SENATE BILL NO. 224 "An Act establishing the governor's performance scholarship program and relating to the program; establishing the governor's performance scholarship fund and relating to the fund; relating to student records; making conforming amendments; and providing for an effective date." 10:10:44 AM LARRY LEDOUX COMMISSIONER, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT opined that the bill emerged from the Senate Education Committee a stronger and more focused piece of legislation. He explained that the Merit Scholarship was a contract inviting students to choose a rigorous curriculum and to validate good grades by a standardized assessment. He believed that the legislation was transformative and would change the mindset of Alaskan students. Alaska must create a culture of success. Many students dream of attending college or technical school. The Alaska commission on post secondary education quoted statistics that in ten years among 50 of today's Alaska ninth graders, three will have a college degree, 19 will not graduate from high school, eleven will have some college and 17 will only have a high school diploma. The goals of the Merit Scholarship are to improve high school graduation rates and to improve the rigor of high school courses. He explained that he wants to create a college and post secondary culture in Alaska. Mr. LeDoux described the specifics of the scholarship program. He noted that the program is open to graduates of Alaska high schools whether they are home school, public school, or private school students. The scholarship can be used at any Alaska post secondary private or public tech school or college and is not restricted to the University of Alaska. He mentioned three levels of academic scholarships. The academic scholarships provide eight semesters of funding over a six year period. The six year time period is important because many of Alaska's students are nontraditional. The criteria to achieve the scholarship are based on a student's grades, an assessment that validates the grades and a rigorous curriculum that predicts students' success in college. If a student is unable to complete the curriculum due to geographic location or availability, they can apply to the commissioner's office that will devise and develop an individualized alternative program for the student to meet the same standard. The other criterion for the alternative pathway is a situation beyond the control of the student. The criteria is an A average for the highest level of academic scholarship, a B average for middle level of academic scholarship, and a C+ average for the lower level of academic scholarship. 10:18:17 AM Mr. LeDoux highlighted the assessment criteria. He explained the importance of the grades achieved by students in rigorous courses. Another criterion is validated by the standardized assessment test. It is not the intent of the program to create a rigorous assessment test for students to qualify. The rigorous curriculum demanded from the Senate Education Committee was four years of English, four years of math, four years of science, and four years of social studies, of which one year can be an Alaska native language, a foreign language, or an arts program. Another option includes four years of language arts, four years of social studies, three years of science, three years of math, and two years of foreign language. Mr. LeDoux informed that the highest academic scholarship is 100 percent tuition at the University of Alaska for the 2010-2011 school year for 15 credits. The gold scholarship is 75 percent tuition at the University of Alaska for eight semesters. The silver academic is 50 percent of the tuition using the University of Alaska over eight semesters. The current technical scholarship awards $3000 a year for a two year period. Both the House and the Senate Education committee added a needs-based component to the scholarship following the achievement of the academic program. Students apply through the Free Application for Federal Student Aid (FAFSA) based on their criterion which would be determined. The minimum expected cost for any student would be $2000. Mr. LeDoux stated that the cost of implementing the program is approximately $417 thousand. The legislature could fund the operating cost this year which would allow the Department of Labor and Workforce Development, the commission of post secondary education, and the Department of Education and Early Development to institute the regulations necessary for funding in 2010. 10:24:02 AM MARK HAMILTON, PRESIDENT, UNIVERSITY OF ALAKSA, testified in support of the legislation. He explained the needs of preparation and access. The instrument of addressing the needs is the responsibility of the legislature. He stated that scholarships work. Most scholarships address high school students moving directly to college. Alaska has nontraditional students who are not eligible for the Alaska Scholars. These nontraditional students comprise 50 percent of University of Alaska students. He recommended that the legislature seek a needs-based requirement that exists outside of the traditional high school student. 10:26:31 AM Co-Chair Hoffman commented that the Alaska Scholar's Program has been as successful with an increase from 42 to 60 percent. He recalled a request from the President to expand the Alaska Scholars Program. Mr. Hamilton advocated for an expansion of the Alaska Scholar's Program by 15 or 20 percent. He noted that the program has an inexpensive method of administration. 10:28:49 AM Senator Thomas asked about the existing scholarship programs. Ms. Barrans responded that the Alaska Advantage Education Grant is the only other non-loan aid program. The Alaska Advantage Education Grant is a needs-based grant that has been funded with a blend of federal dollars, student loan corporation interest income on an unencumbered account, and with a general fund appropriation in the capital budget in 2009. She noted that the funding for the program is modest and lacks the components cited in the proposal today regarding academic criterion. The grant is a $2000 per year maximum grant. Senator Thomas requested information on the concept of loan forgiveness versus scholarship. Ms. Barrans responded that from the late 1960s through 1986, the state funded its loan program with general funds. The loan forgiveness program allowed for entitlements for up to fifty percent forgiveness. She observed that the aggregate impact of the program was unsuccessful as only one in five of the borrowers returned to the state. The overall impact was that the state continues to collect from some of those borrowers today and default rates approach 28 percent. The cost of the investment was substantial with relatively indifferent returns. 10:33:26 AM Senator Thomas noted that the proposed program is broad and would cost less than the previous one. Ms. Barrans agreed. Senator Ellis asked about the Alaska Advantage Program and targeted nature of the program toward workforce needs of the state. Ms. Barrans answered that the statute allows the commission to create priorities in high achieving students and to provide larger grants to those students enrolled in career programs leading to workforce shortage areas. The three areas of study that qualify are process industry extraction, education, and health and public safety related careers. Senator Ellis commented that the Alaska Advantage Program has promise in targeting students with workforce development needs, high achieving students, and those who simply need the help. Co-Chair Stedman mentioned one fiscal note from DOL for $25 thousand in general funds to contract services to adopt regulations, one fiscal note from DOR for $115 thousand in interagency receipts to cover the cost of managing the endowment fund, and one fiscal note from DEED for $376.300 in general funds to cover the cost of the program implementation. The fiscal note reflects the cost of funding the scholarship in the amount of $25,341 in general funds which increases in the out years. SB 224 was HEARD and HELD in Committee for further consideration.