Alaska House adds $175 million one-time school funding boost to the budget

JUNEAU — The Alaska House amended the budget on Monday to include a one-time $175 million boost to public schools, potentially sidestepping efforts by some lawmakers to increase the foundation formula used to calculate the amount of funding each school district receives annually from the state.

The one-time funding added to the budget would amount to an 11% increase to the Base Student Allocation — the state’s $5,960 per-student school funding formula. That’s far short of what education advocates have said is needed after years of flat funding.

Palmer Republican DeLena Johnson, co-chair of the House Finance Committee, introduced an amendment to increase school funding by $175 million for the fiscal year that begins in July, saying that a permanent increase to the BSA formula was “unlikely” in the current legislative session.

Some House Republicans have resisted the urge to increase the formula, saying it must first be updated. But the bipartisan majority in the Senate has called a BSA increase one of their top priorities for the session.

The $175-million figure matches part of legislation currently before the House Finance Committee, which would permanently increase the BSA by $680 for the fiscal year that starts July 1. Education advocates have said a permanent increase would provide predictability and certainty for school administrators in the future.

Johnson said a one-time boost would allow debates on the formula to continue next year. The amendment contains contingency language that the funding would be removed if a bill to permanently increase the BSA passes the Legislature this year.

The amendment for the one-time increase in school funding was adopted on a 39-1 vote. Rep. David Eastman, R-Wasilla, was the only representative voting no.

Republican Reps. Tom McKay and Jamie Allard voted against the $680 permanent funding increase when the bill was before the House Education Committee, but both voted in favor of the one-time funding in the budget. They said they intended to work on rewriting the state’s school funding formula.

Sen. Löki Tobin, the Anchorage Democrat who chairs the Senate Education Committee, said delaying efforts to increase the funding formula could mean sacrificing the ability to reach agreement on a permanent funding increase.

“What I am looking at is the political reality. This year is the year we need to act,” said Tobin, reasoning that it will be harder to reach consensus on public school funding during a presidential election year. “Next year there is going to be a lot more rhetoric and divineness being thrown out into the public space. And I fear our schoolchildren will get left behind.”

Tobin called Republicans’ plans to rewrite the formula, rather than increasing it, “a distraction and something that people are using to essentially kick the can down the road.”

“To me, that is like rearranging the chairs on the deck of the Titanic. It doesn’t increase the pie. It just moves the pie around,” said Tobin.

Soldotna Republican Justin Ruffridge, co-chair of the House Education Committee, said he was “overwhelmed” by educators’ testimony in support of a school funding increase. He had proposed the $680 permanent raise to the BSA last month and echoed calls for a fiscal plan.

Ruffridge said in an interview Friday that he saw the $680 figure as a “starting point,” indicating he was open to a larger funding increase once some of the broader fiscal questions in the Legislature were settled.

The Alaska Association of School Boards determined late last year that they would need a minimum of an $860 formula increase to avoid widespread cuts to school programs but later raised that minimum number to $1,000, driven by persistent inflation. That is the number that the Senate ultimately adopted in their BSA legislation, which is currently under consideration by the Senate finance committee.

While Tobin said she would continue to focus her attention on increasing the BSA, she said she favored the move to add one-time funding to the budget, and may consider a similar amendment to add in even more one-time education funding once the budget is taken up by the Senate. That amount, she said, would likely mirror what is included in the Senate version of the education funding bill, which would add up to a $257 million education funding boost.

“In the Alaska State Legislature, if you’re not thinking strategically, and trying to get as many irons in the fire, you’re not going to be able to pivot or take a different approach when an opportunity arises,” said Tobin.

Last year, the Legislature passed legislation with a one-time $57 million school funding injection outside of the formula, alongside a permanent $30 BSA increase.

PFD vs. spending boosts

The bipartisan House minority caucus, meanwhile, introduced a series of amendments Monday afternoon to increase funding for services, such as a $7.5 million child care boost and $20 million in extra funding for student transportation. The minority’s amendments were consistently voted down after little debate by the 23-member Republican-led majority caucus and Eastman, who is not a member of either caucus.

The House Finance Committee advanced a budget to the floor with a $2,600 Permanent fund dividend, following the 50-50 formula, where 50% of a now-annual draw from the Permanent Fund would go to state services and 50% would go to the dividend.

House Minority Leader Calvin Schrage, an Anchorage independent, said the House’s dividend meant that increased spending for state services was not possible. Sutton Republican George Rauscher bristled at the suggestion that his votes to reject proposed spending increases for services were based on the size of the PFD.

The nonpartisan Legislative Finance Division recently projected that the House spending plan would create a $400-million plus deficit and require drawing from the state’s sole remaining savings account. That deficit would balloon to approximately $600 million with Monday’s proposed education funding increase.

In December, Gov. Mike Dunleavy proposed a budget with a $3,900 full statutory dividend at a cost of roughly $2.5 billion. Falling oil prices meant the full PFD dropped to approximately $3,400, but the deficit was projected to be over $900 million under Dunleavy’s spending plan.

Rep. Sara Hannan, D-Juneau, introduced an amendment Monday to reduce the House’s dividend to roughly $1,300. That amount would roughly match a 75-25 split from the Permanent Fund between state services and the dividend.

Hannan said that a $1,300 PFD would allow for an education funding boost, and not require deficit spending. She said that the Legislature should not draw upward of $500 million from savings to pay for a dividend, and that those accounts had been used to fill budget deficits for too long.

“Free rides die hard,” she said.

Debates over the size of the dividend followed familiar lines. A smaller PFD would be regressive and disproportionately impact lower-income Alaskans. A larger dividend would make an unsustainable hit to the budget. A long-term fiscal plan was needed to permanently resolve the dividend question.

After less combustible and lengthy dividend debates than in recent years, the House solidly rejected the smaller PFD figure on a 12-28 vote. The 12 lawmakers who voted for the smaller dividend were all members of the bipartisan House minority caucus.

All members of the Republican-led majority voted for the larger PFD, alongside the four majority members of the Bush Caucus. Anchorage Democrats Cliff Groh, Donna Mears, Genevieve Mina and Andrew Gray joined the majority in supporting the larger dividend.

The Senate has discussed a $1,300-dividend in the longer-term. Members of Senate leadership said new state revenue would be needed to pay a larger PFD.

House budget debates are set to continue Tuesday. House Speaker Cathy Tilton, R-Wasilla, said late last week that the plan was to advance the budget onto the Senate before the Easter weekend.

Sean Maguire reported from Juneau and Iris Samuels from Anchorage.