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Gov. Sean Parnell's newly proposed "Governor's Performance Scholarship" had its first discussion by the Legislature on Tuesday, receiving both praise and questions about how it would be paid for.

The scholarships would go to qualified students based on their high school grades, and could be used to pay tuition and expenses at both Alaska universities and approved job training programs.

"We really appreciate the governor coming forward with the program," said Rep. Paul Seaton, R-Homer.

Seaton chairs the House Education Committee, which met Tuesday in Anchorage in a joint meeting with the Senate Education Committee to learn about the proposal.

Parnell proposed setting aside $400 million from the state's savings for the scholarships, with the expectation of using investment proceeds to pay for the scholarships.

The program is structured to not run afoul of the state's constitutional prohibition on dedicated funds, state officials said.

"We're careful not to call it an endowment," said Eddy Jeans, director of the Department of Education and Early Development's Division of Education Support Services.

"I heard that," said Rep. Bob Buch, D-Anchorage, "but we're still talking about dedicated funds here."

While proceeds from the $400 million would be used for the scholarships, under the governor's proposal it would take an annual appropriation to spend the money and the Legislature would not be required to fund it, said John Boucher, with Parnell's Office of Management and Budget.

"There would still be discretion as to whether or not to use the earnings for that purpose or for some other purpose," Boucher said.

Rep. Berta Gardner, D-Anchorage, questioned whether that might mislead students who might spend years attempting to qualify for the scholarships that weren't there.

"You make an excellent point," Boucher said. "That would have to be evaluated in the process of creating the fund."

If unanticipated circumstances arose, the money could legally be spent elsewhere.

Some legislators said they didn't think that was likely to happen.

The Legislature already has a program that reimburses school districts with up to 70 percent of the cost of new schools, subject to legislative approval. The Legislature chooses to fund it every year, said Sen. Kevin Meyer, R-Anchorage.

"We always do it," he said, but "sometimes it's a little tough."

He said he doubted the Legislature would fail to fund promised scholarships.

"If we didn't do it for a program like this, we as a Legislature wouldn't look too good," he said.

Seaton, a fisherman, said the Alaska Seafood Marketing Institute is funded with a tax on the fishery that is not required to be used for the institute but always is.

"The Legislature has never gone back and said, 'We're not going to do what we said we'd do,'" Seaton said.

Rep. Cathy Muñoz, R-Juneau, called Parnell's proposal "very positive," and said it was important that seventh and eighth grade students know of the program so they'll be able to take full advantage of it.

That's a key, said Education Commissioner Larry LeDoux.

Educators will have to start by eighth grade or earlier to achieve the program's goal of ensuring three to four years each of math, science and language classes that are required, along with a minimum grade point average, to qualify.

"This is not going to be a cakewalk" for students, LeDoux said.

Other states have done similar programs, with sometimes varying mixes of merit- and need-based qualifications, testified David Longanecker of the Western Interstate Commission on Higher Education.

Former Georgia Gov. Zell Miller created an early version of the program, and won re-election with 84 percent of the vote. Within two years there were similar programs created all across the South, Longanecker said.

"These are politically popular programs, you guys will be heroes in your communities if you go through with this," he said.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.