Senators Joe Paskvan, Dennis Egan, and Gary Stevens during the closeout hearing of the Senate Finance DEED Subcommittee, March 20, 2012
This blog contains highlights from the Alaska Education Update. The update is issued daily during session and contains detailed summaries of education issues under consideration by the Alaska State Legislature. If there is a hearing on a Monday, a report will, with few exceptions, be released by Tuesday morning. There is also a weekly edition of the update. During interim, reports are issued only when there has been action. Interim action may include hearings, bill signings, the release of the Governor's proposed budget for the next fiscal year, and other items that may be of interest to the education community.

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Tuesday, March 30, 2010

Senate Bipartisan Working Group Press Availability

Scholarship Proposal
Sen. President Gary Stevens said the Senate has been meeting with the House leadership and the Governor. Stevens said that one of the big issues the legislature is working on as the session comes to a close is.....
the Governor’s Scholarship Proposal. He noted that major changes have been made to the proposal in the House and Senate Education Committees, including the addition of a needs-based component; both the House and the Senate are working hard to find a solution for how to fund the program.

One thing that could occur is passage of a scholarship program, with funding for the program not occurring until next session. Options for funding the program are an endowment fund or annual appropriations.  Or instead of establishing a new program, the Legislature could provide additional funding for existing programs such as the Alaska Scholars Program or the Alaska Advantage Education Grant.

Capital Budget
After this session, the state will have about $12 billion in reserves, not counting the Permanent Fund. Senate Finance Co-Chairman Bert Stedman said they are looking at saving even more money, on top of what’s already been set aside. But Co-Chairman Lyman Hoffman added that would occur after they have put together a healthy Capital Budget.

Sen. Stedman said the Senate Finance Committee is working on getting other legislation out of the way this week so the committee can start work on the capital budget next week (the committee has a full slate of education-related legislation on their agenda for Wednesday, March 31). Stedman said the capital budget will be a little bigger than the average year, because it will include two years worth of projects, since there wasn’t a capital budget last year.

Sen. Hoffman said there will be additional money put into savings, because even after operating expenses and currently planned savings expenses are figured in, they will have about $850 million left over. He said they will have to put some of that money in savings, because there is no way they are going to have an $850 million capital budget, even though he would like to see one that big. Hoffman said he thinks not having a capital budget last year is one of the reasons the economy has suffered, and one of the reasons he is a strong supporter of a larger capital budget than most people.

Defined Benefits Retirement
Sen. Stedman said before the state can consider going back to a defined benefits retirement system, they need to figure out how they would fund the unfunded liability in the retirement systems. He said that although they relieved cities and boroughs of much of their unfunded liability, that liability now resides with the state. In his opinion, Fairbanks would have gone bankrupt without help from the state.

Alaska is in a significantly better position than other states, but it is still an issue. Different portions of the liability are tied to Tiers I-III, and apportioned between health care and pension liability, but Sen. Stedman could not say off the top of his head how much liability could be apportioned to each category. [I wonder if the Federal Healthcare Reform will lower the amount of unfunded pension liability, since so much of it is related to healthcare costs. I suppose the effect of that won’t be known for at least a few years.]

Sen. Stevens said they are happy to discuss the issue with folks, but simply haven’t found a solution to the unfunded liability. Stevens joked that “those of us in Tier I are dying as fast as we can.”

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