JUNEAU — Alaska Senate leaders said Friday that they're abandoning a bill to eliminate an $11 million state-sponsored college scholarship program, making it the second Senate budget-cutting measure to be withdrawn in the face of strong opposition.
The brief announcement that the scholarships would be spared was made by Sen. Anna MacKinnon, R-Eagle River. She's co-chair of the Senate Finance Committee, and she spoke at the tail end of a committee hearing Friday afternoon as high school and college students were rallying against the legislation 600 miles away in Anchorage.
MacKinnon said her chamber will no longer pursue Senate Bill 208, which was sponsored by her committee and would have phased out the Alaska Performance Scholarship program by 2022. She said the move came in response to testimony from Diane Barrans, the executive director of the Alaska Commission on Postsecondary Education, which oversees the scholarship program.
"It was respectful. It gave us positive outcomes. I just really appreciated Diane's presentation," MacKinnon said in an interview after the hearing. "We didn't want people to continue to worry over the weekend that somehow this is going to pop up and go. It's just not."
SB 208 is the second measure withdrawn from a four-piece package of bills being pushed by the committee in the final weeks of this year's legislative session, as lawmakers seek to close a $4 billion budget deficit. Experts and economists say the deficit can't be closed solely by cutting, but GOP lawmakers, especially in the Senate, have said they need to further diminish the size of state government before contemplating other measures, such as taxes or reductions to Alaskans' Permanent Fund dividends.
The first proposal they dropped was Senate Bill 209, which would have lowered the state's spending on Alaska's public employee pension system by forcing employers like municipalities, boroughs and school districts to make larger contributions. The effect of that change wouldn't have been government shrinkage, just a shifting of costs from the state to localities.
Related legislation offered by the finance committee would have allowed municipalities to offset their increased payments by eliminating property tax exemptions for senior citizens and disabled veterans — a set of proposals that drew ferocious opposition from mayors and municipal advocates and also would have resulted in cost shifting, not overall reduced spending.
Asked about the withdrawal of the two bills, MacKinnon responded, "It says that we like to talk about ideas — and not all ideas fare as well with the population or with legislators."
Barrans' prepared testimony praised finance committee members as "strong proponents of education and training," citing their support for the 5-year-old scholarship program when it was established.
She cited data showing that scholarship recipients have higher college attendance rates and better academic performance with less need for remedial classes.
The scholarship program, an initiative of former Republican Gov. Sean Parnell, paid for 3,000 students' merit-based financial aid of up to $4,750 apiece last year. In total, it's paid 5,248 students about $37.5 million.
Barrans said in an interview Friday that, in part, the scholarships keep high-achieving students in Alaska and keep their costs down in a time of rising tuition.
"We can fully expect substantially higher tuition increases year over year," Barrans said. The University of Alaska regents have already passed a 5 percent tuition hike for fall 2016, and draft budget revisions presented Thursday include additional midyear tuition increases.
Barrans said Friday evening that she was "delighted" and "relieved" to hear that the scholarship would not face elimination this year.
"I think it was probably a hard decision to even propose the termination of the program that the Legislature so recently had put in place and had taken such definite action to create a funding source for," she said.
While the Senate Finance Committee was meeting, about 30 Anchorage college and high school students, along with other community members, met for a rally at University Lake by the University of Alaska Anchorage campus. They chanted for the state to keep the Alaska Performance Scholarship, or APS.
Sarah Gray, an 18-year-old pre-nursing student at UAA, held a sign that read, "Alaska Needs APS!" Gray said that the scholarship kept her in Alaska.
As a high school student in Fairbanks, she said, she wanted to go to Montana State University. But she said she compared tuition costs. Once she took into account her $4,755 annual Alaska Performance Scholarship to put toward in-state tuition, she said, it just didn't make sense to leave.
"It's about money at the end of the day," she said. "It's due to the scholarship that I'm here."
Her friend, Alex Jorgensen, helped plan the afternoon protest. Jorgensen, an 18-year-old UAA freshman, said he expects to graduate with little to no debt because of his performance scholarship. On top of that, he's using money from his Permanent Fund dividend checks to pay for his classes.
Jorgensen said MacKinnon's announcement to keep the scholarship underscored the importance of public education in the state.
"The cost savings (of cutting the program) just do not outweigh the social costs," he said.
Andy Holleman, president of the Anchorage teachers union, also attended the rally and said he staunchly opposed eliminating the scholarship.
The Alaska Legislature transferred $400 million into the Alaska Higher Education Investment Fund in 2012 to pay for education grants, including performance scholarships.
By proposing to drain the fund and put it toward other costs, Holleman said, "It just brings us closer to a time when we are truly out of money."
The elimination of the scholarship program was originally proposed to help offset the impact of another finance committee measure, Senate Bill 207.
That measure would transfer some of the state's bills for Alaska's teachers pension system to local school districts — about $45 million next year, rising to $72 million by 2020. Finance committee leaders said they wanted to take money from the education investment fund to help reduce the immediate impact of the pension legislation on school districts
MacKinnon said her committee would still pursue SB 207, though her co-chair, Fairbanks Republican Pete Kelly, said he wasn't sure there was time to get the measure through the House.
MacKinnon, meanwhile, suggested that lawmakers were not finished with their scrutiny of the scholarship program.
"We still don't have the money to pay for it in the long term," she said. "And so I think it's a conversation that we're going to continue to have."