Government

The Alaska Board of Education unanimously voted to send a proposed regulation change that would have limited how much money local governments can give to schools back to the state education department on Thursday. It comes after public outcry and a change in stance from the department.

The Department of Education and Early Development, or DEED, backtracked on its initial recommendation to the board to change the state regulation that defines what counts as local contribution. That’s school funding that comes from municipalities. State law restricts the amount of funding local governments can give to their districts.

Instead, DEED recommended the board take no action on the change. DEED Commissioner Deena Bishop said the department has been working with district leaders since August to clarify their intentions with the proposal.

“I think just the stress about school funding, a lot of trust isn’t there,” Bishop said. “The department wants to earn that trust back and continue with the work.”

Many district leaders voiced concerns about how it would affect out-of-cap spending. That’s money that local governments give to districts outside of the maximum legal amount. It’s for non-instructional purposes, like transportation, child care and extracurriculars. Many, like the Anchorage and Sitka School Districts, also worried about how in-kind services would be impacted.

The proposal spurred hundreds of written public comments against the change last summer. Several Alaska district officials and parents testified when the regulation was considered in June and again at Thursday’s meeting.

Part of the initial reason for bringing this forward was something called the disparity test —  that allows the state to use federal impact aid as part of its contribution to districts, which can save the state money. The state failed the test this year and in fiscal year 2022. It’s currently appealing the decision. Bishop said during a work session on Wednesday that the department is moving through the appeals process.

But she also said that the focus on the regulation is to make sure districts are following state law.

“We’re not reacting to the federal government,” she said. “What we are, is trying to meet the state statute that calls for that equitable funding.”

In a memo for the regulation when it was introduced in June, Bishop wrote that one of the reasons for bringing the regulation change forward was to make sure it was in line with the federal disparity test.

In his public testimony, Juneau School District Superintendent Frank Hauser referenced a letter from DEED appealing the results of the federal disparity test. The state claimed it would pass the test through a different calculation method, and does not mention local contribution. Hauser said he wants the department to drop this regulation change.

“I am terrified of version 3.0 of this regulation,” he said. “Each subsequent attempt at this regulation change has had exponentially more negative impacts, impacts beyond what the department realizes, even to REAAs, homeschool and correspondent students.”

Juneau officials estimated the district would have lost $8 million in funding if the regulation had gone through. In an email to KTOO after the decision, Hauser said he appreciates the board bringing the regulation back to the department to get more input, but “that action begs the question why stakeholder input was not sought in the first place.”

Several testifiers, including Valdez City Schools Director of Technology Megan Gunderson, also mentioned a back-and-forth between the Anchorage School District and the department. The department posted on social media, calling the information from the district inaccurate.

“When the agency responsible for leading and supporting Alaska schools uses public mockery and personal targeting, that is not communication,” Gunderson said. “It is the breakdown of an essential partnership.”

State Board of Education member Lt. Col. James Fowley only had an advisory vote on the issue, but he said he wanted to ensure the department would come back with a list of districts it engaged with and recommendations.

“In my learning on it, it is going to be incredibly complex, and it’s probably going to vary between every single one of the districts,” Fowley said. “And so for the department, I think you’re going to have to sharpen that pencil and really nug down through this.

In the meantime, the department said it will work with local stakeholders like district leaders and officials to gather more information.

Former Revenue Commissioner Adam Crum defended his decision to invest $50 million from the state’s main savings account in an outside private equity fund in an interview Thursday. The investment with the infrastructure firm DigitalBridge has raised concerns among lawmakers, who have asked their auditor to investigate it.

The investment also raised eyebrows within the Department of Revenue.

Crum’s successor, acting Revenue Commissioner Janelle Earls, expressed concern over the process that led to the investment, a spokesperson said. In response, Gov. Mike Dunleavy ordered an independent third-party review of the investment to determine “whether there were in fact any violations of policy and make process recommendations as appropriate,” Department of Revenue spokesperson Aimee Bushnell said by email Wednesday. Bushnell said DigitalBridge was cooperating with the review but that the contract Crum executed could not be canceled.

The scrutiny was a surprise, Crum said.

Crum, who is a Republican candidate in the 2026 race for governor, said in an interview that the investment was an effort to boost the state’s investment returns. It represents about 1.7% of the roughly $3 billion in the state’s Constitutional Budget Reserve.

“The idea behind this was to put it into things that we know that there’s going to be more of,” Crum said by phone. “These are companies that own cell phone towers, digital assets, AI data centers, and as the world’s growing that direction, (it) seemed like an opportunity to actually get the state to invest in that.”

Crum had been working on the investment for more than a year and delayed his planned resignation to complete it, he said. The state committed the $50 million on July 28, three days after Crum announced that he would resign.

Crum said he’d followed state policy and procedure throughout the process.

“There was Department of Law sign-off, governor’s office sign-off, all of that was there throughout,” he said. “This was not something that was done by fiat.”

Bushnell, with the Department of Revenue, said Crum had approached the governor’s office with the idea, but she said Dunleavy’s staff “cautioned that any investments made needed to be in accordance with established investment policies and procedures.” The Department of Law did not respond to a request for comment.

The vast majority of the reserve is invested in low-risk products like short-term U.S. Treasury bills, which can be easily and quickly sold when the state needs to access the money. That’s been the case since July 2020, when an analysis showed that the fund could be depleted within 12 to 18 months.

“For a budget reserve account that needs to fund the day-to-day operations of government in the event that the price of oil declines, you really need to be holding your investments in cash or Treasury bills or some similar asset that you can turn into cash quickly when you need it,” former Deputy Revenue Commissioner Brian Fechter said in a phone interview.

State law does, however, allow a portion of the Constitutional Budget Reserve known as the “subaccount” to be invested to yield higher returns. Lawmakers created the subaccount in 2000 in pursuit of higher returns but emptied it in 2015 to reduce risk.

Alaska is no stranger to private equity investments, which allow the state to invest in companies not listed on public stock exchanges. The state’s retirement funds hold more than $5 billion in private equity, and the Alaska Permanent Fund nearly $15 billion, according to public documents. Permanent Fund managers have said private equity and other alternative investments are a major driver of growth.

Private equity investments typically come with lock-up periods that make the assets difficult to access on short notice. The industry standard is five to 15 years, Crum said.

Senate President Gary Stevens, a Kodiak Republican and House Speaker Bryce Edgmon, a Dillingham independent, said in a joint statement earlier this month that their risk and inaccessibility makes them an inappropriate choice for the state’s rainy-day fund.

“The (Constitutional Budget Reserve) was created to provide stability during times of deficit and emergency, ensuring that schools, public safety, and essential services remain funded when state revenues fall short,” they wrote. “Placing tens of millions of dollars into an illiquid, high-risk investment undermines that purpose and raises serious concerns about accountability, transparency, and fiscal responsibility.”

The state has drawn on the account repeatedly in recent years to fill gaps in its budget, and lawmakers have said they’re concerned uncertainty around oil revenue and federal spending could require more spending from the Constitutional Budget Reserve in the coming years.

It’s unclear how much of the $50 million committed to the private equity investment would be available in an emergency. Crum said he believed the contract with DigitalBridge included “fire sale” provisions that would allow the state to withdraw its money at a steep discount. To make its money back and see some additional return would take “probably five years,” Crum said.

Crum, though, said it was unlikely the state would need to access the money before then. He said the Legislature’s scrutiny was “amusing” and chalked up the governor’s review to an effort to build a better relationship with state lawmakers.

“If we are actually at the point to where we’re arguing over our last $50 million as a state, then we are already completely done,” he said.

For the organization that oversees commercial fisheries in federal waters off Alaska, the most significant impact of the federal government shutdown might materialize in December.

That is when the North Pacific Fishery Management Council is scheduled to issue harvest limits for Alaska pollock – the nation’s top-volume commercial harvested species – and other types of groundfish harvested in the Bering Sea and Gulf of Alaska, such as Pacific cod and sablefish.

The Bering Sea and Gulf of Alaska pollock harvests start in January.

To set the groundfish harvest levels, the council relies on federal scientists’ analysis of fish stocks in the ocean, work that is based in large part on scientific surveys conducted over the summer.

But during the shutdown, most National Marine Fisheries Service employees, including the scientists who analyze survey data to assess the conditions of commercially targeted fish stocks, are furloughed.

On Wednesday, the last day of the council’s October meeting, the members considered how to deal with scientific uncertainty if the government shutdown prevents completion of the detailed analysis that is usually provided in time for the December meeting.

Council member Nicole Kimball referred to a warning issued eight days prior by Bob Foy, director of the NMFS Alaska Fisheries Science Center, the organization that does the stock assessments. Foy said then that a shutdown lasting more than five days would compromise the ability to complete stock assessments and that a shutdown beyond 15 working days would “dramatically impact” those assessments.

The 15-day threshold is not too far away, Kimball said.

“How does the council and the public understand what to expect in December, in between the October and December meeting, relative to stock assessments?” she asked.

Diana Evans, the council’s deputy director, said impacts are yet to be determined, but the public will be notified of them as soon as possible.

“We don’t think we can answer that until we have a better sense of exactly where we land and how many days of work are remaining between the time that government workers are back and able to resume that work and the meeting,” she said.

Advocates with environmental organizations said they worry about shutdown effects on scientific information needed for harvest decisions, which would add to the effects of mass firings and retirements at NMFS and other agencies.

“I’m terrified at the prospect of flying blind into the next fishing season, especially as the Trump administration has decimated the ranks of scientists who monitor the health of our oceans,” Cooper Freeman, Alaska director of the Center for Biological DIversity, said by email. “I’m especially worried about fisheries like the massive pollock trawl fleet that has been harvesting millions of tons annually at the expense of the larger ecosystem.”

“The first challenge with this shutdown is the instant level of uncertainty it creates. Normal processes face delays that can easily impact or inhibit active fisheries. Potential staff losses will exacerbate that,” Michelle Stratton, executive director of the Alaska Marine Conservation Council, said by email.

“But beyond the concern for continuing day to day services, are those major efforts — like stock assessments and (total allowable catch) setting — that rely on substantial NMFS staff input, data processing and expert analysis. If this continues to the point where we are unable to set catch limits for the start of the 2026 seasons, we’ll be in seriously uncharted territory, and could well see massive economic impacts to our fishing communities and fleets,” she said.

The shutdown forced the council to rearrange its October meeting because federal representatives were unavailable to present information.

One major agenda item was postponed: review of a work plan for assessing essential fish habitat. Other items on the agenda were abbreviated.

The shutdown has already affected fishery management operations to some degree, said council member Jon Kurland. As Alaska regional director for NMFS, Kurland is one of a small group of agency employees remaining at work during the shutdown.

Kurland, in comments last week at the start of the meeting, said some services have been unavailable during the shutdown, such as the processing of harvest quota transfers.

NMFS is still doing basic management of ongoing fisheries, monitoring and closing them as needed, and is supported by contractors, he said. But that level of work has its limits, he said.

“If there are significant unforeseen problems, we will have limited ability to address those. Fingers crossed,” he said then.

WASHINGTON — President Trump is sending military troops to Chicago, over the objections of the elected leaders there, and U.S. Sen. Dan Sullivan thinks it’s a good idea.

Sullivan says Chicago’s violent crime rate justifies the deployment.

“It’s just horrendous that you have young, mostly African American kids who are killed every single weekend in Chicago. I think Labor Day weekend there’s like, maybe 10,” he said. “So something needs to be done. And these are tough issues, but, you know, most Americans would want whatever we can do to bring down crime rates.”

Sullivan spoke Saturday in Wrangell. A KSTK reporter asked what he thought of sending military troops to fight crime in Chicago and Portland, where elected leaders don’t want them.

“I think when you get more resources to law enforcement, to bring down crime, to bring down drug dealing, to help our communities, I think it’s important,” he said.

Trump’s deployment of troops to police Democratic-led cities raises legal questions, and it challenges the principle that the military shouldn’t be used for political purposes. Sullivan comes to the issue with a substantial background in both law and the military. He served as attorney general of Alaska and was also a colonel in the Marines until last year.

In a nearly three-minute answer to KSTK, Sullivan expressed no reservation about the Chicago deployment, then just getting underway.

Trump has given several reasons for sending troops to Chicago and Sullivan endorsed two of them — to protect federal buildings or agents from violence, and to reduce homicides.

Illinois Gov. JB Pritzker, a Democrat, has called it an invasion and said Trump is punishing states that didn’t vote for him.

Sen. Lisa Murkowski considers the Chicago deployment inappropriate.

“I have concerns, again, about bringing in our military without the consent, without the agreement of a governor, and really taking over the role of law enforcement, at the direction of the president,” she said on “Talk of Alaska” Tuesday.

Aside from the legal questions it raises, Murkowski is skeptical that it lowers crime rates in the long run.

Alaska Congressman Nick Begich declined an interview request but sent a statement saying the troops are filling a gap created “by mayors, governors and district attorneys who have put criminals above law-abiding citizens.” Begich’s statement says the troops are “ensuring every resident’s freedom of movement.”

KSTK reporter Colette Czarnecki contributed to this story from Wrangell.

The Juneau Assembly upzoned more than 200 acres of city land for sale earlier this year in hopes of creating more housing opportunities throughout the city and borough. 

The rezones included land north and south of Grant Creek and west of the Bonnie Brae and Blacktail Subdivisions on Douglas Island, and some land in the Auke Bay area.

The hope was that by allowing for denser housing in those areas, it would entice private developers to build units there. But so far, nobody’s biting. That might be because a lot more work needs to be done to make the land buildable, and that work could be expensive. 

Dan Bleidorn, the city’s lands and resources manager, said the rezoning is just another strategy the city is using to try and tackle Juneau’s chronic housing shortage. 

“The goals of the rezones were to initiate a process in which those properties could be disposed of by the city, and developers could acquire them, or people could acquire them to build housing on,” he said. 

That’s especially needed as a U.S. Coast Guard Icebreaker is slated to be homeported in Juneau, bringing more than 100 crewmembers and their families to town in the coming years. It also comes as annual glacial flooding of the Mendenhall River threatens homes in the Mendenhall Valley, and major development projects are being proposed on North Douglas. 

High-density, multi-family is generally cheaper to buy or rent than a traditional single-family home. According to a study by the Alaska Department of Labor and Workforce Development, Juneau has had the highest average sale price for a single-family home in the state for the past two years.

“I think the rezones are important because it provides opportunity that wasn’t present prior to the rezones,” he said. 

Bleidorn said the rezones are just the first step in a long process to get housing built in those areas. But, just because the land is technically now up for sale, it doesn’t necessarily guarantee developers will want — or be able to afford — to build there. Bleidorn said just preparing the land to be developable will be a significant investment.

“I think some of the barriers to development include the fact that there’s no road frontage on a lot of these properties, and utilities are far away in some cases,” he said. 

That, paired with high interest rates and the cost of materials, continues to block developers from breaking ground on new projects.

For other city housing projects like the redevelopment of the Telephone Hill neighborhood downtown, the Assembly controversially chose to front millions of dollars to fund the first phase of demolition and site preparation in order to entice developers to build housing there. The city does not yet have a developer signed on to the project. Demolition is scheduled to begin in December. 

The Juneau Assembly similarly infused millions of dollars to spur the development of the Pederson Hill subdivision in 2017 to create more housing. Since then, private developers and individuals have bought some of the 86 lots to build single-family homes. 

Both projects have been met with skepticism, with people questioning the city’s role in influencing the housing market. Deputy City Manager Robert Barr said public subsidies on projects like these are a way to tuck in affordability requirements. 

“If it’s just left up to developers to kind of front all that principle, all that cash, that investment on their own, we’re gonna end up with one type of housing, right? Housing that they can make a profit on,” he said. 

Bleidorn said it’s not clear which direction the Assembly will choose to go on the land it rezoned. It depends largely on the interest – or lack thereof — from the private sector. He said, regardless, the rezones lay the groundwork for a future Juneau where more housing could finally be on the horizon.

“I really do think that these rezones will make a difference,” he said. “Maybe they’re more mid-term to long-term projects, but I think lining them up for future development is key.”

On a dreary evening late last week, dozens of people packed into the back of the Haines Public Library. Before long, two attendees broke into a chant.

“No road! No road! No road!” they shouted.

Their words captured the tenor of the gathering, which centered around a controversial effort by the state of Alaska to study what it would take to build a road that would – at least in theory – better connect Juneau, Haines and Skagway.

The Department of Transportation and Public Facilities announced the study last spring, indicating that the plan was to assess options for the route along the west side of the Lynn Canal.

The agency organized last week’s open house-style event to provide information to the community and get feedback.

“We’re trying to show people what this project looks like, what potential benefits there are. We also want to understand everybody’s concerns,” said Greg Lockwood, DOT’s Southcoast region project manager.

Some locals have expressed support for the idea, noting that the state ferry system is unreliable and that a road could open up access for recreation and other purposes. But others are opposed, for a long list of reasons.

Attendee Shannon Donahue, who initiated the “no road” chant, is among them. In an interview, she said that as she sees it, it’s clear the state’s central goal is to “create roads to resources.”

“It’s unlikely that this whole thing is going to come to fruition,” Donahue said. “Pieces may come to fruition. Roads to logging, roads to mines, and you know, that can do a lot of damage.”

Others at the open house raised the same concern, particularly given that state officials recently unveiled plans to remove longstanding logging restrictions in the Haines State Forest and open up the entire area to logging. The potential west-side road would run through that forest and could provide better access for timber sales.

In a phone interview following the open house, DOT’s Lockwood said finding ways to partner with and benefit industry is an important part of the process. He added that the potential project “is just not purely a ferry terminal, and road to a ferry terminal.”

“If we can find added value, a freight dock, if we can find a way for mining trucks coming from the Yukon to use [a west side road] and stay out of town, or if there’s timber to be harvested, that would all be value added that would help support this roadway,” Lockwood said.

Critics of the idea have also raised concerns including the rugged terrain along the canal, which would complicate building a road and maintaining it, particularly during winter.

Other worries include implications for people traveling by ferry without a vehicle – and potential environmental impacts of the road itself.

“The Marine Highway is an excellent alternative,” said Sky Skiles, another attendee. “I think putting money into that to keep it in good shape is a better alternative than to cause so much damage to our environment.”

A new ferry terminal, route options

The idea of building a road between Juneau and Haines has been around for decades. But it’s never come to fruition, despite a smattering of earlier feasibility studies. This time around, the study will cost at least $1 million and is being carried out by DOWL LLC, a Washington-based consulting firm.

Gov. Mike Dunleavy’s administration says a road would create more cost-effective and efficient transportation for the region. That idea is that the road in Haines would reduce the length of ferry service between the two locations.

The contractor is studying two main route possibilities, which were illustrated in detail on maps set up during the event last week. Both rely on a yet-to-be-built ferry terminal at Cascade Point, about 30 miles north of Juneau.

The state signed an initial contract for that project this summer, a move that sparked criticism in the upper Lynn Canal but was welcomed by a mining company planning an ore shipping facility in the same location.

Under the first route option, travelers starting in Juneau would need first to travel from town to Cascade Point. From there, they would take a ferry across the canal to William Henry Bay, at which point they would drive north until they hit a bridge back into Haines.

In the second option, travelers would still need to get to Cascade Point and board a ferry. But the ferry would take them further north to Pyramid Harbor, near Haines. From there, they’d drive a much shorter distance to a bridge and then cross back into Haines.

Notably, neither option, as illustrated on maps, indicates how people would get to Skagway.

Lockwood, of DOT, emphasized that it’s still early days, and the agency is still purely gathering information.

“People need to understand this, this isn’t a done deal.” he said. “We haven’t made any decisions.”

The agency plans to have a draft report in December and a final version in January, which will be used to inform next steps. The public can ask for more information and provide feedback by emailing ChilkatConnector@dowl.com.