SENATE BILL NO. 174 "An Act relating to professional student exchange program availability and conditions for loan forgiveness." 9:15:47 AM Co-Chair Hoffman MOVED to ADOPT work draft LS0764\T, Mischel, 2/1/10. Co-Chair Stedman OBJECTED. MICHAEL ROVITO, STAFF, SENATOR MENARD, discussed the CS. He explained the differences. Page 1, Section 2 was added to clarify that the Alaska Commission on Postsecondary Education shall administer Alaska's participation in the Western Regional Higher Education Compact. Page 2, Section 3 was modified to address the loan repayment terms. Initially the bill set the annual repayment interest rate at five percent, but concern was raised that locking a rate in statute was bad policy. The current language in version T uses existing statute AS 14 435 10 to dictate the interest payment of the loans. The third change occurs on Section 4, Page 2. The scope of the section describes how an individual can receive loan forgiveness and the parameters that must be met to receive that forgiveness. 9:18:57 AM Co-Chair Stedman WITHDREW his OBJECTION. There being NO OBJECTION, it was so ordered. Senator Menard delivered the sponsor statement. Senate Bill 174 will boost the number of Alaska's health care providers by making it more financially feasible and attractive for a recent graduate to come back to the state. We now have the WAMI program, which provides educational opportunities for medical students. But for dentists, there is a massive gap in educational opportunities. This is where Senate Bill 174 comes in. There's no doubt about Alaska's shortage of dentists. This has been a long-time problem in rural Alaska. In other areas of the state there are an extremely small percentage of providers taking Medicaid. As the exodus of retiring dentists continues, and recent graduates are wooed by Lower 48 medical clinics, the problem worsens and Alaska loses. A well crafted loan forgiveness program will entice Alaskans graduating in dentistry, pharmacy and optometry to come home for their careers. Senate Bill 174 accomplishes this by setting requirements for loan forgiveness. Working with the Western Interstate Commissions for Higher Education, also known as WICHE, Alaska residents will be able to attend professional health care programs not offered in the Alaska university system. WICHE is a regional organization adopted in the 1950s. Its purpose is to create resource sharing among higher education systems in the American west. This bill establishes a minimum number of supported Alaska participants in dentistry, pharmacy and optometry. The bill also sets the loan interest rate for the PSE loan in statute at 5 percent and provides zero percent interest during the participants' in school period. Senate Bill 174 will establish a forgiveness program entitlement of up to 25 percent loan forgiveness for the participants who meet these criteria: They must accept Medicaid for not less than 5 percent of their total average gross billings for the year. Participants in the program could get an additional 25 percent loan forgiveness if they maintain a practice in rural areas. Please help me support retaining new dentists and other medical professionals in Alaska, for the entire state's benefit. 9:24:21 AM Senator Thomas asked about Page 2, Line 17. He asked if the loan forgiveness was for the initial year, or annually as the loan takes place. DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION COMMISSION, DEPARTMENT OF EDUCATION answered that the certification process would occur annually. She noted that the department would work with the Department of Health and Social Services (DHSS) to ensure the certification. Senator Thomas asked if the certification would be 750 hours minimum, or a six month requirement. He asked to know the percentages forgiven. Ms. Barrans referred to Page 3 of the bill where a governing cap is discussed. Senator Thomas clarified that the 50 percent referenced on Page 3, Line 5 is the defining factor. 9:26:46 AM Co-Chair Stedman noted the fiscal note from the Department of Education and Early Development (DEED) for $230,500 in FY11 to fund the loans. The cost is increased in subsequent years. The committee will request an updated fiscal note to reflect the changes in the CS. 9:27:26 AM JIM TOWLE, EXECUTIVE DIRECTOR, ALASKA DENTAL SOCIETY (via teleconference), testified in support of the legislation. He stressed that the bill provides an excellent tool for a long term and sustainable source of professional education currently unavailable in Alaska. TRACY OMAN, EXECUTIVE DIRECTOR, ALASKA OPTOMETRIC ASSOCIATION (via teleconference), testified in support of the legislation. She noted that Alaska is home to 119 practicing optometrists with 22 percent reaching retirement age. The bill offers an incentive for people to return to Alaska. 9:31:22 AM DAVID LOGAN, LEGISLATIVE CHAIR, ALASKA DENTAL SOCIETY, testified in support of the legislation. Students in the fields of dentistry, optometry, and pharmacy face a challenge of high out of state tuition as programs for the fields do not exist in Alaska. The cost of health care education has risen dramatically. Students can finish school with $200 to $350 thousand dollars worth of debt. 9:34:10 AM PAT CARR, PROGRAM MANAGER DEPARTMENT OF HEALTH AND SOCIAL SERVICES informed that she was present for questions. Senator Olson asked if the department was opposed to or in favor of the legislation. Ms. Carr responded that the administration has not taken a position on the bill. Ms. Barrans echoed the testimony of Ms. Carr. 9:35:51 AM Senator Olson agreed that the shortages of the discussed professions have become critical. He revealed that dentists require additional investment in the equipment that they require to practice their profession. He elucidated that optometrists often discover disease in the early stages and are trained to perform specialized procedures that a family practice doctor may not have experience with. He pointed out the importance of pharmacy school. Senator Egan asked if a shortage of dentists and optometrists exists in Alaska. Senator Menard believed that there will be a shortage in the future with many of the dentists nearing retirement age. Senator Huggins echoed the comments of Senator Olson. He identified the necessary responsibility taken by Senator Menard. Senator Menard added that prior to SB 174 she received a proposal from Oregon State University offering a dental seat in perpetuity for any dental student that would attend their school. The mentioned professions enjoy low risk for a chance of loan default. 9:41:23 AM SB 174 was HEARD and HELD in Committee for further consideration. 9:41:35 AM AT EASE 9:44:15 AM RECONVENED