HOUSE BILL NO. 148 "An Act relating to the Alaska performance scholarship program." 8:52:52 AM Co-Chair Foster noted there were no amendments for the bill. He stated that the committee would review the four fiscal notes. He asked the director of the Alaska Commission on Postsecondary Education (ACPE) with the Department of Education and Early Development (DEED) to review the first three notes. SANA EFIRD, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON POSTSECONDARY EDUCATION, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, began with OMB component number 2990 pertaining to student financial aid programs. The note pertained to the Alaska Performance Scholarship (APS) awards passed through as grants on the grants and benefits line and funded through the Higher Education Investment Fund. The note included $2,264,000 for FY 25, $2,404,200 for FY 26, $2,545,700 for FY 27, $2,688,700 for FY 28, $2,833,100 for FY 29, and $2,978,900 for FY 30. The bill amended the qualification criteria for the APS applicant by adding an option for and expanding career and technical education to the academic curriculum. The bill inserted the definition for career cluster, removed the minimum score on a college entrance or standardized examination requirement for eligibility and added language to allow for a GPA or minimum college entrance examination to qualify, instead of requiring both. The bill added a requirement for school districts to notify students in their junior year of their progress towards earning APS eligibility and it required thth districts to inform students in 9 and 10 grade about the performance scholarship. The legislation increased the annual award amounts and provided an additional two years for students to use the scholarship after high school graduation, expanding the time from six to eight years. The bill allowed eligible award recipients to qualify for an increased award level while enrolled at a qualified postsecondary institution, which was a step-up provision. Ms. Efird continued to review OMB component number 2990. She highlighted that APS award amounts were being increased from $4,755 to $7,000 annually for level one, $3,566 to $5,250 annually for level two, and $2,378 to $3,500 annually for level three. A table on the fiscal note showed the requirements for the GPA or the minimum scores on the college entrance exams. In order to come up with an estimate for the note, ACPE had considered all of the potential changes in the eligibility requirements resulting from the legislation and a possible increase in the number of scholarship eligible students. Additionally, the increase in award amounts could increase the current appropriation. Therefore, the calculation estimate for the APS fiscal note award amount assumptions began with FY 23 (the most recent completed class) as a base. The note applied the increase scholarship amounts included in the bill to the FY 23 numbers and projected a 2 percent increase in student usage for FY 25 due to expanded eligibility criteria. The subsequent years projected a 1 percent increase in the number of students per year. 8:59:05 AM Representative Josephson stated that the legislature had recapitalized the Higher Education Investment Fund with close to $400 million and had passed a law making it a separate fund to prevent the funds from being swept. He remarked that many legislators had shown a real commitment to the fund. He asked if the draw would be sustainable. Ms. Efird responded that the fiscal note was an estimate. She elaborated that ACPE wanted to put forward a good faith, transparent number that could result from the bill; however, currently, the appropriation for the APS award was $11,750,000. She explained that in the past year, APFC had awarded less than $8 million of the funds. She relayed that the investment of the fund was managed by the Department of Revenue (DOR) and she did not want to speak on its behalf in terms of sustainability. She explained that DOR provided a 7 percent calculation of the balance to ACPE to distribute two-thirds to the APS and one third for the Alaska education grants. In FY 24, the 7 percent equaled $26.6 million with $17.7 million for the APS; however, only $11.75 million was appropriated and slightly under $8 million was actually used. The Alaska education grant had an available $8.8 million to use in FY 24; however, only $5.8 million was appropriated. She clarified that up to the current point, ACPE had not used the 7 percent total calculation available under statute from the Higher Education Investment Fund; however, any questions about the investments and gains and losses should be directed to DOR. Ms. Efird speculated it would be five or so years before there may be a concern [about the fund balance]. She underscored that she was not an investment expert. She believed committee members had the most recent APS report showing how the use of the APS had been declining. The current usage was less than half of the peak usage number. She thought it would take four to five years to see all of the new changes opening doors for other students. She stated that there may be a question or funds needed to recapitalize the fund in the future. She emphasized it was a tool that would make a difference for the state's workforce. Co-Chair Foster recognized that Representative Louise Stutes was in the audience. He noted that the bill was sponsored by the House Education Committee and he recognized members from that committee including Representative Justin Ruffridge (co-chair) and Representative Andi Story. 9:04:29 AM Representative Galvin remarked on the bill's language that students would be notified of the APS in their junior and possibly sophomore years. She asked if the notification went home for parents to see as well. Ms. Efird responded that she was not certain but believed it was students. She would have to double check to verify the information. Representative Galvin replied that she was very happy to support the legislation and the answer was not pertinent to her support. 9:05:23 AM Ms. Efird moved to the second fiscal note OMB Component number 3340 for the Alaska Education Grant Program. The grant program was funded through the Higher Education Investment Fund in the amount of $1,165,200 in FY 25, $1,235,300 in FY 26, $1,306,100 in FY 27, $1,377,500 in FY 28, $1,449,700 in FY 29, and $1,522,600 in FY 30. Based on current statute, the grant would increase as a result of the projected APS increase in the bill. She explained that under AS 14.43.915(c) one-third of the combined amount shall be available solely for payment of grants awarded. Statute directed ACPE to annually allocate two-thirds of the combined amount in the accounts to eligible APS applicants. She elaborated that if an insufficient number of qualified applicants were awarded grants or scholarships or both, the commissioner was directed to redeposit the remaining funds into the Alaska Higher Education Investment Fund. She noted that if the appropriation increased for the APS, it would also increase for the Alaska Education Grant proportionately. 9:08:17 AM Ms. Efird reviewed OMB component number 2738 for ACPE program administration and operation. The note pertained to administrative allocation for staffing charged with implementing the program. The note included one-time costs of $31,200 for personal services and $16,000 in the services category for a total of $47,200. She explained that all of the eligibility qualification changes in the two programs would require working with a contractor on the changes to the Alaska Student Aid Portal managed by ACPE. She elaborated that the portal was the platform used to receive information from DEED for eligibility of students and disbursement to the institutions and certification of students. Additionally, the note included $6,000 for regulation changes needed on the postsecondary side and $10,000 to update the student portal. 9:10:37 AM Co-Chair Foster recognized House Education Committee member Representative Rebecca Himschoot in the committee room. Co-Chair Foster asked for a review of the final fiscal note. DEB RIDDLE, OPERATIONS MANAGER, DIVISION OF INNOVATION AND EDUCATION EXCELLENCE, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, reviewed OMB component number 2796. She relayed that the fiscal note included a one-time cost of $6,000 for updating regulations on the K-12 side of the APS, which would include updating the curriculum options providing information about the notification for students and removing testing qualifications as outlined in the law. The regulations would be updated in order for districts to have the necessary guidance to work on the scholarship with students. 9:12:19 AM Co-Chair Johnson MOVED to REPORT CSHB 148(FIN) out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 148(FIN) was REPORTED out of committee with ten "do pass" recommendations and one "no recommendation" recommendation and with four new fiscal impact notes from the Department of Education and Early Development. 9:13:18 AM AT EASE 9:15:15 AM RECONVENED