State Legislature approves $1.32 billion in schools funding

JUNEAU — Passage of a key education funding bill Wednesday brings the Legislature another big step closer to adjournment of its 2018 session. The state House voted to 31-9 to concur in Senate changes to House Bill 287, which provides $1.32 billion in funding for Alaska schools next year.

The bill also approved in advance an equal amount the following year but that is conditioned upon on the House accepting a plan for future “structural” draws from Permanent Fund earnings for the state budget. A percent-of-market value mechanism to draw on earnings of the Fund, in Senate Bill 26, passed both the Senate and House last year in different forms.

That bill is now in a House-Senate conference committee where the differences between the two approved versions can be worked out. But while Senate leaders are pressing for that to happen and for SB 26 to pass, the House has, so far, been reluctant.

Some House members want to attach a broad-based tax, such as an income tax, or higher taxes on oil and gas, to SB 26. The Senate is likely to resist that.

Despite that, the House and Senate have agreed on a one-year percent-of-market-value, or POMV, draw on earnings of the Permanent Fund to fund most of the deficit in the upcoming Fiscal Year 2019 budget along with a $1,600 PFD for 2018. Both of those measures are in the operating budget bill passed by both Houses.

The budget bill is now in a conference committee where spending differences are being resolved. But since the FY 2019 POMV percentage draw of 5.25 percent and the PFD amount are the same in both House and Senate bills, the conference committee will not change them.

A draw on Permanent Fund earnings for the budget is a first for Alaska. In prior years income from oil and gas has funded almost the total state budget, although since 2015, when oil revenues dropped, savings taken from the Constitutional Budget Reserve have been used to supplement the lower petroleum income.

Until now the only draws on earnings of the Fund have been for the PFD and an amount injected back into the principle of the Fund to adjust for inflation.

These three items – school funding, the POMV draw on Fund earnings and a $1,600 dividend set in the budget – were three of the four major issues needing resolution before adjournment. The fourth, setting a statutory framework for future POMV withdrawals, remains as the final major issue.

The education bill is important because it assures school districts they will have full funding over two months prior to the July 1 start of the new budget year. That will avoid having to send out “pink slips” to teachers and other school workers because of the budget uncertainty.

“Education stakeholders from across the state can sleep easier knowing that for the first time in three years their schools are funded on time,” said House Finance Committee Co-Chair Rep. Paul Seaton (R-Homer) in a statement.

“Passing House Bill 287 means there will be no teacher layoff notices this year due to late funding of the budget, and school districts can plan for a status quo budget. Our students deserve good schools staffed by teachers focused on education. They should not be worried about their future because of protracted budget negotiations in Juneau,” Seaton said.

Seaton was the primary driver in the push to get an “early funding” bill, HB 287, for passed by the House early in the 2018 session. That gave the Senate time to work on its version of the bill.

Rep. Harriet Drummond (D-Anchorage), who chairs the House Educatiuon Committee, said getting the education bill resolved allows legislators to focus on discussions on the statutory POMV funding mechanism and other remaining issues.

“Lawmakers from the House and Senate will be working to find consensus on the budget and components of a fiscal plan. That work will go faster and more smoothly by resolving the education funding issue, which we did with the concurrence vote (Wednesday). There is still a lot of work to do but we promised to protect public education from further cuts this year, and that’s exactly what we did,” Drummond said.

The Legislature passed its statutory 90-day limit on April 15, which it can legally do. It must adjourn by the 120th day, or May 15, under terms of the state Constitution. Given the progress to date many in the state capitol believe adjournment on or before May 1 is now likely.

Tim Bradner is co-publisher of the Alaska Legislative Digest