SENATE BILL NO. 174 "An Act relating to professional student exchange program availability and conditions for loan forgiveness." 11:16:45 AM Co-Chair Hoffman MOVED TO ADOPT WORK DRAFT LS0764\U, Mischel, 4/10/10 AS THE COMMITTEE SUBSTITUTE. Co-Chair Stedman OBJECTED. DARWIN PETERSON, STAFF, SENATOR BERT STEDMAN, explained the legislation. He explained that the CS contains three different post secondary education proposals; a merit based scholarship program, a needs based scholarship program, and an expansion of eligible students in the Western Interstate Commission for Higher Education (WICHE) program. Section 1 creates the Alaska Scholars program in statute. The program currently exists as a University of Alaska scholars program, but the state has yet to participate. The university currently contributes $3.8 million from their land grant trust fund to provide scholarships to those students who graduate in the top 10 percent of their high school class. The CS acknowledges the success of the program by bolstering with state participation. The Alaska Scholars program will continue to be administered by the Board of Regents. Alaskan high school students ranking in the top 15 percent of their class are eligible for a tiered scholarship. Students in the top five percent of their class will receive a 100 percent tuition scholarship at the University of Alaska. The next tier comprises those who rank in the top six to ten percent of their class and are eligible for a 75 percent tuition scholarship. The third tier is comprised of those students who rank in the top 11- 15 percent of their class and are eligible for a fifty percent scholarship. Students who rank below the top 15 percent are not eligible for a scholarship under this program. Mr. Peterson explained that the funding for the scholarships will include the continued contribution of $3.8 million dollars annually from the university's land grant trust fund and the remainder will come from the general fund. The anticipated cost of the scholarships in the first year is $11.5 million dollars with $3.8 million from the university and $7.7 million from the state. The amount increases each year as new classes of students enroll until all four classes are filled leveling the annual cost to approximately $9.2 million in general funds and $3.8 million in university funds. The board of regents may adjust the amount of scholarships awarded in the event the state does not appropriate its share of the funds. Sections 8 and 9 of the CS are housecleaning amendments conforming to the new Alaska Scholars program. Section 8 amends AS 1443930 which identify the information made available to the board of regents. Section 9 makes a cross reference to the new definition of a qualified high school. Section 12 repeals the sections of statute that refers to scholarships for high school graduates offering scholarships for dormitory rent. Section 13 is an applicability section which states that only high school students graduating in the class of 2010 or later are eligible for the new scholarship program. Section 14 instructs the replacement of the name University of Alaska scholarships for high school graduates with the Alaska Scholars program. Mr. Peterson commented that Sections 2-7 of the bill includes the needs-based scholarship component which amends the existing Alaska Advantage education grant program which closely resembles Senator Ellis' SB 33 heard by the committee on March 31, 2010. In order to be eligible for a scholarship, the applicant must demonstrate financial need in accordance with standards established in federal code. Scholarships are awarded in the amount not less than $1000 and not more than $5000 per year and not more than a total of $20,000 per student. The program will continue to be administered by the Alaska Commission on Post Secondary Education. The commission is instructed to distribute $10 million annually in scholarships to needy students. Sections 10 and 11 include the original language in SB 174, expanding the eligibility of Alaskan students in the western interstate commission for higher education to include not fewer than five students in each of the fields of dentistry, optometry, and pharmacy. 11:22:41 AM Co-Chair Stedman Removed his OBJECTION. There being NO OBJECTION, it was so ordered. SENATOR LINDA MENARD expressed support of the CS and appreciation for the hearing. 11:23:48 AM DIANE BARRANS, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION COMMISSION, DEPARTMENT OF EDUCATION, stated that the proposed changes were straightforward, but in respect to the Professional Student Exchange Program (PSEP) loan she was not sure if the drafting accomplished the expected outcome. She understood that rather than eliminating the loan repayment benefits, the bill instead superimposes the service obligation and work discharge of WAMI onto these PSEP loans. Co-Chair Stedman requested a page reference. Ms Barrans responded Page 6, Lines 22-24. She added that the new version establishes a minimum number of seats for dentistry, optometry and pharmacy; it does not speak to the other fields of study currently supported through the PSEP loan program. She did not understand if the intent was to set the minimum number. 11:27:04 AM WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY OF ALASKA, noted continued interest in the incorporation of the strict merit based program included in the Governor's Performance Scholarship (GPS) bill. She believed that the merit based program would change the goals of the current high school curriculum and get schools and communities much more involved in the process. She appreciated the accommodation of university concerns. The bill provides access to information previously inaccessible such as names and addresses of students. 11:29:06 AM Senator Thomas asked if homeschooled children are currently eligible for the Alaska Scholars grant. Ms. Redman responded no, only licensed schools in the state are covered. Senator Thomas asked how much money the land trust generates on an annual basis. Ms. Redman responded that the university is contributing $3.8 million to the program. She explained that the trust may generate $4 million and does not generate much income. Senator Olson asked about the effect of the CS on the forgiveness of retention and recruitment. Ms. Barrans responded that the CS would prove helpful in terms of having a higher rate of return of participants to the program to the state. The return rate for WICHE is positive. 11:31:56 AM Senator Thomas asked about Page 2 and the scholarship award. He requested an explanation of Page 3 and the transmission of the bulk amount awarded. Co-Chair Stedman stated that the questions would be answered in a 24 hour period. Co-Chair Stedman noted one fiscal impact note from Department of Education and Early Development (DEED) for $230,500 in general funds with the cost increasing in subsequent years. SB 174 was HEARD and HELD in Committee for further consideration.