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Parnell State of the State calls for 'education session' of Alaska Legislature

Alex DeMarban
Education and natural gas figured prominently in Gov. Parnell's 2014 State of the State Address, but the state's dire financial picture was notably absent from his remarks. Loren Holmes photo

Saying he wants lawmakers to come together to make 2014 the “education session,” Gov. Sean Parnell, delivering his 2014 State of the State Address in Juneau on Wednesday night, proposed raising the base student allocation for the first time in three years, an idea that would increase the main source of funding for schools.

But Parnell said he would work with the Legislature to do that only if they agreed to reform the educational system. He urged the Legislature to pass a measure allowing a public vote that could amend the Alaska Constitution so public money can be spent at private and religious schools.

“The question of school choice is not about private schools or religious schools; it is about whether parents should have the freedom to say what school best meets their child’s education needs with their child’s share of public money -- their money.”

And he said he wanted more resources for charter schools, boarding schools, technical programs, digital classes and vouchers that would give parents the choice to decide where to spend the money.

“Real change comes only with real reform,” he said. “If you are willing to join me in passing real educational reform, I will work with you to authorize an increase in the base student allocation.”

The focus on education, like much of the half-hour speech at the start of the new legislative season, overlooked any discussion of the hundreds of school workers around the state due to lose their jobs in part because school expenses have risen while the base student allocation has remained the same. Parnell, too, didn’t mention that hundreds more teachers and school workers in districts across the state now face losing their jobs in part because funding under the per-student formula has remained flat.

Ron Fuhrer, president of the National Education Association-Alaska, said the group’s members welcome the news of a higher base-student allocation, because many districts around the state are cutting programs and staff. But it’s the details that matter, he said in a prepared statement.

“NEA-Alaska is not in favor of additional funding that is tied to changing the state Constitution to allow for public resources to be diverted to unaccountable private schools and institutions,” he said. “Alaska has one of the best charter school laws in the nation, which has provided a vast array of choices for parents. These choices not only meet a wide range of student educational needs, they are also accountable to citizens through elected school boards."

Rep. Chris Tuck, D-Anchorage, said Parnell is offering support only after he’s “crippled” school districts by shortchanging funding. “Now that it’s been crippled -- no more funding until we see reform," he said.

Sen. Hollis French, D-Anchorage, said Parnell’s changes wouldn’t help public schools. "Diverting public money to private schools simply continues to deprive our public schools of the resources they need to do their job."

Lucas Saltzman, principal of Aquarian Charter School in Anchorage, mentioned by name in Parnell's speech as a successful charter school with a long waiting list, was excited by the focus on education and pledged his support.

"We are so excited for Alaska’s children," he said. "We cannot wait to work with our friends in Juneau to bring about equitable funding of the state's public charter schools. We applaud the governor for recognizing the differences in funding among our public schools, and we look forward to working with him and all the members of the Alaska Legislature over the coming months."

Some Republicans praised the proposal. Wes Keller, R-Eagle River, has been fighting the lonely battle for school choice for years, and welcomed the governor to the fight. "His comments on school choice were great,” Keller said.

In his speech, Parnell expressed support for Joint Resolution 9, the measure that would allow a statewide vote on the constitutional amendment removing language that prohibits public money to fund religious or private schools. That support won praise from the resolution’s sponsor, Republican Sen. Mike Dunleavy of Wasilla.

“Alaskans have not forgotten that the constitution belongs to the people,” Dunleavy said in a statement. “We are seeing growing support for choice in education as the people demand their voices be heard. Let the people vote.”

No talk of deficit spending

Parnell’s selective rhetoric extended beyond education: He never mentioned the billion-dollar deficits the state suddenly faces. Instead, he touted the state’s plans to invest in a gas pipeline project, saying historic progress has been made in the effort.

He also focused on his plan to reduce the state’s pension shortfall by moving $3 billion from a state savings account into the Retirement Trust Fund.

“The state of our state is strong,” Parnell said, and getting stronger each day. The state’s financial foundation is “very healthy,” he said, noting that George Mason University’s Mercatus Center recently ranked Alaska’s fiscal situation tops in the U.S.

But Parnell didn’t note discuss how Alaska came to be sitting atop the $17 billion stash that led to the ranking: With a tax system that plowed billion-dollar surpluses from oil production taxes into the treasury. Parnell and the Republican-led Legislature slashed that tax regime early last year in favor of a tax cut worth hundreds of millions of dollars a year to the state’s major oil producers, BP, ConocoPhillips and Exxon Mobil Corp.

And Parnell didn’t mention the dark clouds on the horizon. State revenues are expected to fall $3 billion short when you combine the current fiscal year -- 2014 -- and the next fiscal year that ends in June 2015, but Parnell never mentioned those deficits.

The projected shortfall in 2015 could be even worse than that, according to a report released Monday from the Legislative Finance Division that struck a decidedly less optimistic tone than Parnell’s speech.

The nonpartisan analysis called the state’s financial outlook “severe” and “sobering.” With expenses up significantly and revenues falling, the division said even dramatic cuts in spending, new broad-based taxes and the elimination of the Permanent Fund Dividend may not be enough to ward off multi-billion-dollar deficits once the state’s savings is tapped.

Parnell said “deficit” only once in his speech, noting that his efforts to transfer money into the state’s pension reserves would help the state address its $12 billion pension deficit.

The move, Parnell said, would reduce the general fund’s annual payment to its pension obligation, holding it steady for years at $500 million a year, and saving more than $250 million in the first year alone.

Energy and education

He said the “Great Alaska Comeback” is under way, and that Alaska is seeing “new oil investment dollars, new jobs and better opportunities are flowing into the state.” Alaskans are better off under the tax cut since it provides more protection to the treasury when oil prices fall, he said.

But, in another example of key details left unmentioned, there was no promise of increased oil production. Perhaps that’s because oil producers and state officials foresee only declining oil production in Alaska, raising serious questions about how Alaska will pay its bills in the coming years.

Still, Parnell focused on positives: Fairbanks should get low-cost natural gas -- trucked in a liquefied form down the Dalton Highway -- by winter of 2016, he said. Tourism is up and more people are acquiring business and professional licenses. Graduation rates have risen for the third year in a row -- to 72 percent in 2013 -- and a larger percentage of graduating seniors are earning Alaska Performance Scholarships.

Parnell also said the state is working on gas pipeline projects that will get gas to Alaskans first.  He wants lawmakers to review the recently signed guiding documents that provide details on how Alaska, the state’s major oil companies, and pipeline builder TransCanada, will join forces on a gas pipeline and liquefaction export project that could cost more than $65 billion.

Unlike past efforts to create a gas line, in which the fiscal terms were negotiated up front, this latest effort, with the state being involved as an equity partner, will take place in phases, allowing the Legislature more time to review the details, which are complex and involve a range of risks and potential rewards.

“The state will return to its board of directors, the people, by seeking review and approval, at all key decision points, from legislators,” he said.

Parnell wants lawmakers to take up legislation, he said, to allow the state and companies to move the next phase of the project, one that calls for about $400 million of preliminary engineering and design work.

That effort will take about 18 months and will require a $70 million to $90 million commitment from the state, he said.

If that gas line project falters, as they have in the past, the state will continue to work on the smaller-gas volume project pursued by the Alaska Gasline Development Corp., which is on track to hold an open season in early 2015.

“This has been a dream of Alaskans since 1968, when Prudhoe Bay was first discovered,” he said. “Our way forward will be on Alaska’s terms and in Alaskans’ interests.”

Pat Forgey contributed to this report from Juneau.

Contact Alex DeMarban at alex@alaskadispatch.com