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." 9:36:16 AM MIKE HANLEY, COMMISSIONER, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT (DEED), relayed that HB 104 had been introduced by the governor to fund a program that had been established by the legislature the prior year. He relayed that the bill would offer incentives for students and families across the state and would ultimately transform kindergarten through college and career education in Alaska. The scholarship rewarded students that sought postsecondary education in the state and had taken courses to prepare for success beyond high school, worked hard, and performed well in school. He explained that the bill had three components, including, the name change from a merit scholarship to a performance scholarship in order to avoid potential copyright issues; second, the establishment of an award fund and an investment fund that the legislature could appropriate funds into and taxpayers could donate to; three, corporate tax credits to incentivize donors. The governor was looking for a sustainable and predictable source of funding to ensure the success of the program. The department had been working hard with statewide school districts to utilize the scholarship program. KAREN EEKS, SELF, KETCHIKAN (via teleconference), urged the passage of HB 104. She discussed that she had been heavily involved in improving the graduation rate and was involved in the local Empowering Youth task force. The program researched national, state, and local drop out statistics, including the various reasons that students dropped out, and recommended solutions. One of the recommendations had been for the funding and implementation of the performance scholarship. The task force was deeply concerned about the dropout rate not only for the students but for the state's economic and social future. She discussed that there were devastating repercussions for the state's economy and society when youths dropped out of high school. She explained that the scholarship program would be an important signal to young people throughout the state regarding the importance of their education. She urged the committee to make modifications to the bill if they had concerns about equal access to the program for students throughout the state. She stressed that over the long-term the investment in Alaska's students would come back to the state. 9:43:15 AM Representative Gara wondered whether she had information about the "alternative pathway" approach that had been offered in other states. He explained that the approach had allowed bright students, who had not been able to take some of the required coursework or who had received their GED [General Education Development], to qualify for the scholarship. Ms. Eeks was not familiar with the alternative pathway. She thought that the scholarship should be available to as many students as possible. She felt that many youths were falling through the cracks and that it was important to support them. Co-Chair Stoltze CLOSED public testimony. DIANE BARRANS, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, discussed that the House Education CS had continued with the use of the new program name. She explained that the CS and added two additional requirements for postsecondary institutions under Section 6. The first requirement was mandatory counseling for students and the availability of courses for students to complete their degree in a timely fashion. The department was currently in the process of approving institutions to participate beginning in the fall of 2011; therefore, the effective date on the new requirements would be FY 13. The second requirement stipulated that scholarships would be paid on a pro rata basis and that no new scholarships would be awarded if funding was insufficient. The Education CS created a non-lapsing investment fund within the general fund that would accept appropriations, donations, and investment income. Additionally, the CS created a provision similar to community revenue sharing that anticipated a time at which new appropriations would no longer be accepted. The fund would accept up to $160 million and would provide sufficient funding for students who had received the scholarship to continue to receive it throughout their college career. She relayed that no other changes had been made to the bill. 9:49:23 AM Representative Costello asked whether students that graduated from the Nine Star High School Completion Program would be eligible under the definition of high school on Page 4, Lines 27-28. Commissioner Hanley did not know whether the Nine Star program would qualify for the scholarship. He noted that he would get back to the committee with an answer. Representative Costello requested information regarding the eligibility for alternative programs that served at risk youth and on an expansion to the definition to include the programs if they did not currently qualify. Commissioner Hanley replied that the intent was that the program would be available to all students. He explained that the bill did not look at the format of the school, but focused on student qualifications that included required course work, and sufficient ACT scores. Representative Gara queried whether the two programs available under the bill were the need-based Alaska Advantage Education Grant and the merit-based Alaska Performance Scholarship Award. Ms. Barrans responded that the Education CS expanded the scholarship award fund and the investment fund to include Alaska Advantage Education Grant funding. Representative Gara asked whether the Alaska Advantage Education Grant was the existing needs-based program. Ms. Barrans replied in the affirmative. Representative Gara wondered whether the bill determined how money was apportioned to each program. Ms. Barrans replied that the legislature would be required to determine how the money was divided on an annual basis. Representative Gara discussed an amendment that he had distributed. He wondered whether the department would help the legislature to consider an alternative pathway that was used by other states that would allow students who did not have all of the courses available to them or who had a GED to participate in the program. He believed that the merit- based program the former DEED commissioner had advocated for had a couple of flaws including that many districts did not offer the courses that a student needed to qualify and that the scholarship was not available to students who had received a GED due to extenuating circumstances. Commissioner Hanley responded that the department was working very closely with school districts that may not be able to offer all of the courses that were required under the legislation. He expressed confidence that districts across the state could provide the required courses; however, he was willing to consider it as a hardship if a district could not provide the required courses. He discussed that there was a two-year grace period for students who experienced situations that were beyond their control. He elaborated that students would be allowed to take a course during the summer or during their first year at the university level. He expressed concern about the incorporation of the GED into a program that worked to provide incentives for students to continue in postsecondary education and that required them to be prepared for college. Co-Chair Stoltze shared similar concerns with Representative Gara. 9:56:22 AM Representative Gara understood that the performance scholarship was directed at high achieving students. He opined that merit-based scholarships should not go to students who received a 2.5 GPA and that the money should go to needs-based students. He did not want the department to offer the scholarship to low achieving students; however, he did not want to punish students for circumstances that had been out of their control if they were able to take other steps to meet SAT or ACT and course requirements. Representative Wilson wondered how the bill's definition of high school would apply to children who were home schooled to ensure that they were eligible for the scholarship. Commissioner Hanley responded that the goal was to keep expectations high without putting up hurdles for students. A home schooled student's eligibility would be determined based on the courses that they had taken and on their SAT/ACT scores. He noted that the first scholarship applicant that had recently been accepted had been home schooled. Ms. Barrans added that the department had developed an eligibility determination process. She explained that an application and an assessment were required to ensure that a home school program ran parallel to high school. Representative Wilson wondered whether requiring different qualifications for a needs-based program and a merit-based program in one bill took away from the intent of the legislation. She thought a student could just apply for the needs-based program if they did not meet those under the merit-based program. 10:00:37 AM Ms. Barrans responded that the only combinations that occurred in the bill related to the award fund and the investment fund. She relayed that there were no other changes to the Alaska Advantage Grant or performance scholarship requirements. There were two separate complimentary programs in statute that did not conflict with each other. The performance scholarship was available beginning with 2010 high school graduates and the Alaska Advantage Grant Program was available to any student attending an accredited institution in the state. A student was required to make good progress and earn sufficient credits to be eligible for the needs-based program. Representative Wilson thought the goal had been create an equal opportunity for students to excel; however, she believed that the existence of two paths created by the two separate programs took away from the goal. Ms. Barrans disagreed. She clarified that there were two programs with different policy objectives that shared the goal of preparing students as trained Alaskans who were ready to enter the workforce. The maximum award under the scholarship program was $4,755 per year and the maximum needs-based grant was $2,000 per year. She explained that a low income student that qualified for the grant and one of the three levels of the scholarship would receive funds to assist them with attendance fees. The cost of full-time attendance was typically about $18,000 per year and provided incentive for students to maximize the resources provided by the state. Co-Chair Thomas wondered about the eligibility of out-of- state religious correspondence courses. He had voted against the legislation the previous year because the majority of his constituents had expressed that they would not qualify under the program. He believed that there were rural districts and others that would be left behind due to their inability to offer all of the required courses. Ms. Barrans believed that the assessment would be based on the curriculum and not on the source of the classes. She detailed that the curriculum would need to pass assessment, along with sufficient test scores and GPA. Co-Chair Thomas requested a definitive answer in the language of the bill. Co-Chair Stoltze requested written correspondence from the department that would provide clarity on the eligibility of home and charter schools. Commissioner Hanley replied that a correspondence course that was incorporated into a student's high school transcript would be accepted as part of their transcript. Co-Chair Thomas wondered whether scholarship funds would be refunded to the state if a student dropped out during college. He reiterated his concern about the eligibility of out-of-state correspondence courses. Ms. Barrans replied that there were refund policies that schools were required to comply with. She expounded that the state would receive a refund in an amount that would depend on the length of time the student had attended school prior to leaving. Co-Chair Thomas remarked that he could not guarantee that he would vote in favor of the bill even if the bill was amended to reflect his concerns. 10:07:44 AM Representative Guttenberg wondered whether the only eligibility requirements for the Alaska Advantage Grant were the ability to prove a need for the funds and active enrollment. Ms. Barrans replied that a student would be required to maintain "academic good progress," meaning that a student would need to take at least 12 credits per term and maintain a minimum 2.0 GPA. Representative Guttenberg asked whether there was a "look- back" provision related to grant eligibility. He wanted to make certain that a student applying for school later in life was not deemed ineligible for the grant funds due to previous high school or college records. Ms. Barrans responded that the only time there would be a look-back would be in circumstances in which a student had taken the grant and had subsequently dropped out of college. A student would be required to attend one term to reestablish their eligibility before they could apply for the grant. Representative Guttenberg echoed Co-Chair Thomas's concern that a student's location in Alaska should not limit their ability to obtain either the scholarship or the grant. 10:10:26 AM Representative Joule wondered whether a student was allowed a semester probationary period if their GPA dropped below 2.0. Ms. Barrans responded that a student was required to have a 2.0 GPA at the end of their freshman year. Representative Joule wondered whether a student that had not initially qualified for funding would be eligible if they began college and achieved a 3.0 to 3.5 GPA. Ms. Barrans replied that the student would not be eligible for the performance scholarship, but they would be eligible for the education grant. Representative Joule explained that he had not been speaking only of needs-based students. He surmised that students who had left the state to attend school and performed well would not ever be eligible for the performance scholarship. He discussed the incentive to encourage students to return to the state. Ms. Barrans replied that he was correct. She understood that the legislature may have many policy objectives, but the main objective of the program that had been approved the prior year was to keep the pipeline flowing from high school into postsecondary education. The idea was to increase the stakes in high school and to transform the system to reduce the number of students that did not perform well. The program required that students begin and use their eligibility within six years of high school graduation. 10:14:22 AM Representative Joule communicated that he would prefer to see a needs-based component as it was currently laid out instead of a performance-based scholarship. He believed that the performance part became an indicator of where problems resided in Alaska's school districts and could help with the ability to learn how to develop the capacity for all of Alaska's students to qualify for a performance scholarship that would allow them to go on to academics and/or a vocational field. He expressed hope for a conclusion. Representative Edgmon asked for confirmation that the governor's FY 12 funding level was $8.2 million for the performance scholarship and $1.1 million for the Alaska Advantage Grant. Ms. Barrans replied in the affirmative. Representative Edgmon believed that there should be more of a needs-based component in the program. He expressed concern about students in smaller communities. Vice-chair Fairclough had learned from a presentation related to standards in math, science and reading that Alaska's schools did not have an aligned K-12 curriculum or standards for grades 11 and 12. She had heard concern from the university that K-12 had not been preparing students to attend college and the K-12 schools had communicated that the university would accept all standards, which was the reason remedial courses were needed at a college level. She read a standard for a tenth grader in math: "explaining in words or identifying the difference between experimental and theoretical probability of independent and dependent events." She believed that the measurement had no relevant meaning. She quoted from a tenth grade standard regarding writing about a topic: "organizing ideas using appropriate structure to maintain the unity of the composition (e.g. chronological order, order of importance, comparison and contrast, cause and effect, classification, and identification) using a variety of transitional words and phrases." She communicated her frustration about the complexity and confusing nature of the state's high school standards and the finger pointing between the university and K-12. Commissioner Hanley replied that the state had scored a "D" on the understandability of its standards based on a national level. The department was currently developing a time-line to change Alaska standards. He had recently met with commissioners outside of Alaska and had discussed national standards that other states had adopted. Vice-chair Fairclough expressed the importance of clear standards and of input from PTA members and Alaskans that spoke local languages such as Inupiat, Athabascan, and other. She believed that it would not help if the same people who wrote the current standards were the ones that reviewed the new standards. Representative Guttenberg wondered whether there was a place the legislature could go to better understand terminology used within the education system. He noted that he had done and appreciated the legislature in a classroom program. 10:24:24 AM Commissioner Hanley responded that DEED was working on the development of clear standards that met national and international norms and on the development of relevant place-based curriculum that varied throughout the state. He hoped to bring a new set of standards before the committee the following legislative session. Representative Gara asked whether the Alaska Advantage Grant Program remained available for vocational education and certificated courses. Ms. Barrans replied that there had been no changes to the structure, eligibility requirement, or other to the grant program. Representative Gara asked whether the bill still included accountability language that required a student to maintain a certain GPA to qualify for the needs-based grant. Ms. Barrans replied in the affirmative. HB 104 was HEARD and HELD in committee for further consideration.