SB 140: "An Act relating to an investment in the education loan fund; relating to authority for the commissioner of revenue to enter into a bond purchase agreement and letter of credit with the Alaska Student Loan Corporation; and providing for an effective date."
00 SENATE BILL NO. 140 01 "An Act relating to an investment in the education loan fund; relating to authority for 02 the commissioner of revenue to enter into a bond purchase agreement and letter of 03 credit with the Alaska Student Loan Corporation; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 37.10.085(a) is amended to read: 06 (a) Except as provided in AS 14.40.458 or (c) or (d) of this section, or 07 AS 37.10.089, neither the state nor a political subdivision of the state may 08 (1) make a subscription to the capital stock of a corporation; 09 (2) lend its credit for the use of a corporation; or 10 (3) borrow money for the use of a corporation. 11 * Sec. 2. AS 37.10 is amended by adding a new section to article 3 to read: 12 Sec. 37.10.089. Loans to the education loan fund; bond purchase 13 agreements and letters of credit. (a) If the education loan fund established in the 14 corporation under AS 14.42.210 is unable to fully finance loan demand in a fiscal
01 year, the commissioner may invest in the education loan fund for the purpose of 02 financing education loans under AS 14.43.161 - 14.43.175, 14.43.600 - 14.43.750, and 03 AS 14.44.040. The commissioner may require the corporation to secure the investment 04 of state money. 05 (b) Investments under (a) of this section may be made only when the 06 commissioner determines that market conditions relating to tax-exempt private activity 07 revenue bonds make the issuance of such bonds by the corporation not practicable or 08 not economical for the purpose of financing education loans under AS 14.43.161 - 09 14.43.175, 14.43.600 - 14.43.750, and AS 14.44.040. 10 (c) Money invested under (a) of this section must be repaid by the corporation 11 under terms established by the commissioner and agreed to by the corporation. Except 12 as provided in this section, the terms shall be consistent with the duties of a fiduciary 13 set out in AS 37.10.071(c). 14 (d) Notwithstanding any other provision of this section, the commissioner is 15 authorized to enter into an agreement with the corporation to provide a bond purchase 16 agreement and a letter of credit when market conditions relating to such credit 17 enhancement mechanisms are uneconomical. The commissioner may require the 18 corporation to pay the costs associated with providing credit enhancement and may 19 charge the corporation a fee for this service. 20 (e) The commissioner may charge the corporation interest on the investments 21 under (a) of this section. The rate of interest may not exceed the five year average 22 return on the state's general fund. 23 (f) The commissioner may charge the corporation an annual fee for the 24 services provided under (d) of this section. The annual fee may not exceed 0.15 25 percent of the average principal outstanding and interest covered by the bond purchase 26 agreement and the letter of credit. 27 (g) If a draw on the bond purchase agreement and the letter of credit occurs 28 under this section, the commissioner may charge the corporation an additional annual 29 rate of interest not to exceed three percent on the bonds held under the bond purchase 30 agreement and letter of credit. 31 (h) The term of the investment under (a) of this section and the commitment
01 under (d) of this section may not exceed five years from the commencement of the 02 initial investment, bond purchase agreement, and letter of credit. 03 (i) The maximum amount of the investment under (a) of this section may not 04 exceed $100 million. The maximum amount of the commitment under (d) of this 05 section may not exceed $106 million. 06 (j) The commissioner may adopt regulations under AS 44.62 to implement 07 this section. 08 (k) In this section, 09 (1) "commissioner" means the commissioner of revenue; 10 (2) "corporation" means the Alaska Student Loan Corporation created 11 under AS 14.42.100. 12 * Sec. 3. This Act takes effect immediately under AS 01.10.070(c).