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‘It’s just crazy’: Alaska school districts brace for delays in state funding

School districts across Alaska are bracing for the possibility that state funding won’t arrive on time this summer if a battle over the budgeting process heads to court.

For some school districts, that means calculating how long they can survive on savings and how they can best pay bills for school supplies already on the way, superintendents said.

“We can survive a month, but after July, I’m up the creek. We’d have to just shut down,” said Lauren Burch, superintendent of the small Southeast Island School District. “It’s just crazy.”

Burch and other school district officials said in recent interviews that year after year uncertainty swells around how much state funding lawmakers will agree to send to public school districts. But this year has presented a whole new level of unpredictability, they said. Now the question is: When will school districts actually start receiving state funding?

The budget uncertainty is a nightmare for planning, and there are concerns about its impact on recruiting and retaining teachers, according to district officials.

“At the very least, it introduces chaos and chaos costs money,” said Norm Wooten, executive director of the Association of Alaska School Boards.

A dispute in Juneau

Typically, school districts receive state funding in installments, and the first round of payments goes out around July 15.

But there’s a dispute in Juneau over the advance funding of education: Is it legal for the Legislature to set a funding amount one year in advance if it doesn’t have the money on hand?

A majority of legislators and Gov. Mike Dunleavy disagree sharply on the issue, likely sending the question to court, and possibly tying up state funds for schools.

The issue stems from 2018 when, under Gov. Bill Walker, lawmakers voted to fund public schools in the 2019-20 school year with no cuts and a $30 million bonus payment. The idea was to provide schools with some budget stability, and avoid the cycle of layoff notices to teachers, they said.

This year, legislators have not included that 2019-20 education funding in the operating budget for the upcoming fiscal year — including in the compromise budget approved by the Senate Monday — because, they said, they already approved the funding last year.

But the state Department of Law argues that last year’s advanced education funding is unconstitutional. It violates the annual budgeting process mandated by the state constitution and the governor’s right to veto, according to a legal memo from Attorney General Kevin Clarkson. The constitution also bans dedicated funds, it says.

Because the funding is not valid, the Dunleavy administration has said, it cannot be paid.

“Without a valid appropriation, we will not be able to distribute education funding to school districts,” said Matt Shuckerow, Dunleavy’s press secretary. “We have called on the Legislature to simply put education funding back in the budget.”

But a majority of legislators say the funding is legal. They said they’re worried that if the governor’s view is upheld, he could use the justification to overturn other laws, not just education funding.

In February, Dunleavy proposed deep cuts to state funding for public schools. Then he said in May if the Legislature put the 2019-20 education funding in the budget, he wouldn’t veto it.

Asked why the Legislature doesn’t put the funding in the budget to avoid a lawsuit, Sen. Gary Stevens, R-Kodiak and chairman of the Legislative Council, said: “Look at the governor’s track record on what he said he’s going to fund, and what he decided not to fund in his budget.”

It’s also a separation of powers issue, Stevens said. The Legislature has the power to pass a budget, and the governor executes it.

“I’m very confident that we are in the right,” he said.

If the state doesn’t issue funding to public schools in July, the Legislature is prepared to sue the governor. If that happens, Stevens said, he’s hopeful the court will issue an injunction, allowing state funding of schools to continue amid a lawsuit.

‘A pawn in this’

Meanwhile, school district officials said they’re left uncertain about when to expect state funding.

“It’s hard to feel like we’re not a pawn in this,” said Nenana City School District superintendent Patrick Manning.

Anticipating a delay in state funding, the Nenana school district issued furlough notices last week to all of its full-time classified staff — about two-dozen people, Manning said. That includes its school maintenance crew that would normally spend the summer painting and cleaning schools.

“We’ve ceased all spending at this time,” Manning said. “No new purchases.”

The district also has yet to offer non-tenured teachers contracts for next school year, he said. It’s too risky without knowing whether state funding will be cut in some way, he said.

Other school districts said they had a larger safety net to fall back on. Possible impacts varied among districts based on their size, their savings and their level of local financial support.

The Anchorage School District could likely survive about three months on its savings, said Jim Anderson, district chief financial officer. If it goes longer than that, he said, perhaps the municipality would consider providing local funding earlier than normal.

“At least, the potential for a solution in a larger city is there,” Anderson said. “Whereas a potential solution in a rural area with no tax base? It’s just not there.”

The Anchorage School District has planned its 2019-20 budget based on the funding amount approved by the Legislature last year, he said. It did not issue layoff notices to teachers, and has not halted summer projects, he said.

At the Matanuska-Susitna Borough School District, budget uncertainty prompted the district to issue more than 140 non-retention letters this year to non-tenured teachers, instead of issuing them contracts, according to district spokeswoman Jillian Morrissey.

On the Kenai Peninsula, school district officials have been busy creating contingency plans — first preparing for possible funding cuts and then preparing for the possibility that funding won’t arrive on time.

“It takes a lot of time, and takes us away from doing other things,” said Kenai Peninsula Borough School District spokeswoman Pegge Erkeneff.

At the Lower Kuskokwim School District headquartered in Bethel, delayed state funding means possibly diving into savings to pay the roughly $2.5 million bill for its year’s supply of fuel that’s already on its way on a barge from California, according to superintendent Dan Walker.

The fuel is divided among remote schools in the summer, while there’s no ice on the Kuskokwim River, he said. It’s cheaper than flying up fuel, he said. The district also barges up other goods in the summer including items from paper towels to plastic bags to five-gallon buckets of wax for the floors.

“As our goods arrive, those companies invoice us ,” he said. “The question is: At what point will we not have the resources to pay the bills?”

Walker said he’s also concerned about how the budget uncertainty will impact school districts’ ability to recruit teachers. It’s already a difficult task. Teacher salaries in rural Alaska used to far exceed other states, but don’t anymore, he said. The retirement system also isn’t competitive, he said.

Lisa Parady, executive director of the Alaska Council of School Administrators, also said the budgeting uncertainty undercuts a school district’s ability to provide stability to its staff, posing issues to retaining teachers.

“Not having (funding) resolved in a timely and reliable way is putting education in peril,” she said.

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