A new letter from the federal government says Alaska’s education department owes almost $30 million to four school districts. The issue stems from the way the state reduced funding when it doled out COVID-19 relief money, and as a result of continued non-compliance, Alaska has now been designated a “high-risk grantee.”
The issue gained public attention earlier this year, when a December letter to Alaska Education Commissioner Deena Bishop from the federal Department of Education began circulating. It said that during the COVID pandemic, when the state received federal relief funds, it inequitably reduced the state contribution to certain districts.
The letter gave the state 30 days to submit a plan to resolve the issue by paying those districts.
Since then, the state has gone back and forth with the feds, whose assessment now shows the state owes even more money to districts than originally described. The latest letter, dated March 27, contains the most resounding consequence yet: the federal government is placing a condition on the relief funds, and designating the state as a high-risk grantee. It says if the state appropriates the funding for the districts within 30 days, the designation will be lifted.
The latest numbers include about $9.5 million for the Kenai Peninsula Borough School District, $16.5 million for Anchorage, $3 million for Fairbanks and $200 thousand for Juneau, a reduction from the last assessment. The North Slope school district, included in the initial letter, is no longer listed.
Clayton Holland, superintendent of the Kenai school district, said that money could be life-changing.
“We’re nearing the end of a budget cycle, preparing for next year’s budget, which has over $13 million in deficit,” he said. “And it would mean a tremendous amount to us.”
This week, the district’s finance committee sat down to plan for a budget with no increase to state funding, which included vast cuts to staff and programs. But they didn’t factor in any of the money described by the federal government — which could erase the district’s deficit, if combined with savings — because Holland said the district has been very out of the loop on when, or if, that money could come their way.
“The lack of commitment from anyone at the state level about anything related to it has been concerning,” he said. “We’ve been completely open about these letters, and what we’re hearing, but very concerned because there’s no confirmation that indeed anything will be added to our budget.”
Holland said he did talk to Bishop earlier this month, and she told him that if the money did come through, it wouldn’t be until the next fiscal year.
Thursday morning, the Alaska Legislature’s Senate Majority announced plans to hold an emergency hearing about the high-risk grantee designation and how it could affect other federal funding.
In a press release, the caucus estimates the impact of that determination could be vast. “The consequence of being designated as a “high-risk” grantee by the federal government risks an additional loss of $425 million of additional federal funds to the state,” the release reads.
Sen. Löki Tobin, who chairs the Senate Education Committee, said the state has assured legislators that it would resolve the issue. But now, that doesn’t appear to be true.
“As recent as early March, we received a letter that indicated the state continued to not meet those federal stipulations to bring us back into full compliance with the agreement we made when we accepted those COVID relief funds for the federal government for education,” she said.
The hearing is set for next Wednesday at 3 p.m., but Tobin said state education officials declined the invitation.
“It’s concerning that after almost two years of non-compliance, and now this hammer coming down from the federal government, we still aren’t receiving clear, direct communication from our administrative branch,” she said.
Commissioner Bishop responded to a request for comment by pointing to a Thursday afternoon press release. In the statement, the department said it disputes the letter’s premise that it has not equitably distributed funds, and claims the feds have moved the goalposts on their requirements.
“To now come back and suggest that we need to give additional funding to some of our largest school districts, which takes the equitable distribution and upends it at the expense of our smaller, rural school districts, makes no rational sense,” Bishop is quoted as saying in the statement. “In short, the way [the Department of Education] is demanding Alaska distribute funds to comply with maintenance of equity requirements is inequitable for Alaska’s rural schools.”
According to the March 27 letter, Alaska is the only state that has not met the federal requirements for equitable distribution of the relief funds.
The state now has 10 days to respond to the feds if they want the high-risk designation to be reconsidered.
This story had been updated to include a reply from Comissioner Bishop.
