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The Alaska Department of Education and Early Development is appealing a federal decision that could cost the state $80 million – and potentially undermine equitable funding among Alaska schools. 

Federal impact aid is at the center of a dispute between the state and the federal government. It’s money that makes up for lost revenue from land that can’t be taxed, like federal, military or Alaska Native-owned land.

The state can normally use a portion of that money as part of its contribution to school districts – as long as it can prove it’s funding education equitably. That’s done through a disparity test.

The state failed that test earlier this year because the U.S. Department of Education rejected the state’s attempt to exclude funding that districts set aside for transportation from the test calculations. That means the state can’t use $80 million in federal impact aid to offset part of its obligation to school districts.

But it’s appealing that decision. In its appeal, the state argues that the federal department was wrong to count transportation funding in its test calculations. The state also asked to retake the test if the appeal fails.

Bonnie Graham, one of the attorneys representing DEED in the appeal, said in an email that it’s difficult to tell how long the case will take this early in the process, and could not comment on “potential outcomes of the pending appeal at this point.”

The federal department said in an email it will review information from the state and hopes to resolve the issue.

Financially, there are a few ways the appeal could play out. The simplest is if the appeal is successful. In that case, the state could continue to use federal dollars as part of its contribution to school districts.

But if the appeal fails, things get more complicated. Districts that qualify for impact aid would still receive that money on top of what they get from the state. And the state would need to make up for an $80 million gap in its funding. 

Alexei Painter is the director of the state’s Legislative Finance Division. Part of his role is to understand how the decision would affect the state’s budget. 

“If we fail the test under the Legislature’s budget, the state costs would go up by $80 million and then those districts would also get that $80 million,” he said. “So essentially districts as a whole would get about $80 million more.”

But some individual districts would get less, he said. 

Painter said that’s because the Legislature sets aside an open-ended amount of money for education funding. It’s basically however much is needed to meet the state’s statutory obligation to districts. He says in this case, districts get whatever the state owes them, plus the federal funds.

But Gov. Mike Dunleavy vetoed more than $50 million in education funding earlier this summer. If state legislators uphold the veto, Painter says that changes education funding from something open-ended to a fixed amount of money. The state would still need to make up the $80 million dollars, but it would have to do so by cutting education funding across the board.

“There’s only a fixed pot of money,” Painter said. “Raising the amount the state owes by $80 million means that all districts will essentially see their amount of aid reduce.”

The finance division estimates the state would have to reduce funding equal to an additional $319 cut to the state’s per-student allocation. That, along with the governor’s veto, would leave districts with only a $181 increase to the base student allocation this fiscal year.

That doesn’t mean that all districts would lose money. The division’s estimates show some districts, like the Fairbanks North Star Borough School District and Bering Strait School District, would receive enough federal impact aid that they receive more money overall – up to millions of dollars more.

Other districts like Anchorage and Kodiak would receive some impact aid, but it isn’t enough to offset the reduced state funding.

And for the 15 districts that don’t receive any impact aid, it would mean less state funding with no federal funds to fall back on. The Juneau School District is one of those districts. It could lose more than $2.5 million without any federal funding to make up for the loss. 

Juneau School District Superintendent Frank Hauser said it’s hard to figure out how things will shape up.

“It’s so difficult to even try to speculate as we’re going through and trying to figure out what could happen, because none of these situations are good for the students,” he said.

Hauser said he’s more concerned about other funding uncertainties that have cropped up in recent months. On top of Dunleavy’s education funding veto, DEED is proposing a regulation change that would further limit local contributions from municipalities to school districts.

On the federal side, the U.S Department of Education blocked millions in grants for migrant education, English language learners and more to the state.

Hauser says the district could lose more than $8 million from those actions.

The appeal process still has to play out. And the state has been successful in a similar appeal before – it successfully appealed a failed test in 2022. 

But at that time, Painter said the state didn’t find out until the end of the fiscal year. He said a similar timeline and a failed result could make things difficult for the state and districts. For example, districts that would receive more money may not have enough time to spend it, and may have more money in savings than state law allows.

In the meantime, Painter said the state is distributing funds to school districts as if it hasn’t failed the test.

Correction: This story has been updated to reflect that school districts will potentially be impacted by a failed appeal, not states.

Gov. Mike Dunleavy has canceled a broadly supported bill proposed by a legislative task force and intended to help commercial fishers in Alaska.

The governor issued his veto of Senate Bill 156 on Wednesday, marking his seventh veto of a policy bill this year.

Legislators will have an opportunity to call for an override vote on most of those vetoes when they meet Aug. 2 for a special legislative session.

SB 156, which was inspired by policies drafted by a joint House-Senate task force intended to evaluate the state’s commercial fishing industry, would transfer $3.69 million from a defunct state loan fund to the state-owned Alaska Commercial Fishing and Agriculture Bank, which provides loans to fishers.

In his veto message, the governor said that “in a year of limited revenues and competing needs, committing scarce public dollars to subsidize a private lender is not prudent. Until long-term fiscal policy is put into place, the state must preserve its limited resources.”

Sen. Jesse Kiehl, D-Juneau, was the lead sponsor of SB 156.

In posts on social media, Kiehl called the veto “a weird move” because the bill was based on work he did with the governor, it passed through the Capitol by a combined 59-1 vote, and he said the governor’s office declined meetings to discuss it after the Legislature passed the bill.

A group that advocates in favor of Alaska’s nonpartisan judicial system has filed a lawsuit against Gov. Mike Dunleavy, alleging that he illegally appointed a member to the board that nominates candidates for the state’s judicial vacancies.

The suit, filed Wednesday in Anchorage Superior Court by Alaskans for Fair Courts, claims Dunleavy violated the constitution and state law when he picked John W. Wood — also named as a defendant — for a public seat on the Alaska Judicial Council.

Under the state constitution, the council consists of three non-attorneys picked by the governor and three attorneys selected by the Alaska Bar Association. In addition, whoever holds the office of chief justice of the Alaska Supreme Court sits as the council’s chair.

The council accepts applications for judicial vacancies, vets those applicants for merit using nonpartisan metrics, then submits a list of nominees to the governor for final selection.

Wood was picked for a non-attorney seat on the board but is a former attorney, making him ineligible to serve, the suit alleges. In addition, the suit says Wood is ineligible because he held a “position of profit” with the state when appointed in May.

State records show Wood has served as a state contractor, receiving more than $132,000 this year. The most recent payment is listed as June 6.

Alaskans for Fair Courts also claims that Wood is ineligible because he has not been confirmed by the Legislature.

Wood was appointed during this year’s legislative session, but after lawmakers had voted on confirmations for the year, the suit claims, meaning that Wood’s appointment should not be considered a recess appointment subject to confirmation next year.

“If the governor were to appoint a (judge) nominee selected by a judicial council that is not properly constituted … the resulting legal deficiency … could subject actions taken by the new judge to challenge by litigants,” the suit claims.

It asks that the Anchorage Superior Court issue an order declaring that Wood is ineligible, and that his appointment is void.

In a written statement, Attorney General Treg Taylor said the state hasn’t yet been served with the lawsuit and can’t comment on the merits.

About the timing issue, Taylor said, “The Governor has the ability to appoint three members to the Judicial Council, and the Alaska Bar Association appoints the other three members to provide a 50/50 balance on the Council. The Council then nominates judges for the Governor’s selection with any ties on the Council being broken by the Chief Justice. It is important that the Council have this balanced perspective as it moves forward with its work. Having to wait almost a full year before seating a Governor’s appointee, as the Alaskans for Fair Courts argues, upsets that balance and doesn’t seem so fair.”

Dunleavy has seemingly violated the state constitution’s judicial nomination process before.

In 2019, he failed to appoint a judge under the timeline required by the constitution, which was part of the basis of a failed attempt to recall him from office. In 2021, he called for the council to add a nominee in addition to the three it had forwarded to him for a seat on the Supreme Court. The constitution does not allow governors to appoint someone from outside of the council’s list of nominees. He ultimately did by the constitutional deadline in that instance.

It’s been three weeks since the Alaska Department of Fish and Game seized dozens of animals from a popular wildlife attraction outside Haines. But a number were left behind, and now the owner is now calling on the state to return to the property and retrieve them.

Fish and Game reported removing 39 animals from the Kroschel Films Wildlife Center in late June amid ongoing concerns about the facility and the animals it houses. But a recent inventory lists closer to 60 animals, which leaves about 20 unaccounted for.

The discrepancy is the latest dispute in a years-long saga between the agency and the center’s owner, Steve Kroschel, over animal welfare and permitting concerns at the popular tourist destination.

The facility has been closed for nearly a year after losing its required permits. Fish and Game and Alaska Wildlife Troopers raided the center last month after executing a search warrant that indicated Kroschel is under investigation for animal cruelty. Two animals died during the operation.

“We’re working on just going back through and double-checking to determine how many of each species still remain there,” said Ryan Scott, who directs the department’s division of wildlife conservation.

Kroschel, for his part, is calling on the agency to retrieve the rest of the animals as soon as possible.

In a Wednesday email exchange with Fish and Game seen by KHNS, he raised concerns over animals that were left behind – and about others he thinks escaped, including several weasels and an arctic fox.

“What is important is that you and those under your direction finish what you have started,” he wrote. “Animals require care 24 hours a day 7 days a week.”

Reached via text on Thursday evening, Kroschel reiterated that point.

“How the heck do they think I am supposed to maintain freezers, phone, time, care, etc without any revenue for a year now?” he wrote, in a nod to the revocation of his federal permit to operate last summer.

Kroschel is not currently at the facility. He said he is in Russia working on a documentary, but that another staff member is on site and caring for the animals.

The agency says it’s working to resolve the discrepancy and always planned to return for the rest of the animals.

Asked why that hasn’t happened yet, Scott, of the wildlife conservation division, said, “there’s more at play there that I can’t discuss.”

He said he doesn’t have any information about animals escaping, adding that staff were “extremely careful” during the operation to avoid that.

Scott also said that as he sees it, it’s Kroschel’s responsibility to take care of any remaining animals.

“We took over two-thirds of the animals, so that leaves a whole lot of resources for what he has left,” Scott said. “In my opinion, it’s his responsibility to maintain care for them until we can get there to take them.”

The agency said earlier this week that 37 animals have been temporarily placed in three Alaska facilities: The Alaska Wildlife Conservation Center in Portage, the Alaska Zoo in Anchorage and Bird TLC in Anchorage.

The agency added that some of the animals will remain in those facilities permanently. Others could be moved elsewhere, such as educational facilities in Washington, Minnesota, Colorado and Canada.

An Alaska Wildlife Troopers spokesperson said the investigation is ongoing and no charges have been filed.

Retired Anchorage podiatrist Matt Heilala filed to join the 2026 Alaska governor’s race Friday. So far, he’s the sixth Republican to join the field.

Heilala, born in Anchorage and raised on the Kenai Peninsula, has never held elected office. But in an interview, the 55-year-old said his experience as a doctor and business owner make him well-suited for the top job in state government.

“The more I get to know candidates and other people that are in office, as much as I admire them, I think I have something unique to offer to help with a lot of the divisiveness without having to compromise on critical principles,” he said.

Heilala said he’s especially adept at working with people with whom he disagrees, an approach he said would lend itself well to collaborating with lawmakers.

“When’s the last time we had an overwhelming majority in our Legislature in Alaska?” he said. “It’s always kind of razor-thin, back and forth, and you become stymied and dysfunctional when people aren’t able to get through the contempt and recognize and align that with common goals.”

For decades, Heilala has donated tens of thousands of dollars to Republican candidates, including Gov. Mike Dunleavy, Congressman Nick Begich and U.S. Sen. Dan Sullivan, according to campaign finance data aggregator OpenSecrets.

Heilala, though, cast himself as straddling political fault lines.

For example, Heilala said he’d like to expand school choice options like charter schools and homeschool — priorities that Republicans, including Dunleavy, have emphasized — but Heilala also emphasized the state’s obligation to ordinary neighborhood public schools. The government is obligated to “defend the defenseless and care for those in need,” Heilala said, adding that he’d like to expand opportunities for businesses to create jobs.

Like Alaska politicians on both sides of the political aisle, Heilala says he’d like to expand resource development in the state.

As the state faces a budget crunch, Heilala said the state government has a “spending problem.” He said he’d like to make the state’s spending more transparent in an effort to build trust with the public. That, he said, could help lawmakers find a compromise on annual Permanent Fund dividends the state can afford.

“You can’t sustain $2 billion deficits every year,” Heilala said. “That just compounds problems.”

Heilala’s most recent experience in government comes as a Dunleavy appointee to the State Medical Board, which made headlines this spring when it asked the Legislature to restrict gender-affirming care for minors. Lawmakers did not act on the request.

Heilala joins a field of six Republicans running for governor in 2026, so far. No Democrats or independents have filed to join the race. Dunleavy cannot run for a third term.

The deadline to file is June 1, 2026.

A retired school teacher and principal from the small Southeast Alaska City of Angoon entered Alaska’s 2026 governor’s race earlier this month.

James Parkin filed a letter of intent to run for governor on July 1. He is one of six Republican candidates who have filed, including Lt. Gov. Nancy Dahlstrom, former state Sen. Click Bishop and Mat-Su Borough Mayor Edna DeVries. Retired Anchorage podiatrist Matt Heilala and Conservative activist Bernadette Wilson are also in the running. 

This is Parkin’s first campaign for public office.

In an interview on Monday, Parkin said he is a supporter of large Permanent Fund dividends, increased state funding to school districts and the revival of a pension plan for state employees. He also wants to eliminate homelessness. 

He said, if elected, he believes he can lead the state to achieve all of those priorities while still cutting back state spending. 

“I think what we need to do is work on efficiency — and I think that the state has been doing some good things in that direction — I’d just like to push us forward a little bit more,” he said. “I have some other ideas I think that will be helpful to move us towards a budget that’s more sustainable.”

The state would need to make severe cuts to services or dramatically increase its revenue to pay for a full statutory dividend. Its expenses would also increase if there’s a significant boost in funding to schools. While he said he has a few ideas to cut down on spending, it doesn’t include implementing a state income tax.

Parkin has lived in Alaska for more than 30 years, living in different parts of the state before settling in Angoon. Parkin is a retired teacher and principal at Angoon’s Chatham School District. He now works for Coeur Alaska’s Kensington mine near Juneau. 

He said Alaska voters should choose him over the other Republican candidates because he intends to work with the Alaska State Legislature — not against it — to make changes constituents have been asking for. 

“It’s a cooperative and collaborative thing — the governor and the legislature and the departments,” he said. “We’ve all got to work together to come up with some ideas — some new ideas, some fresh ideas — that are going to eliminate the waste, that are going to increase the efficiency.”

No registered Democratic candidates have entered the 2026 governor’s race so far. Current Republican Gov. Mike Dunleavy is terming out and cannot seek reelection. The deadline to file is June 1, 2026.