Missteps from Alaska’s education department could cost the state millions in grants, feds say

The state government risks losing millions of dollars in federal funding because it did not comply with requirements for pandemic relief funds, according to a letter from the United States Department of Education.

The state’s education department disputes the claim.

The result is a federal “high risk” designation that could cost the state grant funding. Members of the Senate Majority caucus said the state could lose more than $400 million.

“Without a plan and quick action, our local schools could be out additional federal resources, and the responsibility will fall onto the state coffers to fill the gap,” said Senate President Gary Stevens in a press release.

What happened is this: The state was supposed to maintain its funding to districts that got federal relief dollars, but it shorted several school districts with students from low-income families in 2021 and 2022. That news was first reported by KTOO in Juneau.

The state now owes the Kenai Peninsula Borough School District, Anchorage School District, Juneau Borough School District, and Fairbanks North Star Borough School Districts roughly $29 million.

Last month, the federal education department gave the state 30 days to develop a plan to repay the districts. The state failed to do so, according to federal officials.

Education Commissioner Deena Bishop said in a news release that the state funded schools as it always has.

“To now come back and suggest that we need to give additional funding to some of our largest school districts, which takes the equitable distribution and upends it at the expense of our smaller, rural school districts, makes no rational sense,” she said. “In short, the way ED is demanding Alaska distribute funds to comply with maintenance of equity requirements is inequitable for Alaska’s rural schools.”

The department plans to ask the federal government to reconsider.

“We hope the department will take the time to truly understand Alaska’s unique situation and well-vetted school funding formula which ensures equity in funding on a per pupil basis,” said Karen Morrison, finance director for DEED.

To resolve the issue, Gov. Mike Dunleavy could request supplemental appropriations to be considered by the Legislature in the current session, they said.

Alaska is the only state that has not met or produced a plan to meet the federal requirements to receive pandemic relief for its schools.

Sen. Löki Tobin, D-Anchorage and chair of the Senate Education Committee, said lawmakers were told by the state education department that it was working on a fix late last year.

That committee was set to hold an emergency hearing next Wednesday afternoon, but the state administration declined to attend until after it has responded to the federal government. Legislative Finance and Austin Reid, an expert in federal education policy for the National Conference of State Legislatures will make presentations.

“Despite being assured by the department and commissioner that a resolution was in the works, the state has failed its duties,” Tobin said.

This headline and story has been updated, including a response from the state education department.