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Federal officials say state owes Kenai school district $5 million

Soldotna High School, the largest school in the Kenai Peninsula Borough School District, pictured in May 2023.
Riley Board
Soldotna High School, the largest school in the Kenai Peninsula Borough School District, pictured in May 2023.

The State of Alaska owes the Kenai Peninsula Borough School District and two other Alaska school districts millions, according to a letter from the U.S. Department of Education.

The letter, dated Dec. 22, is addressed to Alaska Commissioner of Education Deena Bishop. It says that during the 2021-2022 school year, the Alaska Department of Education and Early Development (DEED) disproportionately reduced funding for some school districts when it received and allocated COVID relief funds.

The American Rescue Plan Act gave billions of dollars in emergency assistance to schools during the pandemic. In order to receive those funds, states couldn’t disproportionately reduce their funding to high-need districts. And in the highest-poverty districts, the state couldn’t reduce per-student funding below what they got in fiscal year 2019.

Federal education officials write that the state funding fell short by $5,094,972 to the Kenai Peninsula Borough School District during Fiscal Year 2022.

“One way that Alaska may resolve the identified compliance issues for FY 2022 is by making supplemental payments,” Deputy Assistant Secretary for Policy and Programs Adam Schott wrote in the letter.

District Superintendent Clayton Holland said he got hold of the letter via a legislator, who forwarded it to the district’s Finance Director Liz Hayes. But he hasn’t heard anything about the letter or money directly from the state.

“So we have been trying to figure out what this means for us as a district,” Holland said. “The amount on there shows over $5 million. That would be a huge thing for our district to receive as we’re in these challenging financial times.”

The school district is facing a $13 million deficit for the upcoming fiscal year, and has been in talks for months about how to make up that gap. Board members, administrators and students have been major advocates for an increase to per-student funding from the state in legislative discussions.

Holland and Hayes were both in Juneau two weeks ago, and tried to get more information about the letter, but were unsuccessful. Ultimately, Holland said, he reached out directly to Commissioner Bishop in an email, but he hasn’t heard anything back yet.

“We don’t know if we’re gonna get this money — if we get part of this money, where that money went, where it got allocated to — because we’ve not heard a word from DEED,” Holland said.

Holland said he had no sense that any funds were underallocated back in 2022, and he doesn’t know why KPBSD’s amount is so much higher than the other districts — Juneau is owed more than $2.5 million, according to the letter, and the North Slope district is owed almost $200 thousand.

But that money could go a long way in KPBSD, where officials will soon have to think about cutting teachers and services, and are diligently watching legislative discussions.

“If we were to get the $5 million, which I’m not sure that we are, probably the board would give me direction, I would assume, to put it towards next year’s deficit,” Hayes said.

In the letter, federal officials write that the state has 30 days to submit a plan describing whether, when and how they would make supplemental payments to the districts. That deadline would have passed in January. In the letter, officials write that the federal government may take appropriate action without a timely response from DEED, like designating the state as a high-risk grantee or recovering relief funds.

Commissioner Bishop did not respond to an interview request.

KTOO’s Katie Anastas contributed reporting. 

Riley Board is a Report For America participant and senior reporter at KDLL covering rural communities on the central Kenai Peninsula.