Legislature(1995 - 1996)

02/07/1995 03:03 PM HES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HHESS - 02/07/95                                                              
 Number 069                                                                    
 HB 135:  STUDENT LOANS                                                      
 DR. JOE McCORMICK, Executive Director of the State of Alaska                  
 Commission on Postsecondary Education (ACPE), Department of                   
 Education, presented HB 135 to the Health, Education and Social               
 Services (HESS) Committee members.  He explained that the bill                
 contains transition language which accompanies HB 506, which was              
 passed by the legislature last year.                                          
 DR. McCORMICK explained that the transition language will simply              
 allow the ACPE to promote and finalize regulations required to                
 fully implement HB 506 by July 1, 1995.  The regulations put forth            
 will call for the calculation of the appropriate interest rate on             
 student loans awarded for the 1995-96 school year.  Without the               
 authority granted by HB 135, the ACPE cannot offer any loans after            
 July 1.  Therefore, Dr. McCormick requested that the bill be moved            
 quickly so the ACPE can begin the regulatory process.                         
 REPRESENTATIVE TOM BRICE requested clarification on the fact that             
 a bill was passed last year, but the legislature failed to give the           
 ACPE authority to implement the bill.  DR. McCORMICK answered that            
 Representative Brice was correct.  Representative Brice restated              
 that all HB 135 does is give the ACPE regulatory authority to                 
 implement a bill passed last year.                                            
 Number 180                                                                    
 CO-CHAIR BUNDE asked what could be done to prevent such a mix up in           
 the future.  DR. McCORMICK answered that last year he was not                 
 familiar with Alaska's legislative process.  The term "transition             
 language" was new to him.  He assumed when the bill was drafted               
 that it contained all the necessary elements.  It was not until the           
 new regulations were sent over to the Department of Law for                   
 approval that the Department of Law said that the ACPE could not do           
 anything because there was no transition language in the bill.  Dr.           
 McCormick would be very happy if the HESS Committee members could             
 figure out a way to prevent this from happening in the future.                
 Number 250                                                                    
 CO-CHAIR BUNDE stated that his previous question was not to be                
 construed as criticism.  Co-Chair Bunde also was inclined to                  
 believe that when something is received from the Department of Law            
 that it will be drafted in an appropriate form.                               
 CO-CHAIR BUNDE addressed the committee members and reiterated that            
 the bill was passed last year, changing the interest rate on the              
 student loans made at a variable interest rate.  HB 135 gives the             
 ACPE regulatory authority to set the interest rate.                           
 Number 293                                                                    
 REPRESENTATIVE BRICE asked since the bill was passed last year and            
 is now in statute, is it necessary to place Sections 1 and 2 of HB            
 135 in to statute or can they be placed into the Session Laws of              
 Alaska (SLA) and be enacted.  DR. McCORMICK answered that it is his           
 understanding that HB 135 is the exact language the Department of             
 Law says is necessary to enact HB 506.                                        
 REPRESENTATIVE BRICE stated that HESS Committee members were told             
 that the exact language was in HB 506.  He confirmed he was not               
 being critical, but his understanding is that statutory authority             
 is needed in certain areas to implement regulations.                          
 DR. McCORMICK replied that apparently the section of primary                  
 importance in HB 135 is Section 2.  REPRESENTATIVE BRICE said he              
 did not know if the section needed to be enumerated or not.                   
 Number 370                                                                    
 REPRESENTATIVE GARY DAVIS said that he had the same concerns as               
 Representative Brice because there are no statutes cited.  He                 
 deduced that the SLA is being affected.  He read a memorandum from            
 Teresa Williams, Assistant Attorney General, Department of Law,               
 which stated, "I am writing to explain the necessity for the                  
 legislature to immediately adopt transition provisions regarding              
 ch. 112, SLA 1994."  Representative Davis, therefore, decided that            
 it must not be statutes, but SLAs that are being effected by this             
 Number 410                                                                    
 CO-CHAIR BUNDE asked if there was a representative from the                   
 Department of Law present.  There was not.                                    
 REPRESENTATIVE GARY DAVIS asked if the HESS Committee members were            
 again relying on the legal department to provide the proper                   
 language.  CO-CHAIR BUNDE was inclined to feel that once an initial           
 mistake was pointed out, Legal Services would be more diligent.               
 CO-CHAIR TOOHEY moved that HB 135 be passed out of committee and              
 sent to the Finance Committee because of time constraints.  She               
 stated that the bill can be checked for exact wording and can be              
 killed in the Finance Committee if the wording is incorrect.                  
 Number 479                                                                    
 REPRESENTATIVE CAREN ROBINSON expressed concern that since the bill           
 has a zero fiscal note, it may simply be waived out of the Finance            
 Committee.  She asked if it must go to the Finance Committee.  CO-            
 CHAIR BUNDE answered that the bill was scheduled to be heard by the           
 Finance Committee unless the chair of that committee makes an                 
 extraordinary effort to have it waived.                                       
 REPRESENTATIVE ROBINSON said that many times when a bill has a zero           
 fiscal note the Finance Chair is petitioned.  She wondered if this            
 bill would further hinder the Finance Committee, and if perhaps it            
 would not be better to contact Legal Services and get their                   
 questions answered immediately.  The HESS Committee members then              
 could hear other bills and come back to HB 135 at the end of                  
 today's meeting.                                                              
 Number 519                                                                    
 REPRESENTATIVE BRICE asked if the money to adopt regulations was              
 within the fiscal note for HB 506.  DR. McCORMICK answered "yes."             
 REPRESENTATIVE NORMAN ROKEBERG asked what student loan interest               
 rates might be for this coming year.  He said that there seems to             
 be a problem with the state government providing loans at a five              
 percent interest rate.                                                        
 Number 570                                                                    
 DR. McCORMICK answered that the main purpose of HB 506 was to tie             
 the interest rate to the cost of money and to the cost of                     
 administering the loan program.  It would be illegal to charge a              
 five percent interest rate because the cost of money was in excess            
 of five percent for the past year.  The cost of administering the             
 loan program is not to exceed a 2.5 percent cap.  Therefore, the              
 interest rate is based on the cost of money plus no more than 2.5             
 percent.  The interest rate, therefore, will probably be in the               
 range of 7.5 percent to nine percent for the coming year.  The                
 exact rate has not been calculated yet.                                       
 REPRESENTATIVE ROKEBERG asked about the cost of the last bond                 
 issue.  DR. McCORMICK said he did not have that information, he               
 would have to look it up.                                                     
 Number 655                                                                    
 CO-CHAIR BUNDE told Representative Robinson that in light of her              
 concerns, he will communicate with the Finance Committee chair to             
 make sure the fiscal note questions are taken care of.  He then               
 stated that the motion to move HB 135 was before the HESS                     
 Committee.  Hearing no objection, the bill was passed out of                  

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