JUNEAU -- More than a decade after a state judge ruled that Alaska's system of funding for new and renovated schools was unconstitutional, the system remains unchanged and the backlog of projects in the Bush amounts to hundreds of millions of dollars.

Rural lawmakers are railing and legislators from both parties say the issue has festered for far too long. Gov. Sean Parnell says he's working on a solution.

The state now operates a two-pronged system to pay for costly new schools and renovations that Bush legislators say gives unfair advantage to urban districts like Anchorage.

Building the first 10 projects on the state-ranked construction priority list -- four new schools and six expansions -- would cost the state $332 million. All are in the Bush; many are located in villages within the Yukon Delta National Wildlife Refuge.

"If we could tax lichen and moss, we could probably pay for our schools," said state Rep. Bob Herron, a Democrat from Bethel who's on the House budget panel for education. "There is no resource to tax."

Most of the Bush schools that need repair or replacement are seriously overcrowded, with double the students they are meant for, according to state education officials, a situation that the governor and four Bush legislators including Herron saw first-hand during a Feb. 11 trip.

"I saw children being taught under conditions that make it extremely difficult to learn," Gov. Parnell said in an interview. "Extremely crowded classrooms. Lack of facilities, space and equipment. Safety hazards."

He added, "At least for those three schools, I am satisfied the need is there for some change to improve education delivery for young people."

Kipnuk's small school is packed with three times as many students as it has room for. In the village of Napaskiak, the school library was dismantled to make more classroom space. In Alakanuk, the science lab and home economics room have been turned into regular classrooms.

"The conditions there I think were deplorable, particularly in Alakanuk," said Sen. Lyman Hoffman, a Democrat from Bethel who toured the three villages with the governor.

Some of the schools, he said, are firetraps.

THE LAWSUIT

The court case at issue, Kasayulie v. Alaska, began in 1997 when a group of rural parents and school districts sued the state. They claimed that the state's method of financing school construction discriminated against rural students. The case was later amended to add a second claim over how the state turned a school land trust into a monetary trust, without ever putting a value on the land that was originally set aside for schools.

The Kasayulie case was reminiscent of the Molly Hootch case, the groundbreaking 1970s lawsuit that challenged the state's rural boarding school system and led to construction of dozens of village schools, some of them now among the ones in need of repair or replacement.

In the decade leading up the Kasayulie suit, the Legislature neglected to consistently fund grants for rural school construction, while regularly providing funds under a different method for urban districts, according to Howard Trickey, one of the plaintiffs' lawyers. Trickey made his comments in recent testimony before the House budget panel on education at the request of Herron.

Urban school districts like Anchorage can seek approval from local voters to take on debt for school construction. The state will reimburse much of that money.

Rural school districts with no taxing authority must apply to the state for a grant, demonstrate the need, make their way to the top of a state priority list, then wait for the Legislature to appropriate money. Urban districts can also apply for those grants, but often don't because the process can take years, according to officials with the Department of Education.

Before the Kasayulie suit was filed, the top-ranked project for school replacement was in the western Alaska village of Chevak, Trickey said. It was stuck on the list for years.

"There were legislators who referred to that project as the cork in the bottle," Trickey told the House budget panel.

The state never disputed the essential facts of the matter, according to Trickey: Top-ranked rural projects weren't getting funded, and urban districts were getting significant state help in repaying debt from voter-approved school bonds.

In response to the lawsuit, then-Anchorage Superior Court Judge John Reese ruled in 1999 and again in 2001 that the system was unfair to rural students in crowded and poorly maintained schools. The situation violated their right to an education established in the state Constitution, and had the effect of treating Alaska Native students -- the vast majority of those in Bush schools -- differently than non-Native students, the judge ruled.

"The (urban) bond reimbursement program is automatic. The rural funding is political, and has been arbitrary, inadequate and racially discriminatory," Reese wrote in his 2001 order. "Education, health and safety of our youth have suffered. The dignity of our fellow citizens has suffered. The respect for public officials has suffered. The racial divisions in our state are further aggravated."

The judge expressed high hopes that the Legislature would "within a reasonable time, create a constitutionally proper system of funding" but if it didn't, he would order action. Reese has since retired.

All these years later, the Legislature has yet to create a new system that streams money into rural school construction funding the same as for urban schools, Trickey said.

"I had assumed that the litigation was essentially over, that we had an order from the court," state Rep. Les Gara, D-Anchorage, said in the House education panel hearing.

The state disagrees with the ruling but can't yet appeal because the judge never issued a final order, Eddy Jeans, the state director of school finance, told the legislators. The case is still pending because the state has not yet completed an analysis of the land values in the part of the lawsuit dealing with the education trust.

A BURST OF FUNDING

While the system of funding school projects didn't change, since the suit was filed the Legislature has approved nearly $1 billion in grants for school replacements, additions and renovations all over Alaska, and much went to rural schools, according to the Department of Education.

Of the total $988 million, $777 million went to replace or improve school properties in Regional Educational Attendance Areas, the rural districts with no taxing authority, the document shows.

Hoffman said none of the new rural schools was sought by a governor's budget -- the money was only inserted by legislators.

"Since the Kasayulie case, not one school, not one dollar, has been requested by a governor to address new school construction," Hoffman told reporters recently.

The department is working on an analysis to see how much state money went to urban projects during that period through the debt reimbursement program, Jeans said.

The Kasayulie case is complicated because of the separate issue involving the conversion of the land trust to a monetary trust, assistant attorney general Neil Slotnick told legislators at the hearing. The state still needs to put a value on the land at the time of the conversion, back in 1978.

"That's what's been holding us up for the past 10 years," Slotnick said. "So even though the Kasayulie ruling came down 10 years ago, the reason why it's never been appealed is that you can only appeal a final judgment. We don't have a final judgment because we're struggling with doing that valuation of the lands."

State Rep. Peggy Wilson, R-Wrangell, who also is on the education budget panel, said she wanted to see the lands valued and the case resolved.

"I certainly hope that gets going pretty soon," Wilson told Slotnick. "I don't think it's fair that kids are suffering because of it."

THE NO. 1 SCHOOL

Fifteen miles from the Bering Sea on the marshy Yukon Delta sits Alakanuk, a Yup'ik Eskimo village of about 670. That was the first stop earlier this month for the tour by the governor, a Republican, and the Democratic legislators: Hoffman and Herron from Bethel, and Sen. Donny Olson and Rep. Neal Foster of Nome. All but Foster organized with Republicans and hold committee chairmanships.

"I've been sort of hounding the governor to fund schools so he said let's go take a look at some of them," Hoffman said in an interview.

The K-12 school in Alakanuk took years to edge its way onto the top spot on the state's list of projects eligible for grant funding.

The school was built in the 1970s and according to the state has space for 111 students. Now it has more than double that number.

The heating system is so ineffective that during the governor's visit, a 20-degree day, one classroom was so hot the students had to open the windows, while other parts of the building were chilly, Hoffman said.

There's no spot for home economics, no science lab, no room for more teachers. Storage buildings on crumbling foundations are now classrooms, and hallways are used for storage.

"It affects my school work," junior Freddie Edmund said of the crowding. "It's too noisy. We're so close to the gym. I can't really concentrate if I'm doing a test."

Class offerings are so limited, partly for lack of space, that no student will be about to take the four years of hard academics required under the governor's proposed new scholarship program, teacher Paul Tancrede said.

"It really robs the students of the ability to get all the information they should get," Tancrede said.

Shanelle Afcan, who is taking algebra as an eighth grader, said she's worried about the lack of higher level classes at her crowded school.

"If I don't go to college my mom will kill me," Afcan said. "It would be a lot easier if I had a scholarship."

MONEY FOR ANCHORAGE

A project on one of the Department of Education's lists of grant requests has caught the attention of some legislators.

One list consists mainly of requests for new schools and additions. The second list is for major maintenance such as renovated classrooms, boilers, and fire alarm upgrades.

For next budget year, Parnell hasn't requested any new schools but is asking lawmakers to fund the top eight projects on the school maintenance list, a total of nearly $25 million.

Most of that money, $21 million, would go to the seventh project on the list: a big renovation at Service High School in Anchorage.

"Even as an Anchorage person, I feel that's not particularly equitable," Gara said at the recent budget panel hearing.

Herron, from Bethel, responded that the state's process of reviewing and ranking applications is fair. The problem is that the new Bush schools are so expensive.

"The costs are scary," Herron said. "They are scary to the districts and they are scary to the Legislature by the sheer high number."

Price tags for new schools rose dramatically a few years ago with a run-up in the cost of steel, and it's expensive to get materials to the Bush and to build on challenging terrain, said Sam Kito, state school facilities engineer.

The requested new school in Alakanuk, for instance, would cost more than $47 million, of which the state would pay all but $1 million if the Legislature approves.

As to Service High, the Anchorage School District followed the state's requirements and provided a detailed, well-documented request, said Mike Abbott, assistant superintendent of support services. The district would have to pitch in about $9 million.

Most school district construction projects are paid for by bonds, supported by voters, he noted. "It's relatively unusual for an Anchorage school to rank this high."

The Service High grant request comes after voters rejected a $70 million bond proposal for renovation and a new auditorium. The grant request is stripped down and doesn't include the auditorium, Abbott said.

"It's not Service High School's fault," Parnell said. "It's the way the lists are constructed and the way things are funded."

ASKING THE EXPERTS

Parnell said he is looking for a new way to finance school construction that will address the Kasayulie lawsuit.

"That's my intent, that Kasayulie will be resolved and the rural construction needs will be met," Parnell said.

His next step is to meet with experts in the Revenue Department, Alaska Housing Finance Corp., and the Alaska Industrial Development and Export Authority. Financing a project at a low interest rate may make better financial sense than tapping the billions the state has in savings, the governor said.

Hoffman, who is co-chairman of the Finance Committee that must approve all funding legislation, said he wants a plan that will fund the top 10 school projects in three years.

"To me, we have a lawsuit and we need to work on trying to get the lawsuit resolved," Hoffman said. "It's been 10 years. Specifically, when it's a situation where 98 percent of them are Alaska Native students, it does not bode well for the state of Alaska."

Parnell said Hoffman's proposal may be too ambitious but he wants to find a way to start checking off schools from the list as well -- if that settles the court case. He is still working on specifics.

"I think we have an opportunity to resolve the litigation and meet the needs of the young people in these village schools," the governor said.