ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
March 19, 2010
8:05 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Cathy Engstrom Munoz, Vice Chair
Representative Bryce Edgmon
Representative Wes Keller
Representative Robert L. "Bob" Buch
Representative Berta Gardner
MEMBERS ABSENT
Representative Peggy Wilson
COMMITTEE CALENDAR
HOUSE BILL NO. 367
"An Act relating to tax credits for cash contributions by
taxpayers that are accepted for certain educational purposes and
facilities; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 206
"An Act establishing a career assessment requirement in public
schools; and relating to postsecondary courses for secondary
school students."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 367
SHORT TITLE: TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
SPONSOR(s): REPRESENTATIVE(s) MUNOZ
02/23/10 (H) READ THE FIRST TIME - REFERRALS
02/23/10 (H) EDC, FIN
03/10/10 (H) EDC AT 8:00 AM CAPITOL 106
03/10/10 (H) Heard & Held
03/10/10 (H) MINUTE(EDC)
03/12/10 (H) EDC AT 8:00 AM CAPITOL 106
03/12/10 (H) Heard & Held
03/12/10 (H) MINUTE(EDC)
03/19/10 (H) EDC AT 8:00 AM CAPITOL 106
BILL: HB 206
SHORT TITLE: HIGH SCHOOL ASSESSM'T/POSTSECONDARY CLASS
SPONSOR(s): EDUCATION
03/25/09 (H) READ THE FIRST TIME - REFERRALS
03/25/09 (H) EDC, FIN
03/27/09 (H) EDC AT 8:00 AM CAPITOL 106
03/27/09 (H) Heard & Held
03/27/09 (H) MINUTE(EDC)
04/03/09 (H) EDC AT 8:00 AM CAPITOL 106
04/03/09 (H) Heard & Held
04/03/09 (H) MINUTE(EDC)
04/15/09 (H) EDC AT 8:00 AM CAPITOL 106
04/15/09 (H) Heard & Held
04/15/09 (H) MINUTE(EDC)
01/20/10 (H) EDC AT 8:00 AM CAPITOL 106
01/20/10 (H) Heard & Held
01/20/10 (H) MINUTE(EDC)
02/01/10 (H) EDC AT 8:00 AM CAPITOL 106
02/01/10 (H) Scheduled But Not Heard
02/05/10 (H) EDC AT 8:00 AM CAPITOL 106
02/05/10 (H) Heard & Held
02/05/10 (H) MINUTE(EDC)
02/10/10 (H) EDC AT 8:00 AM CAPITOL 106
02/10/10 (H) Heard & Held
02/10/10 (H) MINUTE(EDC)
02/12/10 (H) EDC AT 8:00 AM CAPITOL 106
02/12/10 (H) Scheduled But Not Heard
02/15/10 (H) EDC AT 8:00 AM CAPITOL 106
02/15/10 (H) Heard & Held
02/15/10 (H) MINUTE(EDC)
02/19/10 (H) EDC AT 8:00 AM CAPITOL 106
02/19/10 (H) Heard & Held
02/19/10 (H) MINUTE(EDC)
02/22/10 (H) EDC AT 8:00 AM CAPITOL 106
02/22/10 (H) Scheduled But Not Heard
03/01/10 (H) EDC AT 8:00 AM CAPITOL 106
03/01/10 (H) Heard & Held
03/01/10 (H) MINUTE(EDC)
03/08/10 (H) EDC AT 8:00 AM CAPITOL 106
03/08/10 (H) Scheduled But Not Heard
03/17/10 (H) EDC AT 8:00 AM CAPITOL 106
03/17/10 (H) Heard & Held
03/17/10 (H) MINUTE(EDC)
03/19/10 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
KENDRA KLOSTER, Staff
Representative Cathy Munoz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 267, on behalf of the prime
sponsor, Representative Cathy Munoz.
DENNIS STEFFY, Director
University of Alaska
Mining and Petroleum Training Services (MAPTS)
Soldotna, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 367.
ROBYNN WILSON, Income Audit Manager
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 367.
LES MORSE, Deputy Commissioner
Office of the Commissioner
Department of Education and Early Development
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 206.
ACTION NARRATIVE
8:05:59 AM
CHAIR PAUL SEATON called the House Education Standing Committee
meeting to order at 8:05 a.m. Representatives Buch, Gardner,
Munoz, Edgmon, Keller, and Seaton were present at the call to
order.
HB 367-TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
8:06:18 AM
CHAIR SEATON announced that the first order of business would be
HOUSE BILL NO. 367 "An Act relating to tax credits for cash
contributions by taxpayers that are accepted for certain
educational purposes and facilities; and providing for an
effective date." [Before the committee was HB 367, Version E]
8:07:36 AM
KENDRA KLOSTER, Staff, Representative Cathy Munoz, Alaska State
Legislature, referred to the responses provided to the
committee, in a letter of March 16, 2010 from Johanna Bales, Tax
Division, Department of Revenue, and explained the information.
She referred to Attachments 1-6, which answer questions raised
during the last committee meeting on Version E. She explained
that Attachment 1 compares the benefit of an income tax
deduction to a "credit for contribution of $50,000,000 to a
university." Attachment 1 illustrates the differences between
the deduction and credit, and demonstrates that the value of the
credit is much larger.
8:09:18 AM
CHAIR SEATON noted that HB 367 indicates how a credit or
deduction would work. He asked whether it shows how the
additional expense would affect corporations since the
corporation would need to contribute 50 percent from its
corporate profits.
8:10:30 AM
MS. KLOSTER stated that the scenario on Attachment 1 picked the
maximum of $50 million, which represented a tax credit in the
amount of $25 million. She explained that either a deduction or
credit could be taken. She referred to Attachment 2, to
assumptions that compare the order of credits. Two different
types of credits were used, the Income Tax Education Credit or
the Film Production Tax Credit (FPTC). The difference is that
the Income Tax Education Credit (ITEC) would not have a tax
carry over, unlike other tax credits such as the Film Production
Tax Credit. She explained the carry-over procedure indicated on
the handout. Comparing Attachments 2 and 3, Attachment 2 shows
that the ITEC was fully used and results in tax credits
available for future use that carry over to the next year. The
amount is greater than if the ITEC was not used first.
8:11:57 AM
MS. KLOSTER referred to Attachment 4 showing the credits for FY
07, FY 08, and FY 09, which provides information requested by
the committee. Attachment 5 shows a breakdown by the type of
tax for FY 07, FY 08, and FY 09. She related that the last page
provides suggestions from the Department of Revenue (DOR).
8:12:46 AM
REPRESENTATIVE GARDNER referred to Attachment 5. She said, "The
note underneath says that the amounts do not include
contributions that would have enjoyed the tax credit but the
taxpayer did not claim the credit and instead claimed a
deduction." She asked for the circumstances in which a taxpayer
has the choice between taking a tax credit or a deduction.
MS. KLOSTER offered her belief that the taxpayer would have the
choice.
CHAIR SEATON asked whether the reason is because the tax credit
is limited to $200,000 and the deduction is unlimited.
8:14:29 AM
CHAIR SEATON opened public testimony on HB 367.
8:14:46 AM
DENNIS STEFFY, Director, Mining and Petroleum Training Services
(MAPTS), University of Alaska (UA), stated that his division has
benefited several times from the existing statute. He commented
that the division has been discussing more ambitious joint
projects. He stated that the limit on the amount of deductions
or credits has not been attractive. He offered his belief that
raising the limit would be beneficial. He recalled that up
until the 1980s donations from vendors has funded the Vocational
Education Department. Technology is not something companies can
donate, but "serious cash money" must be spent in order for
students to become competitive. He urged passage of HB 367.
8:16:27 AM
CHAIR SEATON asked him to identify the program.
MR. STEFFY related that he is the director of the University's
Mining and Petroleum Training Service, which has statewide
branches wherever industry is operating. He stated that he is
in Southeast Alaska for attrition work at Greens Creek Mine and
to provide training for the startup of the Kensington Mine, he
stated. His division works cooperatively with industry on
projects that could not be funded any other way.
8:17:07 AM
REPRESENTATIVE BUCH disclosed that he has previously worked with
Mr. Steffy on international partnerships on oil and gas.
8:17:58 AM
CHAIR SEATON asked whether he has been working on petroleum
processes.
MR. STEFFY answered yes, the first class was taught in 1999. He
said he is not active in the program.
8:18:26 AM
REPRESENTATIVE MUNOZ asked about the infrastructure needs for
the program he directs.
MR. STEFFY explained the importance of training people to work
in the states petroleum and mining industry. He offered that a
tremendous number of high paying jobs are available. He
expressed frustration with non-Alaskans in these jobs.
Currently, the division has been in Juneau training students for
the Kensington, Greens Creek, Niblack, and Pogo mines using a
portion of the AJ Mine. The biggest need is to obtain high
technology mining machinery simulators. He emphasized that he
must have a more economical way of preparing people for jobs,
using portable simulators. He stated that if Alaska expands its
offshore oil production, that the division will "step up" its
health and safety programs including cold water survival. He
has been discussing a partnership to develop a cold water
survival facility in the Kenai or Soldotna area. He anticipated
the facility would cost about $11 million. He offered his
belief that the bill under consideration would make doing
business in Alaska more attractive to companies.
8:21:01 AM
CHAIR SEATON closed public testimony on HB 367.
8:21:10 AM
CHAIR SEATON asked for any comments from the tax division,
particularly on Attachment 1. He read, "The purpose is to
compare the benefit of a deduction or credit of $50 million."
The credit column indicates another $25 million from corporate
funds to the University of Alaska.
ROBYNN WILSON, Income Audit Manager, Tax Division, Department of
Revenue, explained that this compares the benefit of a deduction
to a credit. She compared it to federal taxes to illustrate her
point. She explained that with respect to federal tax
obligations, benefits exist in paying mortgage interest and
subsequently deducting the interest along with other deductions,
such as a child care tax since the deductions directly reduce
the overall tax obligation. She referred to Attachment 1 in
members' packets. Under the current statute, assuming a
contribution of $50 million, the taxpayer has a choice of a
deduction or a credit, but not both. This principle of not
taking both a deduction and a credit for the same contribution
is in current statute. The previous example in the graph, in
the second column, demonstrates the effect when the taxpayer
elected to use a credit. The outcome is that the $25 million
deduction represents 50 percent of the actual contribution.
8:23:57 AM
CHAIR SEATON asked if he understood correctly, that Attachment 2
is a comparison of Attachment 3.
MS. WILSON agreed. She stated the current statute for higher
education tax credit does not indicate how credits should be
"ordered." She stated that some tax credits have a carryover
and some do not. The reason that is important is apparent when
calculating the tax obligation. When the taxpayer having a
choice of tax credits, it would be helpful to place in statute
that the education tax credit has priority. If the other tax
credit has priority, the taxpayer could lose the benefit of the
education tax credit. She said she wanted to bring this to the
committee's attention. At the last hearing, she brought up
"ordering" and thought it would be helpful for the committee to
have an example to illustrate the different scenarios. This is
true of any two credits that have different carryover number of
years. She said she selected three tax credits for comparison,
including the Education Tax Credit. She pointed out that the
Alaska Oil and Gas Exploration and Development Credit already
requires being applied first. She selected the Film Production
Tax Credit (FPTC) as an example of another tax credit with
carryover capabilities.
8:26:49 AM
CHAIR SEATON questioned the need to mandate that taxpayers be
directed in a particular direction since it appears that complex
taxpayers would be receiving these credits. He asked whether
the state should mandate the structure for tax credits.
MS. WILSON suggested that the committee consider placing the
structure in statute. She directed attention to Attachment 6,
and explained the suggestions could be used as an amendment to
clarify the priority.
CHAIR SEATON asked for clarification.
MS. WILSON explained that defining "tax due under this chapter"
would apply the education tax credit as the next priority. She
further explained that with the current level of the education
tax credit, that it is not such an issue, but certainly if the
education tax credit is bumped up the quite a bit the issue
becomes more apparent.
8:29:18 AM
REPRESENTATIVE KELLER recalled "a soft recommendation" for this
change. He asked whether the beneficiary of this change would
be education, in general. He asked for clarification from the
taxpayer's perspective.
MS. WILSON answered that it would depend on the circumstances,
whether the taxpayer intended to make an education contribution
or considered other credits since each taxpayer has different
circumstance that will need to be considered. She offered her
belief that having clear legislative intent would be helpful.
8:30:17 AM
CHAIR SEATON envisioned the suggested change would provide an
incentive to use the credit
MS. WILSON characterized it as a "taxpayer friendly" amendment
and would provide clarity regarding the administration of the
tax.
8:31:35 AM
MS. WILSON, in response to Representative Gardner, highlighted
that the education tax credit was initially drafted to apply to
all the taxes and the insurance provisions are first in the
statutes, under Title 21.
8:32:10 AM
REPRESENTATIVE EDGMON referred to Attachment 1 to an assumption,
with read, "--company does all of its business in Alaska" and
asked if that represented a side note or is a requirement.
MS. WILSON answered that it is not a requirement, but represents
an assumption for this example. She said she also considered
providing an example in which a taxpayer conducts business in
multiple jurisdictions, which seemed complicated. She explained
that Alaska taxes a piece of its income so the benefit of a
deduction is lower. The point of Attachment 1 is to highlight
that the benefit of a credit is more valuable than the benefit
of a deduction.
8:33:31 AM
REPRESENTATIVE EDGMON referred to Attachment 4, titled "Alaska
Education Tax Credit Credits Claimed" and asked the reason the
Fishery Resource Landing Tax dramatically decreased from FY 08
to FY 09.
MS. WILSON said she did not know.
8:33:56 AM
REPRESENTATIVE KELLER turned to Attachment 6, and asked whether
currently the taxpayer has the choice to prioritize the
education tax credit or another credit. He asked whether
ambiguity in the statute is the reason for the suggested
language change.
MS. WILSON agreed there is ambiguity in the law. This is a
policy call for the committee to decide. The examples provided
in Attachments 2 and 3 should help with the decision.
8:35:18 AM
CHAIR SEATON, with respect to applying tax credits, asked if any
issues arise for a "complex" taxpayer applying for multiple
credits as to the prioritization of the tax credits.
MS. WILSON offered the statute changes would help make the tax
credit application process clear. Currently, as the statutes
are amended to allow for additional tax credits, it becomes
problematic for the department.
8:36:26 AM
REPRESENTATIVE GARDNER asked for the distinction between
deductions and credits in the bill. She further asked whether
federal charitable contributions are deductions or credits.
MS. WILSON referred to page 5, line 23-28 to AS 43.20.014(d),
which read, "also be allowed as a deduction under 26 U.S.C.170
against the tax imposed by this chapter; and[.]" She
interpreted that to mean that Alaska bases its taxes on
corporations starting with federal taxable income. Thus, the
federal return, with some modifications is used to calculate the
Alaska tax. She highlighted that 26 U.S.C.170 references the
provision of the Internal Revenue Code that allows the
charitable contribution. The section outlines that if a
taxpayer claims a credit, a deduction cannot also be claimed.
REPRESENTATIVE GARDNER asked whether charitable donations earn a
credit or a deduction under federal law.
MS. WILSON stated that under the federal code, charitable
donations have a tax deduction benefit, similar to a personal
tax return.
8:39:08 AM
REPRESENTATIVE BUCH asked whether this is the first time that
priorities have been aligned in Alaska.
MS. WILSON cited AS 43.20.043, the Tax Development and
Exploration Credit, which creates a prioritized credit that
specifies the tax credit will be applied first. She remarked
that the Congress has been specific about which credits are
applied first for federal tax credits.
8:40:18 AM
CHAIR SEATON referred to Attachment 6 and asked Ms. Wilson to
explain the next DOR suggested edit to HB 367.
8:40:28 AM
MS. WILSON explained that the current statute indicates that a
taxpayer cannot claim more than $150,000 for the education tax
credit. She provided a scenario in which a taxpayer was subject
to the corporate income tax and the fisheries business tax. The
statute says the taxpayer cannot claim more than a $150,000
credit, but could apply the credit "wherever the taxpayer sees
fit" between the corporate tax, fish tax, or some combination of
taxes. However, the definition of taxpayer is fundamentally the
problem. She described another scenario in which a big oil
corporate company performs work in Alaska. The department would
expect to have subsidiaries, such as pipeline, exploration and
production, and marketing companies. Those corporations
commonly file one tax return.
MS. Wilson related that when the education tax credit was
initially enacted, the minutes show the intent was to give a
single $150,000 credit to the oil company. However, since the
definition refers to the individual corporation, it is not clear
whether the corporation is entitled to receive one credit or
three $150,000 credits. Additionally, using that scenario, it
is possible that two would file a consolidated tax return and
one would file separately and the question of the amount of tax
credit is also unclear. This ambiguity also exists in the
fisheries business tax area. She suggested that if the
legislative intent is to offer one $150,000 credit, the statute
should be amended to clarify the intent. She referred again to
Attachment 6 to the suggested language change, which defines
"affiliated group" so the tax credit would apply to the group.
She further explained that it could be expanded to all tax types
and to related tax groups.
8:44:36 AM
CHAIR SEATON referred to page 5, line 19 of Version E, to AS
43.20.014(d) which read
(d) A contribution claimed as a credit under this
section may not
(1) be the basis for a credit claimed [AS A
CREDIT] under another provision of this title;
(2) also be allowed as a deduction under 26
U.S.C. 170 against the tax imposed by this chapter;
and
(3) when combined with contributions that
are the basis for credits..."
CHAIR SEATON asked if any distinction exists and whether this
refers to existing language.
MS. WILSON responded that she used existing statute and did not
consider the specific language in HB 367. She referred to the
language in paragraph (3), "...contributions that are the basis
for..." and related her understanding this will not change the
meaning but does provide a clear statement of what is already in
statute. She drew attention to the language in the Attachment
6, which read, "If the taxpayer is a member of an affiliated
group, then the credit may not exceed $150,000 for the
affiliated group." She explained that clearly limits the credit
to a single tax credit of $150,000 and if the credit is
increased, that figure would be replaced with the new credit.
8:46:31 AM
CHAIR SEATON asked whether the DOR has any issue with the
language previously mentioned in paragraph (3) of Version E.
MS. WILSON agreed. She pointed out that Attachment 6 would add
a definition for "affiliated group." She explained that
definition is in statute at AS 43.20.073 would be duplicated in
this bill.
8:47:31 AM
MS. WILSON, in response to Representative Munoz, referred to
Attachment 6, and statutes that should be comformed, as well.
CHAIR SEATON advised that the matter could be handled as a
conceptual amendment that would make the changes uniformly
throughout the bill.
8:48:44 AM
REPRESENTATIVE KELLER made a motion to adopt Conceptual
Amendment 1, which read:
On page 5, line 26:
If the taxpayer is a member of an affiliate group the
credit made not exceed $25 million for the affiliated
group.
AS 43.20.014(e)(3) "affiliated group" means a group of
two or more corporations in which 50 percent or more
of the voting stock of each member of the group is
directly or indirectly owned by one or more corporate
or noncorporate common owners, or by one or more of
the members of the group.
Similar language to be added to other provisions of
the other taxes to which the credit would apply [AS
21.89.070, 21.89.074, AS 43.55.019, AS 43.56.018, AS
43.65.018, AS 43.75.018 and AS 43.77.045].
8:50:22 AM
REPRESENTATIVE KELLER clarified his Conceptual Amendment 1 would
include language to paragraph (3), as follows:
Following "with"
Insert: "when combined with contributions that are the
basis for credits taken during the taxpayer's tax year
under AS 21.89.070, 21.89.075, AS 43.55.019, AS 43.56.018,
AS 43.65.018, AS 43.75.018, or AS 43.77.045..."
CHAIR SEATON that specific language is currently in Version E.
There being no objection, Conceptual Amendment 1 was adopted.
8:51:12 AM
CHAIR SEATON added that the language for Conceptual Amendment 1
is taken from Attachment 6, adding the affiliate group
definition to all taxes.
8:51:56 AM
CHAIR SEATON stated there is also a recommendation by the DOR to
consider edits to prioritize Education Credit before other tax
credits.
CHAIR SEATON made a motion to adopt Conceptual Amendment 2, to
add a paragraph as follows:
AS 43.20.014(e)(2) "tax due under this chapter" means the
tax liability after application of the credit under AS
43.20.043 and before application of any other credits
allowable under this chapter.
REPRESENTATIVE KELLER objected. He said there does not appear
to be enough information to support adding the language in
Conceptual Amendment 2.
8:53:17 AM
CHAIR SEATON suggested that he initially had that trepidation.
However, future revenue officers and commissioners could change
the usefulness of the tax credit by interpreting this in an
ambiguous manner. He suggested that Conceptual Amendment would
provide necessary clarity.
REPRESENTATIVE KELLER offered that is possible. However, he
offered his belief that it may be important to allow the
industry to decide how to apply the tax credits. He suggested
that if the industry would like to "go a step further" that this
bill has another committee of referral and the issue could be
handled in that committee.
REPRESENTATIVE EDGMON echoed the previous comments. He stated
that on the surface the bill seems simple, but the details of HB
367 have far reaching implications. He suggested that it may be
important to have more discussions to delve into the impacts of
HB 367.
8:55:58 AM
CHAIR SEATON asked about the possible consequences of adopting
Conceptual Amendment 2.
MS. WILSON advised that Conceptual Amendment 2 would give the
DOR clear guidance in preparing regulations and tax return form.
It would maximize the credit usage for the education credit.
She stated that "clearing up the ambiguity would be the biggest
benefit." She was not aware of any downside.
CHAIR SEATON related that if Conceptual Amendment 2 was adopted,
and taxpayers had concerns, the language could be removed from
the bill. He expressed concern that if the DOR would like more
direction and guidance to "write" regulations with any downside
to the industry, that his preference is to adopt Conceptual
Amendment 2.
REPRESENTATIVE KELLER maintained his objection. He opined the
statute could be made ambiguous in another way.
8:59:27 AM
CHAIR SEATON restated Conceptual Amendment 2, as follows:
AS 43.20.014(e)(2) "tax due under this chapter" means the
tax liability after application of the credit under AS
43.20.043 and before application of any other credits
allowable under this chapter.
CHAIR SEATON asked whether that language also needs to apply to
other sections of the bill.
MS. WILSON answered yes.
CHAIR SEATON related Conceptual Amendment 2 is a conceptual
amendment.
9:00:03 AM
A roll call vote was taken. Representatives Buch, Munoz,
Edgmon, and Seaton voted in favor of Conceptual Amendment 2.
Representatives Keller and Gardner voted against it. Therefore,
Conceptual Amendment 2 was adopted by a vote of 4-2.
[The clerk reported the tally as 4-2.]
CHAIR SEATON asked for a count. He asked to void the tally.
REPRESENTATIVE GARDNER indicated her vote was a "Yea" vote. He
stated that the vote would be retaken.
9:00:10 AM
REPRESENTATIVE KELLER stated in lieu of time he would like to
remove his objection.
CHAIR SEATON announced that Conceptual Amendment 2 was adopted.
9:02:47 AM
REPRESENTATIVE EDGMON related that he is still "catching up" and
has some questions. He said he supports the concept, but has
concern over the fiscal impact. He said he does not feel he has
a full understanding of the fiscal impact at this point.
CHAIR SEATON reported that the fiscal note is an indeterminate
fiscal note.
REPRESENTATIVE BUCH agreed with Representative Edgmon. He said
he would like more time to have confidence we are moving in the
right direction. He stated that he would like another hearing
on the bill.
CHAIR SEATON stated several members would like another hearing.
[HB 367 was held over.]
9:06:06 AM
HB 206-HIGH SCHOOL ASSESSM'T/POSTSECONDARY CLASS
CHAIR SEATON announced that the final order of business would be
HOUSE BILL NO. 206, "An Act establishing a career assessment
requirement in public schools; and relating to postsecondary
courses for secondary school students."
[Although not formally stated, HB 206, labeled 26-LS0765\S,
Mischel/4/22/09 was before the committee.]
9:07:10 AM
REPRESENTATIVE GARDNER asked whether any amendments were on the
table.
CHAIR SEATON reported that Conceptual Amendment 7 was previously
adopted by a vote of 5-2.
9:07:54 AM
LES MORSE, Deputy Commissioner, Office of the Commissioner,
Department of Education and Early Development (DEED), asked to
address questions surrounding the WorkKeys, discuss which grade
level would be most appropriate for WorkKeys, discuss
transcripts versus cumulative records, and make comments on the
high school graduation qualifying exam. He raised the first
issue, whether the qualifying exam should be given to in 11th or
12th grade. He offered his belief that it comes down to a
question of whether the exam is for adults to assess which
situation is best for a student's employment situation or for a
student to prepare for what he/she chooses to do next. He said
it seems to make sense to the department and the board that
administering the test in 11th grade gives the student an
opportunity to assess what he/she may wish to do differently in
their 12th grade, prior to graduation. This would not prohibit
students from retaking the test, but the requirement should lie
in the 11th grade. Thus, it explains the DEED's position, since
it allows the student to have information to change his/her
behavior in their final year of high school. He suggested the
qualifying exam may motivate the student in combination with an
ACT or SAT exams.
9:09:54 AM
CHAIR SEATON stated his intention is not to move the bill from
committee. He related that if the information was going to be
on the transcript, the text could be taken a second time. He
asked for the cost, noting the Department of Labor & Workforce
Development offers WorkKeys. He asked whether the school
district could accept the WorkKeys if it was taken as a senior
at the DLWD or if the exam must be administered through school.
MR. MORSE said he was not certain. He offered to work with the
DLWD and review any interdepartmental agreements. He commented
that the department shares data with the DLWD. He assumed that
the DEED would obtain the data from the DLWD and he was unsure
if the mechanism was in place to do so. He offered his belief
that students could retake the examination in the 12th grade if
the mechanism was set in place. He recalled that the current
regulations allow charging students for retaking the exam,
although he thought the fees were low. He offered to research
the issue and provide the information to the committee.
CHAIR SEATON asked him to provide the current or projected fee
for retaking the exam in the 12th grade.
MR. MORSE agreed to provide the information.
9:12:17 AM
MR. MORSE continued with an issue from the last hearing,
transcripts versus cumulative records. He reported that all of
the assessments that are statewide assessments require the
results be placed in the "cum" [cumulative] record, which is a
file of student performances during the school period. This
collection provides background information for educators who are
trying to determine how to assist a particular student. He
related the cumulative record is different than a transcript,
which is a summary of "one timeframe." The high school
transcript is a summary record of all the high school courses
taken, attendance, and includes the high school graduation
qualifying exam (HSGQE) results.
9:13:31 AM
MR. MORSE, in response to Representative Edgmon, explained that
"cum" refers to the cumulative record during the school
experience.
9:14:01 AM
CHAIR SEATON recapped that the assessment would be on the high
school transcript and the score of the high school graduation
qualifying examination (HSGQE) would be on the transcript.
MR. MORSE answered that currently the school district is
required to place the HSGQE score as a "pass" or "no pass" which
is the only assessment on the transcript. He stated that it is
a burden to a school district, which is usually performed as a
management recordkeeping system function that brings in the
score to the student record. In further response to Chair
Seaton, he clarified that the HSGQE is a "pass" or "did not
pass" score, which is electronically listed.
9:15:17 AM
REPRESENTATIVE KELLER asked if any indication of WorkKeys is on
the diploma.
9:15:39 AM
CHAIR SEATON recalled that the WorkKeys information is not on
the diploma but is on the transcript. He referred to page 2,
lines 13-14, "the assessment shall be displayed in summary form
on the student's high school transcript." He asked whether an
employer would use a transcript to know the level of student's
preparedness.
MR. MORSE offered that typically, if an employer wishes to see
the student's performance, the transcript, as the universal
tool, would provide that information. However, an employer
could ask a student if he/she has taken the WorkKeys and if so,
ask for the results. Additionally, the student could request
the information from their high school from their "cum" record.
He did not recall the timeframe, but thought the records are
retained for 70 years.
9:18:51 AM
MR. MORSE, in response to Chair Seaton, explained that a
transcript is a one-page document. It tells the course taken
and reflects the grade earned. He stated that most of the
information fits on one page. The transcript is sent when a
student, through the registrar, requests that a transcript be
sent or by obtaining a certified copy of the transcript.
Typically, the transcript is sent to a college or university.
CHAIR SEATON suggested the committee would like the diploma to
be more useful and accessible. It could be the transcript or
the WorkKeys document could be forwarded to an employer as a
separate item from the transcript. He offered his appreciation
for any efforts to help the committee determine a better way to
disseminate the information available to the employer.
9:20:43 AM
REPRESENTATIVE KELLER asked for clarification on the summary
form on the high school transcript. He assumed the school
district would need to determine the content and the burden of
providing the mechanism to obtain a full report. He said it
seemed like it would raise the value of the transcript to have
the WorkKeys summary listed, with a means to access additional
information for the full WorkKeys transcript.
MR. MORSE offered his view that summary information would
provide the level achieved on each test. For example, in math
the student would have attained a bronze, silver, or gold level.
It may be possible to add a line to read, "Full record can be
requested from Registrar's office," but the student would need
to give permission, since that right is provided under the
student's federal rights. He said he could speak to the cost,
but school districts would need to obtain information on the
programming costs.
9:22:41 AM
REPRESENTATIVE GARDNER thought the committee was making this
matter more complicated than necessary. She suggested that a
diploma means the student met the graduation requirements; a
transcript lists grades, attendance records, and she anticipated
that if the legislature adds WorkKeys, that the transcript would
list the WorkKeys score level. She did not recall any employer
or college ever needing more information than the transcript.
9:23:33 AM
The committee took an at-ease from 9:23 a.m. to 9:42 a.m. as the
fire alarm sounded and members left the building.
9:42:06 AM
CHAIR SEATON brought the committee back to order. [Members
present were Representatives Buch, Gardner, Edgmon, Munoz, and
Seaton.]
9:42:38 AM
MR. MORSE reported that he researched a prior question during
the break, and according to regulations, if a student repeats
the HSGQUE in their 12th grade and improves his/her score, there
is not any charge for the examination. If not, the student
could be charged by the school district.
9:43:13 AM
MR. MORSE stated that the State Board of Education and Early
Development supports keeping the HSGQE in place. The board
would like to take a view of the comprehensive assessment system
and accountability system and not change pieces at this time.
He stated that the state must ensure its compliance at the
federal level and some potential changes will occur in the next
year or so. He cautioned that the state does not want to be out
of "sync" with the federal requirements. The board's position
is that the qualifying examination is accomplishing a goal of
ensuring that students graduate with a minimum set of skills and
recommends keeping the exam in place at this time, although some
further work could be valuable. He remarked that it is
important that the WorkKeys be a separate issue since the exams
fulfill different purposes. The HSGQE tests the state's content
standards. He referred to a document in members' packets titled
"HSGQE Proficiency Descriptors and WorkKeys Skill Levels,"
although he related he did not want to cover this in detail.
However, some skills are covered on one exam but not on the
other exam. The examinations cover different things. He
pointed out that the document describes the different levels of
WorkKeys requirements. He offered his belief that WorkKeys can
be an important test for information, but should not be used as
a "high stakes individual student test." He said he would be
reluctant to use the exam since the "high stakes" student test
potentially may deny students a diploma and the vendor must use
vendor rules. The state would not be able to devise state
rules, particularly as it relates to accommodations.
9:46:06 AM
MR. MORSE said he learned that "signing" is not allowed on the
WorkKeys assessments although "signing" is allowed on all state-
developed tests In response to Chair Seaton, he acknowledged
that he was referring to the American Sign Language when he
referred to "signing." He added that the presumption is that
someone who cannot hear could read.
9:46:40 AM
MR. MORSE related that WorkKeys assessments provide information,
but he would not consider using it as a "high stakes" tool or
any vendor product as a "high stakes" tool. He mentioned that
another question was a request for analysis on certification
levels and WorkKeys equivalent to the HSGQE. He related that
the DEED attempted to compare students who took the WorkKeys in
11th grade to their 10th grade HSGQE's scores. The question was
to examine how well students perform on the HSGQE relative to
their WorkKeys level of Bronze, Silver, Gold, or Platinum. He
suggested more students will provide more sophisticated
analysis. So far, the school district has less than 390
students, which is not enough to make a judgment since the
sample is too small. Generally, those students obtaining a
silver or gold level or higher passed the HSGQE. Typically,
some students achieving a bronze level did not pass the HSGQE.
He explained that next year the whole student population will
take the WorkKeys and the DEED will be able to provide better
analysis.
MR. MORSE, in response to Chair Seaton, related the DEED will
have the data to easily be able to compare. In further response
to Chair Seaton, he stated that a report could be provided to
the committee.
9:49:00 AM
MR. MORSE related that if the "high stakes" nature of the HSGQE
was removed but WorkKeys content tested the same areas that one
content test in WorkKeys is not given on the HSGQE. Currently,
the DEED offers some subtests on reading comprehension and math,
but the open-ended writing and grammar tests in the HSGQE are
not covered in WorkKeys. He also related that some detailed
skills are not tested that are on the standards. He stated that
the state board could change their regulations to include all
content areas.
MR. MORSE commented that the original purpose of the HSGQE was
to give graduates the basic skills. Since its inception in
2005, more students are graduating today. The state has gone
from a 61.4 percent to 67.5 percent graduation rate.
Additionally, the Special Education population group has
improved from 39.6 to 43.6 percent. While more improvement is
needed, some improvement has been made, he stated.
9:51:24 AM
REPRESENTATIVE GARDNER asked whether the HSGQE is the reason for
the increase in graduates and it may be an incidental result.
MR. MORSE acknowledged that the DEED has not performed a study
to pinpoint the increase. He agreed that other improvements in
the standards-based movement or other things could have impacted
the graduation rate. However, if the rates had decreased, the
department would consider whether the HSGQE was preventing some
students from graduating.
REPRESENTATIVE GARDNER offered her belief that testimony has
been given that does show it prevents some students from
graduating. She related that the "high stakes" refers to
students who have otherwise met course requirements, but have
not passed the HSGQE and cannot graduate.
MR. MORSE reported that in the class of 2008, at 12th grade
level, 270 students did not graduate since they did not pass the
HSGQE, but met other requirements. In 2008, 1,926 12th grade
students did not graduate, but passed all parts of HSGQE exam.
In those instances, the local requirements interfered with
graduation. The majority of those not graduating are actually
passing the exam, he concluded.
9:54:04 AM
REPRESENTATIVE GARDNER related that the 1,976 may include
students who decide they do not need to go to school since they
passed the exam.
MR. MORSE said he did not think it would apply to the specific
population since most of the students passed the exam in 10th or
11th grade, but were still appearing in school in the 12th
grade. He suggested he does not have any survey or data of the
number of students who leave due to that reason. He offered his
belief that number would be small.
9:54:58 AM
MR. MORSE, in response to Chair Seaton, offered that these 270
students obtained a certificate of achievement, which means that
they achieved the local requirements but did not pass the HSGQE.
The 1,926 students did not receive anything since they needed to
pass local requirements prior to graduation. He suggested those
students may have returned and finished high school the next
year. He pointed out that 69.1 percent of the 2,787 seniors did
not graduate. Thus, the 1,926 students represent the 69.1
percent of the students who were seniors but did not graduate.
CHAIR SEATON referred to that figure as the dropout population.
He said it may not be the total figure since some students will
return and graduate in their 5th year. He assumed the DEED has
the identifying student number and will follow up to obtain an
outcome. He asked him to provide the committee with the report.
MR. MORSE agreed to do so. He said it is important to note that
30 percent of dropouts come back the next year. Some of them
will drop out again. Nearly 20 percent of students have been in
the dropout population two times.
9:57:22 AM
REPRESENTATIVE BUCH said he was encouraged at the enhanced
graduation rates. He recalled that the state has enhanced the
investment. He said that some teachers have stated that the
Special Education investment is huge. He asked for the
percentage of investment for special education students since
2005.
9:58:55 AM
MR. MORSE said he believed that the funding has increased for
all students, as well as for the intensive special education
students, who may never earn a diploma. He related that school
districts are providing better education for all teachers on how
to teach all students. He related a scenario in which 2 of 30
students in a classroom are special education students. He
stated that the teacher training is more sophisticated on how to
help those students. He related that this has improved due to
technical assistance at the state and federal level.
Additionally, it has improved due to the investment the
legislature has made in education.
REPRESENTATIVE BUCH said he is encouraged. He just wondered
about the shift in funding since the legislature spends more
funds on education. He did not disagree with the changes or
shift, but expressed an interest in knowing the percentage.
10:00:33 AM
REPRESENTATIVE MUNOZ asked for an example of the HSGQE.
MR. MORSE offered to provide an "item sampler" that would give
feel for the items on a test.
[HB 206 was held over.]
10:01:05 AM
HB 367-TAX CREDITS FOR EDUCATIONAL CONTRIBUTIONS
CHAIR SEATON announced that the committee would take up HB 367.
REPRESENTATIVE MUNOZ made a motion to offer a Conceptual
Amendment 3 to lower the tax credit from $25 million to $5
million.
CHAIR SEATON referred to page 3, line 25, and stated the
Conceptual Amendment 3 would lower the tax credit from $25
million to $5 million.
REPRESENTATIVE BUCH objected for purpose of discussion.
REPRESENTATIVE BUCH offered to assist. He removed his
objection. There being no objection, Conceptual Amendment 3 was
adopted.
[HB 367 was held over.]
10:03:18 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 10:03 a.m.