Alaska Gov. Dunleavy presses school policy changes with funding increase, after vetoing larger boost

Along with announcing a veto of an education funding bill on Thursday, Alaska Gov. Mike Dunleavy introduced new legislation with a lower per student funding boost, plus additional funding and policy items focused on charter schools and homeschool programs.

Dunleavy held a news conference at the Alaska State Capitol on Thursday, saying there were two reasons for the veto.

“One of the reasons is that the revenue situation has deteriorated a lot since we submitted the bills and worked off the budget in December,” Dunleavy said. “And the second reason for the veto is there’s no policy with this.”

Last week, the Legislature passed a stripped-down version of House Bill 69, taking out all policy items, and putting forward a simple two-line version that increased the base student allocation — the core of the funding formula — by $1,000 in the funding formula. The bill originally was focused solely on a funding increase, and legislators had added some policy changes sought by the governor, only to remove those proposals after he continued to criticize the different versions of the bill for falling short.

Dunleavy had called the move a “joke” and promised to veto the bill. On Thursday, with the veto announcement, he urged legislators to reconsider his policy proposals to advance school funding this session. 

“We still have 34 days left in the session. We still have plenty of time to get a bill passed,” he said. “We know what the policies are. We know how to get to the end game here.”

The governor’s new proposed bill includes a $560 increase for the base student allocation, plus another $35 million per year in “targeted investments” for specific programs, resulting in what the governor’s office calls a “BSA equivalent” of $700.

However, that would result in a year-over-year decrease in the BSA because last year’s budget included a one-time funding bonus equivalent to a BSA boost of $680.

The governor’s policy proposals includes $13.6 million to fund homeschool students at the same level as the core BSA amount for students in brick-and-mortar schools; the state currently funds homeschooling at 90% of the BSA. In addition, Dunleavy proposed $21.9 million in incentive grants aimed at improving reading proficiency, an expansion of the application and appeals process for charter schools, and statewide open enrollment, which would allow families to choose which school students attend.

“This is a bill that, if agreed upon by the Legislature, I’ll sign tomorrow morning. I’ll sign Monday. I’ll sign Tuesday … because it will have policies in there,” Dunleavy said. “We support funding, but we’re not going to support a very large, unbalanced, one-sided coin that is just funding, when we have opportunities to improve educational outcomes.” 

Now, the 60 members of the House and Senate are headed to a joint session where they could override the veto. 

Overriding the veto would require votes from 40 of 60 legislators. Last year, the Legislature failed by one vote. This year, multiple legislators said there are unlikely to be 40 votes for an override. The House and Senate passed HB 69 with a combined 32 votes.

A joint session to vote on the veto override is tentatively scheduled for Tuesday, April 22. 

“You simply never know,” House Speaker Bryce Edmon, I-Dillingham, told reporters on Thursday of the veto override vote, adding that school districts are in crisis. “We have heard time and again this session, (from) schools that are beyond their capabilities of any reserves that they had. Our public school system in Alaska is in crisis, and that’s something that we need to focus on.” 

Edgmon said the House majority caucus is open to negotiate with Dunleavy and consider his policy proposals, but he’s concerned it doesn’t address the state of schools now, some facing major deficits and budget shortfalls. 

“What happens if that gap isn’t met this year? What transpires in year two or three or four?” Edgmon said, adding that this question is particularly important for districts that are struggling to keep schools open. “And I didn’t hear a clear answer from the governor, and that concerned me.”

With 34 days left in the session, Edgmon said the funding boost is a major priority. “It’s going to be a heavy lift, but we’re up for it, and we’re going to do everything we can,” he said. “And we ask our school districts to be patient, to know that we’re doing our best.”

Rep. Rebecca Himschoot, I-Sitka, who sponsored the bill, also urged the veto override. 

“Honestly, the $1,000 BSA is what our districts need,” she said. “They need twice that. So to back away from the override vote, would I think be the wrong move at this point. We need to push for that override.”

Himschoot agreed there are areas in Dunleavy’s new legislation that could be negotiable. “There are some things there that we can definitely work with,” she said. “But the deal is not sealed in any way on that bill right now, I know that educators across the state are being laid off. We have school programs being cut. Once you cut it, you don’t necessarily get it back,” she said.

In an interview after the governor’s news conference, Himschoot pointed to a comment by Dunleavy. 

“One thing the governor said was we need to put our resources where the biggest problem is,” she said. “And the biggest problem our districts have right now is they’re either over a funding cliff or they will be next year…. right now, while we’re talking, they are going off the edge.”

Educators and advocates react to the veto

School district officials, students, parents and advocates have testified to lawmakers over weeks during the session that Alaska schools are in a financial crisis, and face steep cuts to programs, school closures and the loss of teachers and staff without the funding boost. Already, school districts have sent out hundreds of notices of potential layoffs, some accounting for a $680 to $1,000 per student increase. 

On Thursday, the state’s largest teachers’ union, NEA-Alaska, criticized the veto and urged an override. “To say I am disappointed Governor Dunleavy vetoed education funding is an understatement,” said Tom Klaameyer, NEA-Alaska president, in an emailed statement. “Unfortunately, it’s not surprising. We knew this Governor was going to play politics with Alaska students’ futures – and it’s disgraceful….  I urge every legislator to vote to override Governor Dunleavy’s veto and do the right thing for our kids.” 

Caroline Storm, executive director of the nonprofit Coalition for Education Equity, said in an interview Thursday that the group is preparing a lawsuit against the state saying that it is failing to maintain adequate schools, as required under the state constitution.

The group sued the state in 2004, in Moore vs. State of Alaska, where a judge ruled that the state was failing to support underperforming schools. Storm said today, the state is again not fulfilling its obligation, for both funding districts and adequately meeting education standards. 

“I know for a fact that there are several districts that are unable to even provide their students with elective opportunities, and those students have to do some other sort of correspondence course to get the requirements they need to graduate,” Storm said. “So if we’re not able to fund districts to the point where they can have a teacher present to offer those electives, or those art standards or anything, we’re not providing an adequate education.”

Budget still in flux 

Last year, legislators approved a one-time $680 boost to the BSA. That was worth roughly $174 million statewide. The increase proposed in HB 69 would have permanently increased that funding boost by $79 million, or $253 million statewide.

Anticipating Dunleavy’s veto, the Alaska House of Representatives voted to include a one-time, $1,000 BSA boost equivalent to HB 69 in the state’s draft operating budget.

It isn’t yet clear whether the Senate will affirm that increase, because the House’s draft budget also includes a major deficit. 

The legislation the governor proposed on Thursday would cost $179.1 million. 

As of Thursday, the draft budget bills adopted by the Legislature this year contain about $6.6 billion in spending. The Alaska Department of Revenue is expecting $6.1 billion in state revenue over the next year, resulting in a projected deficit of almost $500 million.

Speaking to reporters on Thursday, Dunleavy said that if the Legislature is able to balance the budget while still approving a one-time $1,000 BSA boost, he’d consider it.

“I would have a discussion with finance leaders to take a look at that, see where we would draw that money from to make that happen. But I’d be willing to have that discussion,” he said.