Alaska’s schools got more bad news on Wednesday when the federal government declared the state a “high-risk” grantee — a move that could potentially jeopardize hundreds of millions of federal education dollars — after the Dunleavy administration failed to fix costly errors in how it shared federal pandemic relief money with school districts.
The state received several rounds of federal pandemic relief money with the stipulation that the state had to maintain funding levels for school districts with high numbers of students from lower-income families. That was meant to help stabilize school districts’ funding amid declines in enrollment, which typically is used to determine funding levels. The feds accuse the state of failing to follow that rule, using the pandemic as an excuse to cut funding.
According to a Wednesday letter from the U.S. Department of Education, the state shortchanged four of its largest school districts by $29 million over two years.
In a Dec. 22, 2023 letter, the feds demanded the state come up with a plan to pay the districts — Anchorage, Juneau, Fairbanks and Kenai — the money that was due. The Anchorage School District is owed the biggest repayment of about $16.5 million. According to the latest letter from the feds, the state responded with a letter that essentially outlined how it could request the money from the Legislature “but made no commitment to do so.”
Since the initial letter, the governor has had several opportunities to request the money be included in the budget — including his draft budgets and amendment requests – but has yet to request the money. The formal deadline for the governor to offer budget amendments has passed, but legislators could field informal requests to amend the budget.
It’s not clear whether that will happen.
The letter also outlines how the state has repeatedly missed federal reporting deadlines for the money, with some reports that were allegedly more than two years past the due date. Together, it has landed the state in hot water with the feds, resulting in the U.S. Department of Education labeling the state as a “high-risk grantee.”
The letter doesn’t state a specific cost or penalty for the state, but it says that if the state doesn’t come up with a better answer in the next 30 days, it could move to withholding future funds or recovering the $359 million in pandemic funds.
“Alaska is the only State that has not met, or presented a sufficient plan for meeting, these requirements,” explained the letter.
The bipartisan Senate Majority responded with alarm, noting that they had been aware of the issues but had been assured by the Dunleavy administration that a solution was in the works. Now, it appears that was not the case, and the Senate has called an emergency Education Committee hearing on the issue next Wednesday, where legislators say they hope to get answers.
“During a period where we are already doing everything we can to provide school districts with the resources they need, because of the lack of quality oversight and management, the state is on the hook for an additional $29 million while putting in jeopardy hundreds of millions of dollars in federal grants,” said Senate Education Chair Löki Tobin. “Despite being assured by the Department and Commissioner that a resolution was in the works, the state has failed its duties.”
What districts are due
| School district/budget year | Shortfall |
|---|---|
| Kenai Peninsula Borough School District, FY2022 | $7,186,852 |
| Anchorage School District, FY2022 | $15,202,289 |
| Juneau Borough School District, FY2023 | $204,309 |
| Anchorage School District, FY2023 | $1,391,681 |
| Kenai Peninsula Borough School District, FY2023 | $2,494,871 |
| Fairbanks North Star Borough School District, FY2023 | $3,097,911 |
Why it matters
School funding has been at center stage in this year’s legislative session. Legislators reached a hard-fought compromise outlining about a quarter-billion dollars in increased public school funding, but that move was successfully vetoed by the governor after 17 Republicans flip-flopped on the measure. Dunleavy and Department of Education Commissioner Deena Bishop have routinely suggested schools’ financial problems are a result of mismanagement by local school boards, which they’ve used to justify a more state-down approach to public education policy.
Now, it appears that it’s the state that’s falling short in its duties.
It’s also not the first time that the Dunleavy administration has put millions of dollars in federal funding at risk. Last month, the federal government notified the state that it had rejected the state’s transportation plan for a long litany of errors. The state, like now, found itself in the unenviable spot of being the lone state in the country scrambling to comply with the federal government’s rules. At least with that, the federal government eventually gave the state partial approval for its transportation plan.
In a sharply worded message posted to Twitter, Sen. Tobin followed up with:
“This situation was completely avoidable,” she said. “The public deserves to understand where leadership fell down & what needs to happen to immediately resolve the issues. The legislature delegates its authority to DEED, and our public school system deserves quality leadership. This is not it.”
