Alaska Senate to set aside extra school funding after warning from the feds

JUNEAU — The Alaska Senate is planning to set aside around $15 million in its draft budget in extra school funding. That’s because the federal government says state funding was not adequate for the highest-need schools during the COVID-19 pandemic.

The 2021 American Rescue Plan Act gave over $125 billion to schools across the nation to help cover pandemic-related costs. As a condition of receiving $359 million in federal aid, Alaska agreed not to cut state funding to its highest-need schools in excess of school cuts made statewide.

Last month, the state was told it owed almost $30 million to four school districts because those reductions had effectively taken place. After a recent recalculation, the federal government said the state owes roughly $17.5 million to four districts.

The Anchorage School District is owed a little over $6.6 million; the Kenai Peninsula Borough School District needs an extra $8 million; the Fairbanks North Star Borough School District is owed $2.5 million; and the Juneau School District is owed $90,000, according to the U.S. Department of Education.

The federal aid package had a first-of-its-kind equity provision that proved challenging for states with fluctuating enrollment patterns during the pandemic to comply with.

Alaska education department officials have steadfastly said that they do not believe extra school funding is needed. The state’s per-pupil funding formula was not cut during the pandemic. The state also kept paying schools a percentage of that formula for students who disenrolled. Some students were also getting homeschool funding on top of that, state officials said.

“We see no reason why Alaska’s equalized education funding formula should not be considered consistent with the first-of-its-kind equity provision included in the American Rescue Plan,” Education Commissioner Deena Bishop said earlier in the month.

Since March last year, the state has sent multiple letters in attempts to resolve school funding concerns with the federal government. Some proposals were accepted, but not all of them.

“No matter how you try to recalculate the numbers, at the end of the day, there was a reduction that was greater than the statewide average in these communities of per-pupil spending,” said state Sen. Löki Tobin, an Anchorage Democrat.

Tobin, chair of the Senate Education Committee, said that may have been because of declining student enrollment. It could also have been that the percentage of the state’s funding formula paid to school districts for disenrolled students dropped year-to-year during the pandemic, she said.

”The reason doesn’t matter,” Tobin said. “At some point, you just have to comply with the regulation.”

Because of the failure to comply with the equity requirements, the U.S. Department of Education designated Alaska last month as “a high-risk grantee.” That designation could see the federal government claw back pandemic aid from the state. It could also be used when reviewing whether education grants should be awarded to Alaska.

The state Education Department wrote an April 5 letter, asking for reconsideration of the state’s high-risk grantee status. Bishop reiterated that the state believed its funding formula had met federal requirements.

In a letter sent last week to Tobin, the U.S. Department of Education said the high-risk status would be lifted by April 25 if the extra school funds are appropriated or an alternative and acceptable plan is presented.

In the letter to Tobin, the U.S. Department of Education detailed correspondence going back almost three years with state officials over the federal equity requirements. Senate members said they have been frustrated after being assured by state officials that the funding issue would be resolved.

The funding said to be owed to school districts is for two fiscal years. The 2021 shortfall would see $6.4 million paid to Anchorage schools and $5.5 million for Kenai schools. For the 2022 shortfall, $5.6 million would go to Fairbanks and Kenai schools, and schools in Anchorage and Juneau.

Around 41 states struggled to meet the federal requirements for 2021 state funding. Every state but Alaska has resolved those concerns. The 2022 requirements are still being negotiated between some states and the federal government.

With competing budget interests, Tobin said the Senate was planning on setting aside funding for the 2021 shortfall. That’s on top of $175 million in extra school funding in the Senate’s budget for all school districts.

Sitka Republican Sen. Bert Stedman said Tuesday that around $15 million is being budgeted in case the extra school funding is needed. The latest version of the Senate’s operating budget is set to be presented to the Finance Committee on Wednesday.