The Alaska Legislature set aside $400 million in 2012 for merit-based and needs-based college scholarships for Alaska’s graduating high school students.
Untouched, the investment income from the pot of money would be enough to pay out $11 million in Alaska Performance Scholarships and another $6 million in needs-based grants in perpetuity. But, like all savings accounts in the era of Alaska’s financial woes, the Legislature has already dipped in multiple times.
It now regularly pays for state libraries, it pays for the state medical education program WWAMI and it has pitched in more than $100 million to the state’s retirement programs in one-time payments.
Even the small non-scholarship payments put the future of the program at the risk, the University of Alaska explains:
“While all important and worthy, if non-designated continue at the Fiscal Year 18 rate, the fund’s investment earnings will not be sufficient to cover the (scholarship) programs without eroding the fund’s principal, potentially jeopardizing the long-term viability of both,” explains a university website on the fund.
Already, the Alaska Higher Education Investment Fund has dwindled to $320 million.
Now the Senate is considering taking another $128 million to pay for part of a $1,600 dividend.
It’s unclear what impact the legislation will have on the future of the program and a Monday hearing on the bill didn’t lend any additional clarity on the matter. Sen. Bert Stedman, the Sitka Republican who’s carrying the bill, said the Legislature could refill the account if it hits zero.
“We’re at a place where the hard decisions need to be made,” he said.
The $1,600 dividend plan faces plenty of hurdles before it could become law—including the threat from Gov. Michael J. Dunleavy to veto anything below a $3,000 dividend—the proposal to take money out of scholarship fund landed with a thud with Senate Democrats.
“Using the Higher Education Fund to pay a Permanent Fund Dividend doesn’t make sense,” said Juneau Sen. Jesse Kiehl in a prepared statement. “Raising more barriers to paying for college hurts the economy and limits opportunity. Our state needs a real plan that pays a sustainable dividend Alaskans can count on for the long-term. This falls short.”
Anchorage Sens. Elvi Gray-Jackson and Bill Wielechowski also echoed the sentiment in statements accompanying the release.
The legislation funding the PFD from the scholarship program is currently on the Senate floor and is up for amendment. If passed, it would head to the House next.