Legislature(2015 - 2016)CAPITOL 106

03/02/2015 08:00 AM House EDUCATION

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Heard & Held
Heard & Held
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        HB  97-AK PERFORMANCE SCHOLARSHIP: FINANCIAL AID                                                                    
8:02:51 AM                                                                                                                    
REPRESENTATIVE  COLVER,  as sponsor,  said  HB  97 prohibits  the                                                               
Department  of   Education  and  Early  Development   (EED)  from                                                               
requiring  an applicant  for the  Alaska Performance  Scholarship                                                               
(APS) to  also submit  the Free  Application for  Federal Student                                                               
Aid  (FAFSA). The  APS rewards  Alaska high  school students  for                                                               
their  hard work,  he stated,  which is  measured by  coursework,                                                               
grade point average,  and ACT, SAT, or WorkKeys  test scores. The                                                               
FAFSA is  used to determine  a student's eligibility  for federal                                                               
financial  aid  based on  the  family's  financial situation,  he                                                               
explained. He said  that [HB 97] was introduced  because there is                                                               
no  compelling state  interest  in  gathering personal  financial                                                               
data to award a merit-based scholarship.                                                                                        
8:04:42 AM                                                                                                                    
REPRESENTATIVE  COLVER  pointed  out  that this  bill  serves  to                                                               
reduce  paperwork  as well  as  protect  privacy. He  noted  that                                                               
parents  in his  district, who  were not  seeking financial  aid,                                                               
could  not understand  why they  had to  fill out  the FAFSA.  He                                                               
suggested that EED  "describe what their mission  is in requiring                                                               
that, because it  sure came with a lot  freight-huge fiscal notes                                                               
on  retooling data."  He  said he  believed that  the  APS was  a                                                               
simple program  based on merit  and not a  data-mining operation,                                                               
but he  may be mistaken.  It may be  difficult to move  this bill                                                               
because of  the financial  cost, but he  said that  going through                                                               
this process  may lead to  streamlining education funding,  so it                                                               
can go into the classroom instead paying for data management.                                                                   
8:07:30 AM                                                                                                                    
REPRESENTATIVE SEATON  recalled that the  APS is not just  a cash                                                               
grant, but a student must apply  for all other money and then the                                                               
APS would  fill in over  a maximum of six  years. If that  is the                                                               
case,  "are we  now  saying that  it wouldn't  be  a last  dollar                                                               
scholarship?" The scholarship would  then be available regardless                                                               
of  whether  the  student  had  expenses  to  cover  or  not,  he                                                               
8:08:48 AM                                                                                                                    
DAVID  SCOTT,  Staff,  Representative Jim  Colver,  Alaska  State                                                               
Legislature,   said  that   the   Commission  on   Post-Secondary                                                               
Education can answer that; however,  it is his understanding that                                                               
the scholarship is based on merit: grades and test scores.                                                                      
8:09:51 AM                                                                                                                    
REPRESENTATIVE VAZQUEZ asked about the application for the APS.                                                                 
REPRESENTATIVE COLVER said he will provide a copy.                                                                              
8:10:37 AM                                                                                                                    
MR.  SCOTT said  that  the  APS is  created  and administered  by                                                               
Alaskans, and he  does not think the FAFSA should  be required to                                                               
award a merit-based scholarship that  is created by Alaskans. The                                                               
constitution provides a right to  privacy, "and that is something                                                               
we  all love  and  we  all cherish."  He  said  there is  private                                                               
financial  information in  the  FAFSA that  is  not necessary  in                                                               
order to award a merit-based scholarship.                                                                                       
8:12:16 AM                                                                                                                    
DIANE  BARRANS, Executive  Director, Alaska  Commission on  Post-                                                               
Secondary Education,  said she understands the  sponsor's concern                                                               
about the  apparent disconnect between a  merit-based scholarship                                                               
and the need to use FAFSA  as part of the qualifying information;                                                               
however, Representative  Seaton is correct  in that there  was no                                                               
intent  for the  scholarship  to be  "walking-around money."  The                                                               
cost  of the  student's education  and other  available financial                                                               
assistance were to  be used to determine, to the  extent that the                                                               
student qualified for  the scholarship, how much  a student could                                                               
receive.  If  a   student's  unmet  costs  were   less  than  the                                                               
scholarship amount, the  student would only be  awarded the unmet                                                               
8:13:32 AM                                                                                                                    
REPRESENTATIVE KREISS-TOMKINS asked  if the APS is a  hybrid of a                                                               
need-based and merit-based scholarship.                                                                                         
MS.  BARRANS  said  the  term   "need-based"  usually  denotes  a                                                               
financial  need   demonstrated  by   a  given  family,   but  all                                                               
scholarships are forms of financial aid.                                                                                        
8:14:30 AM                                                                                                                    
REPRESENTATIVE SEATON questioned if passing  HB 97 would create a                                                               
cash benefit to  students whether they attend college  or not. He                                                               
asked the question  if the APS is  merely a reward or if  it is a                                                               
scholarship  to  go  toward qualified  institutions.  The  "last-                                                               
dollar" concept was  incorporated into the original  bill, and he                                                               
asked what  HB 97  will do regarding  the financial  liability of                                                               
the state to provide money to students.                                                                                         
MS.  BARRANS said  that  she  does not  see  that  aspect of  the                                                               
program changing. She  noted that FAFSA is  a universal financial                                                               
aid application,  and about  85 percent of  students use  it. The                                                               
FAFSA  allows the  state to  ensure that  students apply  for any                                                               
sort of aid  that was available to them. The  intent was to spend                                                               
the APS funds as efficiently  and effectively as possible, and it                                                               
was not  intended to  be money  that could  be spent  on anything                                                               
other   than   attending   a  post-secondary   institution,   she                                                               
explained. The commission is the  grant administrating agency for                                                               
the state,  so it  already receives  FAFSA information.  She said                                                               
that  without requiring  students to  complete yet  another form,                                                               
the FAFSA  is an efficient means  of standing up the  program and                                                               
getting information on students  before even knowing whether they                                                               
are eligible  for the  APS. The institutions  do not  learn which                                                               
students  are  eligible for  the  APS  until  late July,  so  the                                                               
commission  would have  very  little  time to  reach  out to  the                                                               
eligible students,  make an application available,  and make sure                                                               
they get  it in  in time  for the  funds to  be dispersed  to the                                                               
MS.  BARRANS said  that  using FAFSA  not  only accomplishes  the                                                               
statutory goals of  having the students apply for  other aid, but                                                               
the form, itself, indicates that  the application is for Alaska's                                                               
grant  and scholarships  programs.  It  is also  a  means to  get                                                               
student  addresses,  she noted.  The  process  would have  to  be                                                               
replicated  and students  would need  to be  reeducated that  the                                                               
application could not be used for  the APS, and, in fact, Section                                                               
2  of HB  97  actually  nullifies any  application.  If the  bill                                                               
passes, there  would be no  application process,  whatsoever, and                                                               
one  would need  to be  created through  the regulatory  process,                                                               
which may take until 2016 or 2017.                                                                                              
8:20:12 AM                                                                                                                    
REPRESENTATIVE  VAZQUEZ  asked  what  bill created  the  APS  and                                                               
whether committee members  could get a copy,  including "what you                                                               
perceive to be the legislative intent."                                                                                         
MS.  BARRANS offered  to ask  the Legislative  Information Office                                                               
for legislative  information. She suggested reading  the statute,                                                               
as well.                                                                                                                        
8:21:27 AM                                                                                                                    
REPRESENTATIVE VAZQUEZ  asked whether Ms. Barrans  is saying that                                                               
the APS is a scholarship of last resort.                                                                                        
MS.  BARRANS said,  no. The  Alaska  Education Grant  would be  a                                                               
grant of  last resort; however, most  of the APS students  do not                                                               
qualify for  it, so if the  only other source of  financial aid a                                                               
student has is the APS, "you could certainly use that term."                                                                    
CHAIR KELLER said there will be  time to look at that history and                                                               
noted that it was part of  the governor's bill. He sees this bill                                                               
as a way to discuss the legislature's intent.                                                                                   
8:22:49 AM                                                                                                                    
REPRESENTATIVE COLVER said  the APS was endowed  at $400 million,                                                               
and he asked what revenue was "spinning off every year."                                                                        
MS. BARRANS  said that the  Higher Education Investment  Fund was                                                               
established a  year after  the APS program  was created,  and the                                                               
legislature set aside $400 million. She  said she thinks it has a                                                               
6 to 7 percent  return. It is managed as a  subset of the general                                                               
fund, and in June, 2014, there  was $444 million in the fund. The                                                               
fund is a source for  both the Alaska Performance Scholarship and                                                               
the Alaska Education Grant, she explained.                                                                                      
REPRESENTATIVE COLVER  asked how  much has  been awarded  and the                                                               
amount needed to administer the programs.                                                                                       
8:24:17 AM                                                                                                                    
MS.  BARRANS said  the  administrative costs  are  not paid  with                                                               
those  funds.  The  Alaska Student  Loan  Corporation  pays,  she                                                               
explained,  and the  fund has  been  "stepped up"  each year,  as                                                               
additional   classes   graduate.   In  FY15,   the   amount   for                                                               
scholarships  was  about $11  million,  and  there was  about  $8                                                               
million for grants. She offered  to provide the accumulated total                                                               
spent to date.                                                                                                                  
REPRESENTATIVE COLVER indicated that the  fund has $19 million in                                                               
outflow and "we've gained $44 million  in the fund." He asked how                                                               
the commission pays for the administrative costs.                                                                               
MS. BARRANS  said the  Alaska Student  Loan Corporation  pays for                                                               
the operating costs of the commission-not the GF [general fund].                                                                
REPRESENTATIVE COLVER asked about  the [fiscal note] of retooling                                                               
the  application evaluation,  which is  $144.2 million  this year                                                               
and then $91.7 million annually.                                                                                                
MS. BARRANS corrected him, saying it is thousands, not millions.                                                                
REPRESENTATIVE COLVER asked, "This would  have nothing to do with                                                               
general fund  budgets … it could  be funded out of  revenues from                                                               
the  scholarship fund  as a  possibility, but  now you're  saying                                                               
that  this is  going  to come  out  of the  budget  of the  Post-                                                               
Secondary Education Commission?"                                                                                                
MS.  BARRANS clarified  that  the  costs have  been  paid by  the                                                               
Student Loan  Corporation, but these  new costs created by  HB 97                                                               
would come from the Higher Education Investment Fund.                                                                           
REPRESENTATIVE COLVER said  it is, therefore, a  covered cost for                                                               
doing  business  to administer  the  loan  fund. So,  "we're  not                                                               
creating  a budgetary  issue;  this is  a  fully funded,  endowed                                                               
program that's spinning  off excess revenue." He  asked if Alaska                                                               
wants to use  the federal form for financial aid,  or "do we want                                                               
Alaska  to have  our own  form that  merely identifies  students'                                                               
academic achievements?" As  he understands, no money  goes to the                                                               
student but is distributed to the institution, he stated.                                                                       
MS.   BARRANS  said   the  funds   are   dispensed  through   the                                                               
institution, which are  then released to the students  if they do                                                               
not have unpaid fees.                                                                                                           
8:29:01 AM                                                                                                                    
REPRESENTATIVE COLVER asked about the entire process.                                                                           
MS. BARRANS said to qualify for  the APS, a student must complete                                                               
the  rigorous high  school curriculum,  have a  certain GPA,  and                                                               
score at  minimum levels  on one of  the standardized  tests. The                                                               
determination  for  eligibility is  made  in  a student's  senior                                                               
year,  and  the  department  has   that  information  within  its                                                               
existing  data collection.  School districts  provide eligibility                                                               
information  to  the department  by  July  15,  and the  data  is                                                               
transmitted  to   the  commission.   The  commission   takes  the                                                               
eligibility information  and matches it  to the FAFSA data  as to                                                               
the student's current address. The  students are notified through                                                               
mail that  they have qualified for  the award and at  what level.                                                               
The students  are encouraged to  use an online portal  where they                                                               
can go  in and  register and  monitor the  status of  their state                                                               
financial aid. The scholarship is  available to complete the cost                                                               
of education  that is not  offered through other grants  or other                                                               
scholarships.  The APS  can replace  the amount  that the  family                                                               
would be  expected to pay,  so it  is available before  a student                                                               
needs to take out a loan.                                                                                                       
8:33:03 AM                                                                                                                    
REPRESENTATIVE  SEATON  surmised  that   if  a  student  was  not                                                               
required to apply  to the FAFSA for Pell grants  or other federal                                                               
aid, it  may cause  more funding  to be drawn  from the  APS. "Is                                                               
that why the FAFSA is required?"                                                                                                
MS. BARRANS said yes, that  is the objective. The students should                                                               
maximize  the  attainment  of  available  money,  including  Pell                                                               
grants and state grants, in addition to the APS.                                                                                
8:34:17 AM                                                                                                                    
CHAIR KELLER asked  if the Higher Education  Investment Fund ever                                                               
operates in excess, putting money back into the general fund.                                                                   
MS. BARRANS  noted that  the Department  of Revenue  manages that                                                               
fund,  and  there is  no  mechanism  for  overflow money  to  the                                                               
general  fund. The  fund  has  only been  in  existence for  four                                                               
years, and  it is very  unpredictable what future draws  will be.                                                               
There is a  brief history with the APS. About  32 percent of each                                                               
graduating  class  tends  to  be  eligible,  but  the  number  of                                                               
eligible students  who use it fluctuates.  If there is a  jump up                                                               
in its use, the financial  demands will increase, and there needs                                                               
to be more time to calculate average expenses, she said.                                                                        
8:36:13 AM                                                                                                                    
REPRESENTATIVE DRUMMOND  asked which institutions the  APS can be                                                               
used for.                                                                                                                       
MS. BARRANS  said all  University of Alaska  campuses and  six or                                                               
seven others, which  she offered to provide. The APS  can only be                                                               
used in Alaska.                                                                                                                 
8:37:14 AM                                                                                                                    
REPRESENTATIVE  COLVER asked  what triggers  the request  for the                                                               
FAFSA application.                                                                                                              
MS.  BARRANS said  the  FAFSA information  already  comes to  the                                                               
commission  as  the  state's   grant  administrating  agency.  It                                                               
receives  the  information  for any  Alaska  resident  or  anyone                                                               
planning to attend an Alaska institution.                                                                                       
REPRESENTATIVE COLVER  said, obviously,  some students  would not                                                               
fill  out  the FAFSA  so  there  would  be  a trigger  when  they                                                               
qualified  for the  APS.  He  asked what  that  data base  "looks                                                               
MS. BARRANS  said she  does not know  exactly, but  a substantial                                                               
majority of students have already  completed that form before the                                                               
commission  receives  the  eligibility information.  There  is  a                                                               
campaign informing students  that they need to file  the FAFSA by                                                               
the end  of June. Because  of funding availability,  the deadline                                                               
extends to December, so students can continue to apply.                                                                         
8:39:58 AM                                                                                                                    
CHAIR  KELLER  said  that  he  hopes  the  school  districts  are                                                               
listening.  Financial counselors  at different  schools have  the                                                               
responsibility  to  communicate this  to  the  students, and,  in                                                               
Representative  Colver's case,  a Valley  resident "just  missed"                                                               
the deadline. He noted that the students need to be informed.                                                                   
MS.  BARRANS  said  that,  for the  first  time,  the  commission                                                               
partnered  with  the  University   of  Alaska  to  help  identify                                                               
students who  fell into that  category of being eligible  but had                                                               
not completed the FAFSA.                                                                                                        
8:41:13 AM                                                                                                                    
REPRESENTATIVE SEATON  noted that,  under the  regulations, there                                                               
is a process for institutions  that cannot receive federal funds,                                                               
and he asked about those institutions.                                                                                          
MS.  BARRANS said  there are  a few  technical institutions  that                                                               
have not received accreditation.                                                                                                
8:42:07 AM                                                                                                                    
REPRESENTATIVE  VAZQUEZ  asked  for  information  on  legislative                                                               
intent  by  March  23.  "If you're  correct  on  the  legislative                                                               
intent, I  think it sheds  a whole new  light on this  bill." She                                                               
was under the impression that  only the students' performance was                                                               
looked at, and the APS would be based solely on that.                                                                           
MS. BARRANS clarified  that in terms of  a student's eligibility,                                                               
the APS is based solely  on meeting the merit-based requirements.                                                               
The  question  is  to  what  extent does  a  student  have  unmet                                                               
educational costs that can be  covered. That is not determined by                                                               
the  FAFSA; the  school's  financial aid  office determines  what                                                               
amount  of unmet  costs  the  student has,  she  stated. In  most                                                               
cases, students  have unmet costs,  and it  is very rare  for the                                                               
APS to be reduced.                                                                                                              
8:45:00 AM                                                                                                                    
REPRESENTATIVE  COLVER said  there are  two fiscal  notes on  the                                                               
bill, and he asked to hear from the Department of Education.                                                                    
8:46:17 AM                                                                                                                    
LES  MORSE,  Deputy  Commissioner, Department  of  Education  and                                                               
Early  Development, said  that, regarding  the fiscal  notes, EED                                                               
was looking  at the most  efficient means to  collect information                                                               
that FAFSA  now provides. There may  be a way to  combine the two                                                               
fiscal  notes, but  there  needs  to be  more  dialogue with  the                                                               
sponsors. He said the FAFSA  collects student contact information                                                               
that the  department does not have,  so that would be  a new data                                                               
collection  system,  along  with the  eligibility  for  students.                                                               
"Every time  we add an element  to our data collection,  it costs                                                               
us approximately  $40,000 in  programing," he  said, and  the new                                                               
system would  have about four  different elements.  The remaining                                                               
costs in  the fiscal  note include the  outreach and  manuals. It                                                               
would be a  one-time cost, but there would still  be some ongoing                                                               
expenses experienced by the commission, he stated.                                                                              
REPRESENTATIVE COLVER  surmised that  just the  student addresses                                                               
need to be added and transmitted to the commission.                                                                             
MR. MORSE said  the student contact information would  be the new                                                               
element  to   collect,  and  "we   would  pull   the  eligibility                                                               
information from  the July  15 report that  all districts  do for                                                               
other reporting requirements  … so the APS  information would all                                                               
be  collected  together." All  of  the  districts would  have  an                                                               
additional report due in late May or June, he added.                                                                            
REPRESENTATIVE  COLVER   asked  if   the  FAFSA   tracks  student                                                               
information through a student ID or a Social Security number.                                                                   
MR. MORSE said he  cannot not speak to the FAFSA  "and all of its                                                               
requirements," but EED only uses a student ID number.                                                                           
REPRESENTATIVE  COLVER  said  the   FAFSA  will  use  the  Social                                                               
Security  numbers,  and  somewhere  there  is  a  linking  factor                                                               
between the department data base and the FAFSA data base.                                                                       
8:52:45 AM                                                                                                                    
MR. MORSE said that the  EED information can generally be matched                                                               
based on gender, date of birth, and name.                                                                                       
8:53:22 AM                                                                                                                    
CHAIR KELLER announced that HB 97 would be held over.                                                                           

Document Name Date/Time Subjects
HB 97.pdf HEDC 3/2/2015 8:00:00 AM
HB 97
HB 97 - Sponsor Statement.PDF HEDC 3/2/2015 8:00:00 AM
HB 97
HB 97 - what is FAFSA.PDF HEDC 3/2/2015 8:00:00 AM
HB 97
HB 97 -- FAFSA paper application.pdf HEDC 3/2/2015 8:00:00 AM
HB 97
HB 97 - APS.PDF HEDC 3/2/2015 8:00:00 AM
HB 97
HB 97 -- 20 U.S.C. 1090.PDF HEDC 3/2/2015 8:00:00 AM
HB 97
HB 97 -- 20 U.S.C. 1082 (m)(1)(c).PDF HEDC 3/2/2015 8:00:00 AM
HB 97
20 AAC 16.215.PDF HEDC 3/2/2015 8:00:00 AM
HB97 Fiscal Noten2.pdf HEDC 3/2/2015 8:00:00 AM
HB 97
HB97 Fiscal Note.pdf HEDC 3/2/2015 8:00:00 AM
HB 97
HB 98.pdf HEDC 3/2/2015 8:00:00 AM
HB 98
HB 98 - SPONSOR STATEMENT.docx HEDC 3/2/2015 8:00:00 AM
HB 98
HB098-ACS-TRC-02-26-15 Fiscal Note.pdf HEDC 3/2/2015 8:00:00 AM
HB 98
HB 98 Letter of Support Academy.pdf HEDC 3/2/2015 8:00:00 AM
HB 98
HB98 Letter of Support NEA.pdf HEDC 3/2/2015 8:00:00 AM
HB 98