Legislature(2009 - 2010)CAPITOL 106

03/02/2009 08:00 AM House EDUCATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved Out of Committee
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
HB 58-EDUC LOAN REPAYMENT PROGRAM                                                                                             
9:01:26 AM                                                                                                                    
CHAIR SEATON announced  that the next order of  business would be                                                               
HOUSE BILL NO.  58, "An Act relating to a  student loan repayment                                                               
program for specified  occupations or fields in  which a shortage                                                               
of qualified employees exists."                                                                                                 
9:02:07 AM                                                                                                                    
REPRESENTATIVE BILL  THOMAS, Alaska State  Legislature, presented                                                               
the CS for HB 58, to the committee.                                                                                             
9:02:23 AM                                                                                                                    
REPRESENTATIVE  MUNOZ  moved  to   adopt  CSHB  58,  26-LS0307\P,                                                               
Mischel, 2/25/09.                                                                                                               
CHAIR SEATON objected for discussion.                                                                                           
9:02:45 AM                                                                                                                    
REPRESENTATIVE  THOMAS   introduced  the  proposed   CS  changes,                                                               
paraphrasing from  a prepared statement  , which read  as follows                                                               
[original punctuation provided]:                                                                                                
     Section 1:                                                                                                                 
          Findings and Purpose:  remains the same.                                                                              
     Establishes that the purpose of  the bill is to provide                                                                    
     financial incentives  to students who return  to Alaska                                                                    
     to work.                                                                                                                   
     Section 2:                                                                                                                 
          Remains the same.  Allows Alaska Student Loan                                                                         
     Commission  to perform  duties assigned  by the  Alaska                                                                    
     qualified employee recruitment  loan repayment program.                                                                    
     (Technical conforming language.)                                                                                           
     Section 3:                                                                                                                 
          Remains the same.  Allows the Executive Director                                                                      
     of  the Alaska  Student Loan  Commission to  administer                                                                    
     the   Alaska  qualified   recruitment  loan   repayment                                                                    
     program.  (Technical conforming language.)                                                                                 
     Section 4:                                                                                                                 
          Remains the same.  Allows unrestricted capital                                                                        
     monies   made   available   to  Alaska   Student   Loan                                                                    
     Corporation to  be appropriated  to the  loan repayment                                                                    
     Section 5:                                                                                                                 
          Changed Eligibility Criteria                                                                                        
          HB 58 [reads] - In order to be eligible for the                                                                       
     program the student must:                                                                                                  
          1.) Be a resident of the state when applying                                                                          
               2.) Be employed in a specified field:                                                                            
                    a. Biologist                                                                                                
                    b. Education                                                                                                
                    c. Dentist                                                                                                  
                    d. Nursing                                                                                                  
          Changed in CS - In order to be eligible for the                                                                       
     program the student must:                                                                                                  
               1.) Be a resident at the time of applying                                                                        
     for the program                                                                                                            
               2.) Is working full time in a field                                                                              
     determined  by  the Department  of  Labor  to be  in  a                                                                    
     shortage in the state.                                                                                                     
               3.)   Applicant   began    working   in   the                                                                    
     designated  field  in  Alaska   within  four  years  of                                                                    
     attaining his/her degree                                                                                                   
               4.) Student received a loan from the Alaska                                                                      
     Student Loan Corporation                                                                                                   
     Changed Conditions and Limitations on Loan Repayment                                                                     
          Clarified that the loan repayment will only be                                                                        
     for  the outstanding  loan amount  at the  time of  the                                                                    
     application  to the  program.   Therefore if  a student                                                                    
     elects to pay some of the  loan on their own, the state                                                                    
     will  not  be  reimbursing them  for  payments  already                                                                    
9:04:05 AM                                                                                                                    
REPRESENTATIVE MUNOZ  asked for clarity on  how qualification for                                                               
the program works, and what  will occur if the critical workforce                                                               
areas  change  in  the  four  years that  a  student  is  Outside                                                               
attaining their degree.                                                                                                         
KACI  SCHROEDER, Staff,  to  Representative  Bill Thomas,  Alaska                                                               
State Legislature,  responded that reimbursement occurs  when the                                                               
student returns to  the state and takes up  employment.  Further,                                                               
she said  that the  Department of  Labor &  Workforce Development                                                               
(DLWD) does  not anticipate changes  to occur rapidly  in deficit                                                               
employment areas.                                                                                                               
9:05:32 AM                                                                                                                    
REPRESENTATIVE KELLER inquired whether  the CS affects the fiscal                                                               
MS. SCHROEDER  said the  available fiscal  note does  not reflect                                                               
the CS.                                                                                                                         
CHAIR SEATON interjected that a  fiscal note will be tailored for                                                               
the CS, if it is adopted.                                                                                                       
9:06:17 AM                                                                                                                    
CHAIR SEATON  removed his objection  and CSHB 58, Version  P, was                                                               
before the committee.                                                                                                           
9:06:40 AM                                                                                                                    
REPRESENTATIVE  THOMAS   explained  how  the  reported   lack  of                                                               
professional biologists and nursing  field employees has been the                                                               
impetus for  this bill.   He identified  the problem as  being an                                                               
exodus  of  students,  attending universities  Outside,  and  not                                                               
returning  to  Alaska  to  fulfill   their  careers.    The  loan                                                               
forgiveness  incentive  applies to  working  in  rural and  urban                                                               
Alaska, and  requires the employee  to make a work  commitment of                                                               
four  to  six years.    Further,  he  pointed  out that  the  gas                                                               
pipeline  will require  a large  workforce, and  college training                                                               
should  be  encouraged for  this  effort.   A  repayment  program                                                               
incentive has  been in  existence, however, he  opined, it  is in                                                               
need of  revitalization.  Although  the fiscal note is  high, the                                                               
need for this program is high, also.                                                                                            
9:12:10 AM                                                                                                                    
REPRESENTATIVE  MUNOZ referred  to Sec.  4, and  asked about  the                                                               
dividend  repayment  to  the   Alaska  Student  Loan  Corporation                                                               
MS. SCHROEDER explained  that current statute allows  ASLC to pay                                                               
any excess  money to the state,  and the new language  allows the                                                               
money to be made available to the proposed program.                                                                             
REPRESENTATIVE MUNOZ asked for clarity  on the funding source for                                                               
the program.                                                                                                                    
MS. SCHROEDER  answered that it  will be capitalized  and consist                                                               
of appropriations made by the legislature.                                                                                      
REPRESENTATIVE MUNOZ  queried what the recommended  amount is for                                                               
the capitalization.                                                                                                             
MS. SCHROEDER indicated  that, without a CS fiscal  note to refer                                                               
to, she would defer to EED for an answer.                                                                                       
CHAIR  SEATON  clarified that  this  capitalization  is from  the                                                               
general fund.                                                                                                                   
9:14:17 AM                                                                                                                    
REPRESENTATIVE  KELLER asked  if this  program applies  to Alaska                                                               
residents only,  and whether  any loan  repayments would  be made                                                               
outside of the state.                                                                                                           
MS.  SCHROEDER directed  attention  to page  3,  lines 25-28,  to                                                               
respond  to the  residency question.   She  paraphrased the  bill                                                               
language, which reads:   "... the applicant is a  resident of the                                                               
state at  the time of  submitting the application and  during the                                                               
loan repayment period;" and Page  4 language establishes that the                                                               
recipient  is required  to  be a  resident  during the  repayment                                                               
period.    However,  she  pointed  out,  the  proposed  amendment                                                               
removes  the residency  requirement.   If  residency is  required                                                               
prior  to   the  assistance  being   available,  it   creates  an                                                               
unintended penalty phase  where a student returning  to the state                                                               
cannot benefit until residency is once again established.                                                                       
9:16:06 AM                                                                                                                    
CHAIR SEATON referred to page 3,  line 6, to read:  "repayment of                                                               
education loans from the corporation  under the program ...", and                                                               
pointed out that  any loans being paid back  must have originated                                                               
with  ASLC and  excludes loans  from other  states, agencies,  or                                                               
private funding.                                                                                                                
MS. SCHROEDER said, "Correct."                                                                                                  
9:17:09 AM                                                                                                                    
CHAIR  SEATON  directed  attention  to   the  CS  and  asked  for                                                               
justification on the changes of the eligibility criteria.                                                                       
MS. SCHROEDER  indicted that the  eligibility criteria  begins on                                                               
page  3.   The recipient  is  required to  be a  resident but  is                                                               
allowed a  four year grace period  to begin work in  their chosen                                                               
field.  The intent is to  ensure that the student does not remain                                                               
ten years out of state before  deciding to return to Alaska.  The                                                               
four year  period will serve as  an allowance time to  attain any                                                               
required  license  to  practice.   Further,  the  recipient  must                                                               
remain employed  in Alaska,  the loan  must have  originated with                                                               
the  ASLC,  and it  is  the  purview  of  DLWD to  determine  the                                                               
workforce  shortages  that  are  covered.    The  conditions  and                                                               
limitations on the  payback schedule have also  been clarified in                                                               
the  CS  to  indicate  that  any  payments  a  student  may  have                                                               
previously made on the loan, will not be reimbursable.                                                                          
9:19:27 AM                                                                                                                    
CHAIR SEATON  asked about  the repayment  rates for  rural versus                                                               
urban work.                                                                                                                     
MS.  SCHROEDER described  the repayment  for rural  work as  four                                                               
years, or  25 percent, and six  years, or 16.67 percent  per year                                                               
in urban areas.   To a follow up question  from Chair Seaton, she                                                               
explained  that  the  basis  for the  difference  is  to  attract                                                               
professionals to rural  areas, where there is  a deficiency; loan                                                               
repayment is  expected to be  an attractive incentive.   Further,                                                               
the  expectation  is that  a  professional,  such as  a  teacher,                                                               
having become established over a  four year period, may choose to                                                               
9:21:34 AM                                                                                                                    
REPRESENTATIVE BUCH  referred to page  4, line 11,  and commented                                                               
on  the vagueness  of the  language authorizing  DLWD to  specify                                                               
occupational  shortages.   He asked  what means  will be  used to                                                               
identify applicants for this program.                                                                                           
MS. SCHROEDER said that DLWD  tracks the employment trends across                                                               
the state,  publishing an informative  analysis every  two years,                                                               
as well as providing a monthly magazine "Economic Trends."                                                                      
REPRESENTATIVE  BUCH  maintained   that  [subsection  (b)]  seems                                                               
vague, despite the other specifics  requirements contained in the                                                               
9:23:32 AM                                                                                                                    
HANNAH  HARRISON, Staff,  to Representative  Paul Seaton,  Alaska                                                               
State  Legislature, offered  that the  bill originally  addressed                                                               
specific occupations.   However, during the drafting  of the bill                                                               
it  was decided  that DLWD  would be  the fundamental  source for                                                               
identifying  which occupations  indicate a  15 percent  or higher                                                               
vacancy, or are otherwise experiencing a shortage.                                                                              
REPRESENTATIVE BUCH upheld  the need to have  clarity imbedded in                                                               
the bill; additional criteria, and identified jobs.                                                                             
9:26:09 AM                                                                                                                    
CHAIR SEATON  made a  request that DLWD  provide the  committee a                                                               
list of  the university majors that  apply to this aspect  of the                                                               
bill.  Further,  he conjectured that a student could  take a loan                                                               
under this program, attend a  four year university, and return to                                                               
Alaska  to  find that  their  major  is  no longer  considered  a                                                               
deficient category.   Given  the scenario of  a job  dropping off                                                               
the list, how will reimbursement be handled, he asked.                                                                          
MS. SCHROEDER  answered that once  an applicant is  accepted into                                                               
the program, the  reimbursement will be made, whether  or not the                                                               
degree they hold has dropped off of the DLWD list.                                                                              
CHAIR SEATON  underscored that statute  must be  clear, regarding                                                               
these qualifications.                                                                                                           
9:28:07 AM                                                                                                                    
REPRESENTATIVE MUNOZ agreed  with the need for  clarity, and also                                                               
suggested that  flexibility is important to  reflect the changing                                                               
needs of the state.                                                                                                             
MS. SCHROEDER explained that the  entire list would be expansive,                                                               
and was  intentionally omitted  so as to  avoid a  Christmas tree                                                               
9:29:16 AM                                                                                                                    
REPRESENTATIVE  KELLER asked  for  a description  of the  process                                                               
used  to  qualify a  job  and  specify  it  as eligible  for  the                                                               
MS.  SCHROEDER  indicated  that  it  is  a  complex  process  and                                                               
deferred to DLWD.                                                                                                               
9:30:27 AM                                                                                                                    
DIANNE   BARRANS,  Executive   Director,  Alaska   Commission  on                                                               
Postsecondary Education,  said it  is important  to have  a clear                                                               
intent in a  bill, so as to  not put an agency  in a compromising                                                               
position.    Unless  full  funding  is  received,  administrative                                                               
decisions will need  to be made regarding  which occupations will                                                               
receive  benefits  and the  state  regions  that require  focused                                                               
effort.    An  example  is  the teaching  profession.    In  some                                                               
regions, such as Southcentral, the  teaching profession would not                                                               
be identified  as experiencing a  shortage, but in  other regions                                                               
this is a  high priority deficit occupation.   She suggested that                                                               
the  bill  language  allow  the   commission  to  impose  certain                                                               
principles  related  to  public interest  emphasis  or  emergency                                                               
workforce  decisions.    This would  also  facilitate  regulation                                                               
drafting and program implementation.                                                                                            
9:32:22 AM                                                                                                                    
CHAIR SEATON requested that Ms.  Barrans work with the sponsor on                                                               
improving the bill language, and she agreed.                                                                                    
9:32:48 AM                                                                                                                    
BRYNN   KEITH,  Research   Chief,   Division  of   Administrative                                                               
Services,  Department of  Labor &  Workforce Development  (DLWD),                                                               
said,  "Regrettably, the  [DLWD]  doesn't have  a  handy list  of                                                               
shortage  occupations."    Assessing  a  shortage  requires  many                                                               
considerations,  but   it  is  basically  a   supply  and  demand                                                               
situation.    The  department has  an  abundance  of  information                                                               
regarding the  demand for specific workforce  positions, however,                                                               
the  knowledge of  how many  skilled workers  are available,  and                                                               
residing in Alaska  is elusive.  Thus,  establishing the shortage                                                               
figure is difficult.   Proxy measures are utilized,  one being to                                                               
chart, by  occupation, the percentage of  non-residents employed.                                                               
Although there  are many  reasons that an  employer hires  a non-                                                               
resident, the policy  assumption is that the hire  was made based                                                               
on the lack  of available local talent.   The non-resident report                                                               
is produced annually,  as well as a projection  for future demand                                                               
by  occupation.   Every  two  years,  the department  releases  a                                                               
forecast  of  future occupational  demands.    The 2009  forecast                                                               
projects through 2016, she said,  and expressed confidence in the                                                               
report as  a potential shortage  indicator.  Shortages  occur due                                                               
to  growth/expansion  in  a  particular field,  as  well  as  the                                                               
retirement  factor, and  the data  reflects these  variables, she                                                               
said.    A  definitive  answer does  not  exist,  however,  these                                                               
measures are helpful.                                                                                                           
9:35:22 AM                                                                                                                    
CHAIR SEATON  requested that Ms.  Keith join the  afore mentioned                                                               
work group,  including the  bill sponsor,  to identify  fields of                                                               
study  that  this bill  could  incorporate,  and mechanisms  that                                                               
could be employed to ascertain appropriate loan reimbursements.                                                                 
9:36:40 AM                                                                                                                    
REPRESENTATIVE  KELLER confirmed  that DLWD  identifies potential                                                               
shortage areas but does not prioritize vocations.                                                                               
MS. KEITH stated that the  research and analysis section does not                                                               
prioritize  occupations,   it  produces  data  on   which  policy                                                               
decisions can  be made.   The  Alaska Workforce  Investment Board                                                               
does  prioritize  occupations  for various  reasons;  largely  to                                                               
funnel training dollars.                                                                                                        
9:37:29 AM                                                                                                                    
CHAIR SEATON stated that the bill would be held.                                                                                
9:37:53 AM                                                                                                                    

Document Name Date/Time Subjects
HB 126 amendment.pdf HEDC 3/2/2009 8:00:00 AM
HB 126
HB 126 amendment II.pdf HEDC 3/2/2009 8:00:00 AM
HB 126
hb 126 materials.pdf HEDC 2/25/2009 8:00:00 AM
HEDC 3/2/2009 8:00:00 AM
HEDC 3/9/2009 8:00:00 AM
HB 126
workdraft HB 126.pdf HEDC 2/25/2009 8:00:00 AM
HEDC 3/2/2009 8:00:00 AM
HEDC 3/9/2009 8:00:00 AM
HB 126
HB 147 material.pdf HEDC 3/2/2009 8:00:00 AM
HB 147
HB 58 material.pdf HEDC 3/2/2009 8:00:00 AM
HB 58
new HB 126 material including new fiscal notes.pdf HEDC 3/2/2009 8:00:00 AM
HB 126
HB 58 fiscal note.pdf HEDC 3/2/2009 8:00:00 AM
HB 58
HB 58 amendment.pdf HEDC 3/2/2009 8:00:00 AM
HB 58