Legislature(1995 - 1996)
04/26/1996 01:50 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
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 14 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 The are repealed in SB 301.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 16 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.