"Alaska Education Grants"

The Senate Finance Committee is weighing a bill that’s aimed at protecting state accounts used to pay for university scholarships and the ferry system.

The intent of Senate Bill 224 is to keep any money in the accounts from being swept into a state piggy bank, the Constitutional Budget Reserve. 

A Superior Court judge recently ruled against university students who sued to keep more than $400 million in the Higher Education Investment Fund.

It pays for Alaska Performance Scholarships, Alaska Education Grants and the state’s medical education program, WWAMI, named after the initials of the states that participate, Washington, Wyoming, Alaska, Montana and Idaho.

The sweep grew the Constitutional Budget Reserve from roughly $1 billion to $1.5 billion.

Bethel Democratic Sen. Lyman Hoffman said at a committee meeting on Tuesday that Alaskans who rely on the scholarships and the ferries want more certainty. 

“I think these two need to be taken care of as soon as possible, particularly the Alaska Higher Education Fund, because this one has the most funds in it and to put them aside and get them unsweepable, I think, is something that the people of Alaska are looking forward to,” Hoffman said.

Dozens of other accounts wouldn’t be protected through the bill. They range from a fund for tobacco cessation programs to one that pays to maintain the Whittier tunnel. 

Wasilla Republican Sen. David Wilson said he’s concerned about that. 

“I don’t want to pick winners or losers and [be] trying to pick out, you know, this fund versus this fund – I believe we should just take action to either do them all or none,” he said.

Hoffman said he wants to start with the higher education and marine highway accounts so that the bill is less likely to get bogged down in the legislative process. 

The bill would put the accounts in a similar legal position as the Power Cost Equalization Endowment Fund, which pays to reduce the cost of power in high-cost areas. In a separate court case last year, a judge ruled that $1 billion in that fund is not subject to being swept into the Constitutional Budget Reserve. 

The House is considering two bills on related subjects. House Bill 229 focuses on protecting the higher education fund, while House Bill 57 seeks to protect all of the separate accounts.

Even if the Legislature passes any of the bills, it would need to take another step to put the money back into the accounts that’s already been swept out of them. 

It would take three-quarters of both legislative chambers to agree to draw money from the Constitutional Budget Reserve. If that doesn’t happen, the Legislature could put money into the accounts as part of the regular budget bill, but that would leave less money available for other programs.

An Anchorage judge will decide in the next two weeks whether more than $400 million will remain in a state fund that pays for scholarships and need-based grants for Alaskans to attend college.

Lawyers for four Alaska university students and the state government presented their arguments to Superior Court Judge Adolf Zeman on Tuesday to determine the future of the Alaska Higher Education Investment Fund. The fund was started in 2012 with $400 million. 

But three years ago, Gov. Mike Dunleavy’s administration started sweeping the money into the Constitutional Budget Reserve, a state savings account, unless three-quarters of both the Senate and House of Representatives agreed to keep it in the higher education fund. That failed to happen last year.

So, in January, four students sued to maintain the fund. 

Jahna Lindemuth, the students’ lawyer, argued that the state misapplied a provision of the constitution that determines what money will be swept into the Constitutional Budget Reserve each year. She served as the attorney general in the administration of former Gov. Bill Walker, an independent who is challenging Dunleavy, a Republican, in this year’s election.

Lindemuth said Dunleavy had proposed language in a bill that would have eliminated the fund, which the Legislature failed to pass. She said that it wasn’t until after that happened that the administration reached its conclusion that the higher education fund money was subject to being swept without legislation.

“The governor simply has different legislative priorities than the Legislature,” she said, adding that it was a “money grab that fundamentally violates the Legislature’s rights” under the constitution. 

Assistant Attorney General Margaret Paton-Walsh represents the state in the case. She noted that the state constitution requires that unspent money in the general fund that’s available to be spent in the annual budget — also known as being “appropriated” — be swept in into the Constitutional Budget Reserve. She said that applies to the money in the Alaska Higher Education Investment Fund, which the law defines as being in the general fund.

“The Legislature is quite free to appropriate that money for any purpose that it wants,” she said. “There is no dispute about that fact.”

The judge noted that students rely on scholarships for several years, and asked Paton-Walsh if that makes the higher education fund similar to the state setting aside money for a construction project that lasts several years. 

“How’s that different than a four-year education?” he asked. 

She replied that with the higher education fund, the Legislature has to take two separate actions: putting money into the fund and then spending it on programs like scholarships. 

But with a multi-year construction project, it only appropriates it once. And the Legislature doesn’t appropriate it again for the same construction project in multiple years.

“That money is not available for appropriation because the executive branch can spend it without any further action by the Legislature, ” she said of a multi-year construction project. 

The state now considers the $422.8 million that was in the higher education fund to be part of the Constitutional Budget Reserve, which has another roughly $1 billion.

Dunleavy has proposed funding the Alaska Performance Scholarships, need-based Alaska Education Grants and the state’s medical education program in the budget for the coming fiscal year.

The money for those programs wouldn’t come from the higher education fund, but instead from the general fund, which pays for the rest of the state budget. Without the money in the Alaska Higher Education Investment, the students expressed concern that there wouldn’t be funding for the programs in future budgets. 

Judge Zeman said he would issue a decision by Feb. 22. That could allow time for the case to be appealed to the state Supreme Court and resolved by the time the Legislature finishes its work on the budget. 

The Alaska Legislature is supporting the lawsuit by university students against Gov. Mike Dunleavy’s administration to protect a fund that pays for scholarships.

A joint council of the House of Representatives and Senate on Monday approved filing a legal brief backing the lawsuit.

The Alaska Higher Education Investment Fund has held more than $400 million. Each year, money from the fund pays for Alaska Performance Scholarships, need-based Alaska Education Grants and the state program for medical students, known as WWAMI.

Dunleavy’s administration has said that the money in the fund must be swept into a state savings account if three-quarters of both legislative chambers don’t vote each year to maintain the funding. That vote failed last year.

Kodiak Republican Sen. Gary Stevens said emptying the fund would leave students uncertain about whether the scholarships would be available.

“The medical students are on a long-term program, and for them not to know from year to year to year how they’re going to be supported would be quite devastating,” he said.

Dunleavy has said that he supports funding the scholarships.

The Legislative Council’s vote to support the filing was 12 to 1.

Four University of Alaska students are suing the state government in an attempt to maintain a fund that pays for scholarships. 

The Alaska Higher Education Investment Fund has been under threat of being emptied of more than $400 million as a result of legislative budget fights. It pays for Alaska Performance Scholarships, need-based Alaska Education Grants and the state program for medical students, WWAMI.

Riley von Borstel of Seward is one of the students who sued. She’s the student body president at the University of Alaska Fairbanks. She said the scholarships are essential for her and other students. 

“If this funding weren’t available to students anymore, I think the University of Alaska System would see a significant decline in enrollment amongst Alaskan students,” she said. “I think many of them would decide not to attend school in Alaska if this funding weren’t available.”

Students Madilyn Short, Jay-Mark Pascua, Kjrsten Schindler and von Borstel filed the lawsuit on Tuesday against Gov. Mike Dunleavy, the Office of Management and Budget and the Department of Administration.

According to the Dunleavy administration, the money in the fund must be swept into state savings account if three-quarters of each legislative chamber doesn’t vote each year to maintain the funding. And this vote failed last year. 

Another lawsuit, filed by the Alaska Federation of Natives and 17 other plaintiffs, successfully protected the Power Cost Equalization Endowment Fund, which also has been threatened by the legislative disputes. That fund pays to lower the cost of electricity in high-cost rural areas. 

In the new lawsuit, lawyers for both sides jointly asked that a judge hear arguments in the case quickly and issue a ruling by Feb. 22, leaving time for an appeal and for the Legislature to take the ruling into account in the budget. 

Dunleavy said in a statement that he supports funding the scholarships. 

University of Alaska Interim President Pat Pitney wrote in a letter to students that the university supports the lawsuit. 

 

Alaska’s medical education program and scholarships to attend college will be funded this year, announced Gov. Mike Dunleavy on Wednesday.

Dunleavy said he ordered his Office of Management and Budget to release funding for the WWAMI medical education program plus 17 other programs.

Kathryne Mitchell is a second-year WWAMI student. She’s glad about the announcement.

“We’re very excited that the funding for our program is secure for this year,” Mitchell said.

Without WWAMI, Mitchell would have to take on an extra $120,000 for four years of medical school — plus student loan interest.  She wants Dunleavy and the Legislature to secure long-term funding for the program.

“When this battle for funding for WWAMI comes up every year, we lose students — students who will go on to become excellent physicians. We lose them and they go train in other programs, where there’s more certainty as to funding. And then we don’t get them back as physicians in Alaska,” she said.

She’s originally from North Pole and wants to practice family medicine in rural Alaska.  She says the program benefits the whole state.

“For Alaska, it’s really, really important that we train home-grown students to become physicians here, because they’re the physicians that are going to stay,” she said.

The announcement allows more than $42.8 million to be spent on WWAMI and other programs that include funding to attend college through both $11.8 million in Alaska Performance Scholarships and $6.4 million in Alaska Education Grants. Oil spill prevention also received $3 million in additional funding.

WWAMI received $3.3 million. And reimbursements to municipalities to pay off their debt to build schools received $4.2 million.

Dunleavy’s administration previously had said that these programs could not be funded without the agreement of three-quarters of both chambers of the Legislature.

But Dunleavy said Wednesday that his administration reviewed this funding after a recent decision by a Superior Court judge. And this review led him to OK the spending.

That judge’s decision said that money in the Power Cost Equalization Endowment Fund was not subject to the three-quarters vote.

The administration said these programs received funding for this year’s budget before the money in the accounts used to fund them was swept into the Constitutional Budget Reserve.

This year’s permanent fund dividend would be $2,350 under a proposal by Gov. Mike Dunleavy. But legislators are raising questions about whether the state can afford that amount. 

Dunleavy added legislation on Thursday to the special session agenda that would pay for this year’s PFD. If that hadn’t happened, there was a chance Alaskans wouldn’t receive a dividend at all for the first time in 40 years. 

Dunleavy’s bill would also fund university scholarships and the state’s medical education program, known as WWAMI.  

State budget director Neil Steininger said the governor still wants the Legislature to pass the constitutional amendments he’s proposed. They would enshrine the PFD in the state constitution and lower the state’s spending limit. 

“This appropriation bill isn’t … the agenda in and of itself,” he said. “This appropriation bill is there to support the discussions and the decisions that need to be made on those bigger policy issues.”

Steininger testified on the measure, House Bill 3003, to the House Finance Committee on Friday. 

Dunleavy has proposed drawing $3 billion more than planned from the permanent fund to cover costs for the next few years, as part of a broader compromise. Half of that money would pay for this year’s dividend. 

Committee member Rep. Bryce Edgmon said he’s concerned the dividend amount the governor proposed would commit the state to pay more than it can sustain. Edgmon is a Dillingham independent who caucuses with the mostly Democratic majority. 

“I’m very concerned about overdrawing the permanent fund because — speaking of compromising — we’ll be compromising the future,” he said. “And if there’s a downturn anywhere near what we experienced in 2008, 2009 — certainly back in the late ‘80s — where the bottom essentially falls out, that overdraw this year could be magnified many times over.”

Kodiak Republican House Speaker Louise Stutes expressed optimism that the Legislature would be able to work toward a compromise on solving the long-term gap between what the state spends and what it raises. 

She praised Dunleavy’s decision to add funding for this year’s dividend to the special session agenda. 

“I’m grateful to the governor for putting on an appropriation bill, which allows us to do this,” she said. “I’m excited about a good, solid compromise, where we can all feel good and get things rolling.”

She said the PFD bill would go through the normal committee process, in which it could be amended. She said one potential path for this year’s dividend would be to choose an amount that would not draw more than planned from permanent fund earnings. 

If the Legislature later reaches a broader compromise on a long-term budget plan, Stutes said it could pass another bill that would add to this year’s dividend. 

The House Finance Committee plans to consider amendments to the bill on Sunday. 

Committee Co-Chair Neal Foster, a Nome Democrat, said the committee is working under a constrained timeline because some lawmakers won’t be available beginning in roughly a week. 

Neither legislative chamber voted on Dunleavy’s vetoes of line items in the budget by the deadline on Friday. But vetoed items would be funded under House Bill 3004, introduced by the House Special Committee on Ways and Means. That committee is meeting on Monday to discuss the conclusions of a working group of lawmakers who met since mid-July to discuss a long-term budget plan.