Legislature(1995 - 1996)

04/26/1996 01:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  SENATE BILL NO. 301                                                          
                                                                               
       "An Act relating to postsecondary education."                           
                                                                               
  DIANE BARRANS, EXECUTIVE  DIRECTOR, POSTSECONDARY  EDUCATION                 
  discussed SB 301.   Senate  Bill 301 would  move the  Alaska                 
  Student Loan Corporation from the Department of Education to                 
  the  Department of  Revenue and transfer  the administrative                 
  functions  of   the  Alaska   Commission  on   Postsecondary                 
  Education  to  the  Alaska Student  Loan  Corporation.   She                 
  stressed that the Commission is  committed to making changes                 
  necessary for the financial success  and long term viability                 
  of  the  loan  program.   She  observed  that  SB 301  would                 
  consolidate some agency  functions under one board  with the                 
  clear and distinct focus on the welfare of the program.  She                 
  noted that  there would be  some positive  changes from  the                 
  removal  of  institutional  authorization or  regulation  of                 
  postsecondary  institutions  and  the  move  of   loan  fund                 
  administration  to  the  Corporation in  the  Department  of                 
  Revenue.  She questioned why  two boards would be  necessary                 
  in the  future.  She suggested that  the regulation function                 
  could be  transferred as a  function of the  Department with                 
  oversight from the State Board of Education.  She noted that                 
  the  legislation  leaves  inefficiencies and  expenses  of a                 
  state agency having to administer two separate boards.                       
                                                                               
  Ms.  Barrans discussed potential benefits  from SB 301.  The                 
  Board membership is reduced from 17 to 10.  Quorums will  be                 
  easier to achieve and there will  be some reduction in cost.                 
  The legislation  will clean  up unnecessary  language.   She                 
  noted that  Ken Vassar, Bond  Counsel wrote a  memorandum to                 
  her on April  4, 1996,  articulating concerns regarding  the                 
  constitutional existence of the  public Corporation Board in                 
                                                                               
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  SB 301 (copy on file).                                                       
                                                                               
  Ms. Barrans noted that the Legislature wishes  to keep close                 
  ties to the Program.  She stressed that if the Commission is                 
  eliminated that  legislative ties  would remain  through the                 
  budget and loan terms.                                                       
                                                                               
  MIKE TIBBLES, STAFF,  SENATOR GREEN  noted that the  Sponsor                 
  worked with the Legislative Legal Services Agency to address                 
  the constitutional question raised by the Department of Law.                 
                                                                               
                                                                               
  In  response  to a  question  by Representative  Mulder, Mr.                 
  Tibbles noted that many of the provisions of Executive Order                 
  97 were adopted.  He observed that EO 97 had some  out dated                 
  federal laws that needed to be cleaned up.  The are repealed                 
  in SB  301.    He  added that  legislative  involvement  and                 
  confirmation were retained in SB 301.                                        
                                                                               
  In response  to a  question by  Representative Kohring,  Ms.                 
  Barrans discussed the fiscal note accompanying SB  301.  She                 
  observed that the only new cost  that is not currently being                 
  born,  is  the  cost  to  the  Department  of  Education  to                 
  administer the  functions of  AS 14.48.   The  cost of  this                 
  function is  currently being  absorbed by  the Student  Loan                 
  Corporation.   There is  a provision  in SB  301 that  would                 
  allow  the  assessment  of  fees  on institutions  that  are                 
  regulated.  She noted that the  fiscal notes are the same as                 
  for  EO  97  with  the   exception  that  the  institutional                 
  authorization was not moved.                                                 
                                                                               
  KATHLEEN STRASBAUGH, ASSISTANT ATTORNEY  GENERAL, DEPARTMENT                 
  OF LAW spoke regarding constitutional  problems with SB 301.                 
  She referred to a  memorandum she sent to Senator  Judy Salo                 
  on April 23,  1996 (copy on file).  She noted that the Board                 
  of  the  Alaska  Commission on  Postsecondary  Education has                 
  never been subject to legislative  confirmation.  She argued                 
  that the Board's  functions have  not changed sufficient  to                 
  warrant  the  need  for  confirmation.   She  discussed  the                 
  position of legislators on  the Board.  She noted  that non-                 
  voting legislative  members remain on the Board.  She stated                 
  that  under  the legislation,  legislative  members  are not                 
  needed for a  quorum.  The  Corporation would no longer  pay                 
  per diem  to  legislative  members.   She  noted  that  Bond                 
  Counsel has expressed concern that legislators are closer to                 
  the  bond  issuance  process  than  they  were   previously.                 
  Members of the Postsecondary Education Commission become the                 
  members of the Corporation under the legislation.  She noted                 
  that corporations are not subject to confirmation.                           
                                                                               
  (Tape Change, HFC 96-143, Side 2)                                            
                                                                               
                                                                               
                               15                                              
                                                                               
                                                                               
  Ms. Strasbaugh noted  that legislators  will not vote  under                 
  the legislation.   They  currently vote  and are  part of  a                 
  quorum.  She  reiterated that  legislators will not  receive                 
  per diem or be part of the quorum.                                           
                                                                               
  Ms. Strasbaugh maintained that the whole Board is being kept                 
  on  in  order to  require  legislative confirmation  for the                 
  Corporation.    She  asserted  that  this is  expensive  and                 
  unnecessary.    She  added  that  the   regulatory  function                 
  predominates.    She  stressed  that  the  argument  against                 
  confirmation remains.                                                        
                                                                               
  Mr.  Tibbles noted  that under SB  301 legislators  will not                 
  serve  on  the  Commission,  but  they  will  serve  on  the                 
  Corporation as non-voting members.                                           
                                                                               
  Ms. Strasbaugh acknowledged that legislators  are not on the                 
  Commission.   She emphasize  that concern  remains that  the                 
  presences   of   non-voting  legislative   members   on  the                 
  Corporation would be closer to the bonding process.                          
                                                                               
  Ms. Strasbaugh noted that by itself, the Alaska Student Loan                 
  Corporation  is  not  subject  to  confirmation   under  the                 
  Constitution.    The only  way  the Legislature  can require                 
  confirmation is  to claim that  the Postsecondary Commission                 
  is subject to confirmation and then  have the members of the                 
  Student Loan Corporation the same  as the Commission through                 
  statute.                                                                     
                                                                               
  KAREN REHFELD, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT                 
  OF EDUCATION expressed concern with SB  301.  She noted that                 
  the  Department would  receive  another responsibility  at a                 
  time when the  Department is trying  to focus energy on  the                 
  quality   education  initiative.    She  observed  that  the                 
  Department of Education does not  have staffing or expertise                 
  in these  areas.    She  observed  that  the  Department  of                 
  Education has requested  a part time  position to assist  in                 
  coordinating  and scheduling  meetings.   The  authorization                 
  function  would be new  to the Department.   The legislation                 
  also contemplates  implementation of  regulations for  a fee                 
  structure.   She emphasized  that  the Department's  limited                 
  resources would be diluted.                                                  
                                                                               
  Representative  Brown questioned the  need for  two separate                 
  entities.                                                                    
                                                                               
  REPRESENTATIVE   CON  BUNDE   responded   that  the   Alaska                 
  Commission on  Postsecondary Education's  function  is as  a                 
  quasi judicial board,  warranting legislative  confirmation.                 
  The  Commission  used to  decide  appeals on  student loans.                 
  Currently,  staff  decides  appeals.    He  maintained  that                 
  appeals should go to  the Commission.  He stressed  that the                 
                                                                               
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  Commission can preside over appeals by schools.                              
  Ms. Barrans clarified  that under  the legislation all  loan                 
  related issues are moved away from the Commission.  The only                 
  appeals the Commission could hear, under SB 301, would be an                 
  appeal  of withdrawal  or  termination  of authorization  to                 
  operate an institution in Alaska.  She could not recall such                 
  an appeal before the Commission in the past 14 years.                        
                                                                               
  Ms. Barrans noted that the Commission administers the Alaska                 
  Student  Loan  Program  and  student   aid  programs.    The                 
  Commission also regulates postsecondary education in  Alaska                 
  under AS 14.48.  This function  would move to the Department                 
  of Education under SB 301.                                                   
                                                                               
  Ms. Strasbaugh  maintained that  the basic  function of  the                 
  Corporation would not  be changed.   She  stressed that  the                 
  only  function that  could  be used  to  base arguments  for                 
  confirmation  would  be  the adjudication  of  institutional                 
  authorization that has been rarely invoked.                                  
                                                                               
  SB 301 was HELD in Committee for further consideration.                      

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