Legislators stand by forward funding of schools as Dunleavy administration ramps up threats

Sen. Natasha von Imhof, R-Anchorage, during a March 27, 2019 Senate Finance Committee meeting. (Photo by Alaska House Majority/Flickr)

The Dunleavy administration has made two trips to the fifth floor of the Alaska Capitol to try to convince legislators that last year’s forward funding of education—which effectively puts it out of the governor’s reach of a veto this year—is unconstitutional.

It struck out swinging both times.

The hearings in front of the House Finance Committee on Monday afternoon and the Senate Finance Committee on Tuesday morning were the first on bills that would repeal the forward funding from last year’s budget and create new appropriations for education in the upcoming year. The new appropriations would also happen to be open to the governor’s line item veto though he’s promised to hold off and save the fight over education for next year.

Both hearings included overviews from Senior Assistant Attorney General Cori Mills, Office of Management and Budget Budget Director Lacey Sanders and Heidi Teshner, who directly oversees the Department of Education’s budget. They made the case that the Legislature had unconstitutionally earmarked revenue from the upcoming year to fund the upcoming year’s school budget.

Legislators were unconvinced when the argument was first raised earlier in the session, unconvinced when the special session was called last week and unconvinced after the latest hearings.

Ultimately, the hearings served less as traditional bill overviews and more as an opportunity for legislators to pepper the trio with a wide-ranging barrage of questions on everything from the legal case and the historical precedent to education policy and respect for the legislative process.

There’s no indication that the Legislature will budge on this matter, but that doesn’t mean the fight is over.

If legislators won’t surrender on education funding, the governor’s threatening to withhold school funding until a hypothetical legal challenge is resolved.

Withholding funding

While the constitutionality of forward funding has been questioned, laws are not invalidated by committee hearings or legal opinions. For a law to be overturned, a lawsuit must be brought against the forward funding and the courts must find it unconstitutional. It’s a process that Mills said could cost around $100,000 and take up to a year to resolve.

The law wouldn’t come off the books until a successful challenge, meaning the funding would be valid law until then. The court could potentially approve an injunction against the payments, too.

The Senate Finance Committee delved into the issue of what would happen if such a lawsuit really did come to pass. The committee wanted to know whether the administration would hold the entire year’s K-12 funding hostage like it’s currently doing with $20 million bonus the Legislature set aside for schools during the current fiscal year.

The Dunleavy administration refused to distribute the $20 million earlier this year while asking the Legislature to repeal the funding. The Legislature promptly refused to even entertain such a cut, but Dunleavy has continued to hold onto the funding. Because that money doesn’t have a set distribution date in law, the administration can hold onto it until the final day of the current fiscal year, June 30.

OMB Budget Director Sanders said the same move is planned for education funding unless a “valid appropriation” is made.

“At the legal guidance that has been given from the AG’s opinion to the governor it is my understand that funding will not be distributed on July 15 when the funding should go out to school districts without a valid appropriation,” she said.

Such a move would almost certainly spawn its own lawsuit, just as the withholding of the $20 million funding has. But unlike the $20 million of education funding, the forward funding has a distribution schedule set in law. School districts expect monthly payments starting on July 15 that continue through the next fiscal year.

Dunleavy would be ignoring statute by withholding the funding.

Senate Finance Committee co-chair Sen. Natasha von Imhof, R-Anchorage, punched back over the administration’s plans to withhold school funding. She said the money is there so it’s ultimately Dunleavy’s choice to hold school funding hostage over what many view as an invented constitutional crisis.

“We need to make sure education is funded. Right now, there’s even an issue about $20 million for this year that’s not being funded. I don’t think that’s a constitutional issue, I don’t think that’s a court issue. That’s just a choice,” she said. “Moving forward, coming July 1, it’s a choice. The governor may choose to not to fund education or not. The Legislature has chosen to fund education.”

She said she ultimately welcomes a lawsuit on the matter.

“Having a friendly lawsuit probably makes sense, and we should probably do that to solve it. But in regard to not funding education come July 1, there’s no revenue crisis, there’s no fiscal crisis,” she said. “We have the money, we’ve appropriated it. If the governor refuses to do that, it’s his choice.”

The governor can’t directly sue the Legislature under the Alaska Constitution, but the governor said last week he has “a feeling” that a lawsuit will be filed challenging the education funding’s constitutionality.

Legislative opposition

The Legislature has been nearly unanimous in its opposition to the administration’s newfound argument on the issue, and the general thinking seems to be that case was invented to allow the governor to deliver on public promises to deeply cut spending with his veto power.

“We have a difference of opinion with the administration concerning this issue at hand,” said Senate Finance Committee co-chair Sen. Bert Stedman, R-Sitka, at this morning’s hearing. “It should be clear to the public that the finance committees have had ample opportunity over the last three months to change the funding mechanism for FY 20 and decided to let the forward funding stand.”

The fact the Legislature had the opportunity to repeal or alter the funding is a key piece of the Legislature’s opposition to the governor’s argument. The Legislature not only had the opportunity to open the discussion during the budget process, they argue, but it also had specific opportunities to weigh in.

That’s because minority Republican Rep. Ben Carpenter offered two amendments during the budget process that would have repealed the forward funding clause and replaced it with a veto-able appropriation for schools. It ultimately failed both times.

Legislative Legal Services Director Megan Wallace told the House Finance Committee on Monday that those two actions would likely become part of the legal basis of any lawsuit, noting that it showed the Legislature exercised its power to freely appropriate revenue.

Rep. Gary Knopp, R-Soldotna, summed up the issue when he said the effect of the legislation was not to bind the Legislature’s hands because the Legislature could have always voted to change its mind.

“We did not tie our legislative hands,” he said, “but we did tie the hands of the new governor.”

Bring it on

The House Finance Committee returned today with a public rebuke of the legislation when members voted against advancing the legislation on a 7N-4Y vote. Typically, committees will just let legislation die without official action, but this sends a clear message they don’t intend to move it.

Knopp said he was concerned, ultimately, that the administration was trying to box in the power of the Legislature to appropriate funds.

“I think it’s a difference of opinion between the legislative body and the administration. I think it’s a valid question that needs to be answered through the courts,” he said. “I think it sets precedent for the Legislature going into the future. I would like to see this issue settled in the judicial system.”

Knopp was joined by majority Reps. Wilson, Foster, Josephson, Johnston, LeBon and Ortiz in voting down the measure. Minority Reps. Sullivan-Leonard, Merrick, Carpenter and Tilton voted to advance the measure.

General disdain

Votes weren’t the only way the Legislature stood up to the administration over education funding.

Aside from the scattered shots at the administrations’ inconsistencies and general conduct (particularly the lack of Attorney General Kevin Clarkson, OMB Director Donna Arduin or Education Commissioner Michael Johnson at the hearings), the most stinging rebuke came from minority Sen. Donny Olson, D-Golovin, who raised Attorney General Kevin Clarkson’s track record in high-profile cases, wondering if his advice is all that good in the first place.

“As you look at the point of what everybody is pointing toward, they’re talking about the Attorney General’s opinion,” he said. ” As you look at that, he’s had other opinions that have been out there. What is his record of taking those opinions, having them challenged in court and what has been the outcome? Have his clients prevailed? Have they not prevailed?”

Before joining the administration, Clarkson was well-known for litigating right-wing issues like anti-abortion cases, defending a discriminatory invocation policy and attempting to shut down the Troopergate investigation into former Gov. Sarah Palin’s administration. He found little, if any, success on these cases.

Stedman interjected, noting that it was getting too far off topic.

“I think that if we’re going to spending money here, I would like to know earlier what the odds are about whether we’re going to prevail or not. Whether we should just go ahead and acquiesce and pass this piece of legislation,” Olson said with a chuckle.

His comments garnered other laughs from the committee.

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