She reported that the APS includes a minimum number of credits, enrollment level requirements, and an earned credit accumulation that a student must maintain in order to continue to receive the award. If these requirements are not upheld the award status is suspended until the student satisfies the criteria. The grant program provides a higher amount for the students who enroll in programs at an accelerated pace. These students are also required to maintain good academic standing and continue to accumulate credits towards their chosen credential. 8:20:28 AM MS. BARRANS offered that a more straight forward approach, to address the amount of investment in a student that doesn't result in a credential, would be something similar to the Texas "Be on Time" loan. The Texas program is a straight-forward loan and contains requirements for academic standards, including completion of a degree within five years of initial enrolment. The students receive the funds with the understanding that it is a loan program, conditions may be met to have the balance forgiven, but there is no confusion that it's a scholarship or grant, which later converts to a loan. 8:21:08 AM MS. BARRANS stated that, with regard to the grant program, which targets low and middle income students, imposing the threat of additional debt could be a disincentive for them. She opined that the very students, who might derive the most benefit from additional education and training, will be discouraged in their pursuit. 8:21:28 AM MS. BARRANS said, to the extent to which students elect not to risk the associated repayment responsibility, and reduce their enrollment level to accommodate the loss of financial aid, statistically they will also reduce the likelihood of completing their program of study. She said it appears that the legislation unilaterally applies to APS eligible graduates who have already earned eligibility, as well as graduates who become eligible for awards after passage of the legislation. Making this change mid-stream, without grandfather provisions, will likely be seen by participants, and the parents, as an unfair, bait-and-switch action. 8:22:54 AM MS. BARRANS cited the possibility for administrative/technical issues, and offered a description of a federal teach grant program, that was initially offered specifically for teacher education training. If the program requirement for teaching in a qualifying school was not met, the grant converted to a federal loan. She reported a high level of difficult in administer the program, which required annual, conditional reviews for each participant. Therefore, the program is no longer utilized. 8:24:11 AM MS. BARRANS indicated that the bill also calls for implementation with awards paid out mid-way through the 2016- 2017 academic year. She opined that the timeline is inadequate for making the necessary modifications to the aid management system, promulgating regulations, developing contracts and disclosures, and communicating the new terms to aid recipients. The terms and conditions of the loan incorporated in the bill refer to AS 14.43.120, she said, a statute under which loans have not been made for over 15 years. The statute contains no method for setting interest rates, the borrowing limits are non- specific for the proposed application, and the forgiveness of obligations clause for active military duty may require clarification. Finally, the proposed bill indicates that interest accrues only at the time that the aid converts to a loan status; however, recipients would need to have a specific rate quote, prior to signing an agreement for receipt of funds. The loan terms and conditions would need to be disclosed by the state to the students prior to the consummation of the obligation. 8:26:50 AM REPRESENTATIVE VAZQUEZ directed attention to the committee packet, and the page titled, "Exhibit 7, AY14 Public High School Graduates' In-State and Out-of-State Attendance Patterns by Standard APS Eligibility and Award Levels, Fall 2014," and asked for an explanation of the statistics being presented. MS. BARRANS said the chart indicates the disbursement of the 2014 graduating class: 7,666 graduates, 2,273 in-state college attendees, 1,205 out-of-state college attendees, and 4,188 not found/attending. She drew attention to the third row of the chart, to point out that the APS eligible students attended college in-state, at a higher rate. 8:29:20 AM CHAIR KELLER continuing with the same chart, inquired about the 55 percent, the 4,188 not found/attending, and asked whether these students have been subject to suspension of funds. MS. BARRANS clarified that the third line represents the eligible APS population. Of the total eligible population, she pointed out that 17 percent did not attend college in the autumn of their high school graduation year. Under the terms of existing statutes governing the APS contract, these students have an additional five and one-half years to initiate use of their award. 8:30:51 AM REPRESENTATIVE SEATON noted the 48 percent eligibility level and commented that these statistics indicate how the scholarship is serving the purpose for which it was intended. He said the expectation was to stimulate students to apply themselves more rigorously in high school. That is, to not only take the basic requirements for graduation, but go beyond those requirements and be rewarded via APS eligibility. The chart reflects how this merit based program is being fulfilled, and doing an excellent job for what it was intended: raising student achievement levels. 8:32:09 AM MS. BARRANS clarified that the total eligibility group in 2014 was about 28 percent and, of those, 48 percent attended college in Alaska. REPRESENTATIVE SEATON asked if the percentages have changed over time. MS. BARRANS reported that the last two graduating classes have had a slight increase, perhaps as high as 32 percent; however, the percentage of the graduates who are eligible for the career technical education award, has increased significantly. 8:33:22 AM REPRESENTATIVE COLVER asked for the percentage of the overall high school graduates who attend vocational/technical postsecondary education, versus pursuing college degrees. MS. BARRANS offered to provide further information, and added that not all vocational facilities are required to file federal reports, from which the statistics are drawn. CHAIR KELLER said public testimony would be held open. 8:35:02 AM REPRESENTATIVE WILSON assured the committee that the bill does not act retroactively, and agreed that the military duty question will require further consideration. 8:37:04 AM CHAIR KELLER announced HB 264 was held over.