HB 256 POSTSECONDARY SCHOOLS: REGULATION & LOANS  Number 406 CHAIRMAN WILKEN introduced HB 256 am as the next order of business REPRESENTATIVE DAVIS , Prime Sponsor, said that HB 256 should look familiar in that it identifies a fee that does not cover the cost of the service provided. Currently, the Postsecondary Education Commission authorizes the postsecondary education institution in Alaska to operate in the state. Postsecondary Education currently has a flat $100 fee to authorize the institutions to operate which generates about $2,000 per year. HB 256 would authorize the commission to establish fees that will come closer to meeting the $100,000 annual expense to operate the program. HB 256 authorizes the adoption of regulations in statute that will adjust the annual fees for authorization of postsecondary institutions. Representative Davis acknowledged that there may be some concern regarding the regulations and Deborah Craig is present to speak to that. HB 256 does not specify the amount of fee to be charged. Representative Davis noted that there was an amendment on the House floor which addressed a clarification in Section 1 resulting from legislation passed last year relating to postsecondary education and the default rate on student loans. The department did not object. DEBORAH CRAIG , Director of Institutional Relations for the Commission on Postsecondary Education, informed the committee that she had been an administrator of a postsecondary education institution for the past seven years. Her current position as director is new to her. Ms. Craig emphasized that she took the task of establishing a fair fee schedule very seriously due to her knowledge of what that could do to a small school. The school Ms. Craig administered was very small and primarily funded by grants. Ms. Craig noted that the packet should include a sample fee schedule. After polling 25 states regarding each state's fee structure, Ms. Craig reviewed what other states were doing. Most states established a percentage of the tuition revenues that were generated and then charged that percentage. Sometimes a maximum and a minimum were established. This is what Ms. Craig is proposing. Ms. Craig said that the proposal would be established in regulation and school owners and administrators would be invited to meet and provide input on the proposal. This process would take a number of months before implementation would occur. Ms. Craig emphasized that the fee structure would establish minimums and maximums in order to avoid discouraging schools from doing business. If the fee schedule was set at three percent of the tuition revenue, that could result in a large fee for larger schools; a fee similar to accrediting fees on a regional and national basis. A maximum fee of $2,500 would be established. If a school has a tuition revenue of $100,000 a year, which over 60 percent of Alaska's schools do, the fee would be $3,000 based on 3% of revenue; but the fee would be capped to $2,500. HB 256 would have a small impact on the smaller schools and a positive impact on the larger schools. HB 256 will not make the commission totally self-supporting; that would require fees so high that it would prohibit schools from doing business in Alaska. With regards to the concern that HB 256 would impact small schools, Ms. Craig pointed out the reality that requires the commission to tighten its budget and generate fees for services. This fee structure is intended to move agency towards self-sufficiency while not discouraging schools from doing business in Alaska. SENATOR GREEN asked if this fee structure would encourage anyone to alter the tuition revenue. DEBORAH CRAIG said that the fee structure might encourage some to manipulate the reporting of the fee revenues. However, Ms. Craig informed the committee that the commission has an audit review process that is separate from the authorization process. The audit review process audits schools for Alaska student loan participation and therefore, have oversight over the management of the Alaska student loan which is of primary concern. Ms. Craig explained that the current fee of $100 is set in statute. HB 158 would establish those fees in regulation. The schedule in the committee packet was a proposed fee schedule based on research from other states. CHAIRMAN WILKEN inquired as to the wishes of the committee. SENATOR GREEN moved to report HB 256 am out of committee with individual recommendations and accompanying fiscal notes. Without objection, it was so ordered.