House Bill 44 aims to accelerate the building of an in-state gas line in Alaska. Before it overwhelmingly passed the House, lawmakers agreed to strip the bill of a provision authorizing the Alaska Permanent Fund Corporation to invest up to $1 billion in such an in-state project. The vote was 22-15, and not strictly along party lines.
That was the right call.
For decades now, the Permanent Fund directors have run the fund as a long-term investment for Alaskans. Their target is maximum returns with minimum risk. The Permanent Fund is not a development fund. Alaska has vehicles for that -- the Alaska Industrial Development Authority (AIDEA) and the Alaska Natural Gas Development Authority, to name two. Allowing those agencies to issue bonds for in-state natural gas development falls squarely within what those agencies were created to do.
Lawmakers and other Alaska citizens have long debated the purpose and best uses of the income from the Permanent Fund. But over the years the fund has become Alaska's rock, as permanent as financial works can be, even when hammered as it's been these last 8 months. The fund yields a dividend to Alaskans every year while maintaining billions in savings for the future.
Whether, how and how much the state should invest in a gas line project are fair questions. But let's leave the Permanent Fund out of this equation. From the Healy coal power plant to Delta barley to Anchorage fish processing, the state's track record in bankrolling big projects doesn't inspire confidence.
The Senate didn't act on the bill, and it's likely to be back next session. Good, provided the part about investing the Permanent Fund doesn't return. We can take calculated development risks with some of Alaska's money. But not with the Permanent Fund.
BOTTOM LINE: Permanent Fund is not a development bank, nor should it be.
A good year
Education comes out well, but federal money is still uncertain
Alaska's schools made good gains this legislative session, even though state revenues took a dive from the year before.
The Legislature followed through on year two of a plan to put new money into public schools over three years. Lawmakers added more than $56 million to increase the per-student base funding, add money for intensive needs children, and address rising operating costs in districts outside of Anchorage. The new money is intended to make up for years of short funding.
The Legislature also endorsed spending $170 million in federal stimulus money on schools. This is extra money Alaska districts can certainly use as they tackle persistently low graduation rates and high dropout rates. This one-time money can be spent on such programs as teacher training, summer schools and improved technology.
But the stimulus money is hanging in the balance. Only Gov. Sarah Palin can request some of that stimulus money, and she controls all of it through her veto power. This money will create jobs around the state and give Alaska school children a better chance at success. The governor has no good reason to veto it, but she has not yet made her intentions clear.
The extra education money adds $100 to the base amount in the state's funding formula for schools, bringing the total to $5,580 per student. Funding for intensive needs students rises from $49,320 to $61,380 per student -- significantly closer to the actual cost of educating them. That will particularly help the Anchorage School District, which draws a big share of the students needing the most services.
The Legislature also approved:
• $2 million for state-funded pre-schools to be run by school districts around Alaska. The money will pay for 500 children, and will be spent on half-day programs, mostly for four-year-olds in the year before they enter kindergarten. It's a modest pilot program, but a welcome one.
• $824,000 for the state Department of Education to target more aid to low-performing schools. The state intends to hire a director of rural education and to provide experts who will assist school districts in areas like teaching reading and math. These sound like positive steps toward improving rural schools with lagging student achievement.
• $600,000 to reduce the wait list for children to get into the federal Head Start program. The money will pay for 60 more kids from a wait list of several hundred.
One thing the Legislature did not do this year was set aside money for education a year in advance. Last year, lawmakers did so. This year, forward-funding fell victim to a late-session tussle between Democrats and Republicans over taking money out of reserves. With forward funding, districts know in advance how much money they can spend when they build their budgets, instead of waiting, waiting, waiting until the Legislature passes the state budget in the spring and scrambling to make last-minute adjustments.
Given that it was a tough financial year, the Legislature overall did a good job with education. The next step is up to the governor.
BOTTOM LINE: Schools will be better off this coming year, thanks to the Legislature.