Dunleavy’s budget vetoes have created a complete mess for schools

When Gov. Mike Dunleavy vetoed $30 million in state K-12 funding, he promised that districts would be made whole with the arrival of federal funds but as additional details have come out, it’s becoming clear just how much of a mess he’s created for schools, students and families.

The Legislature held a joint hearing of the House and Senate education committees on Wednesday, where legislators heard from the Dunleavy administration on its plans to allocate federal education aid as well as the controversial signing of a contract with a Florida-run virtual school. Legislators also heard from education officials, including several superintendents and the president of the University of Alaska.

The meeting made clear that Dunleavy’s promise to replace not just the $30 million veto of K-12 funding but hundreds of millions of dollars in payments to communities with federal coronavirus money was just as flawed as everyone said when he announced it. The federal money comes with strings attached, busting his promise—which he apparently based on the legal guidance of Attorney General Kevin Clarkson—to simply replace several long-standing programs with federal money that’s specifically intended to respond to the unanticipated costs of dealing with COVID-19.

The administration ultimately conceded at the meeting that the $30 million veto to school support was intended simply as a cut to state spending.

The hearing also laid out difficulties and confusion that districts, teachers and families have had with the state’s surprise decision to sign a $525,000 contract with Florida Virtual Schools. Nearly a month after its launch, the program is still clouded in uncertainty and is being utilized by just 140 students.

There was a ton covered in the three-and-a-half-hour meeting, but here’s a rundown of the significant issues.

Sophie’s Choice

When it comes to school funding, the Dunleavy administration has announced a grand total of $38 million in federal aid will be available to schools. Education budget manager Lacey Sanders told the committee that the plan would be that districts receive the same or more than they would have received from the $30 million in state funding.

“The school districts have the ability to use the funding at their discretion,” she said. “They are now receiving approximately $38 million to not only address their current needs but as well as the increased needs due to the impact of coronavirus.”

Legislators were frustrated with the plan, pointing out that even if districts can replace the $30 million veto with the federal money, which isn’t entirely clear given the federal guidelines for how the money can be spent, then that leaves just $8 million statewide for districts’ response to COVID-19.

“Am I to assume that the administration believes that the cost of the impact of COVID-19 issues on our school districts is only $8 million above that $30 million that was vetoed by the governor?” asked Rep. Harriet Drummond, D-Anchorage. “I’m having trouble justifying the size of these grants and when they are supposed to be expended.”

With schools facing unprecedented challenges as the in-person classes have been cancelled for the remainder of the school year, Sen. Tom Begich, D-Anchorage, said the action puts districts with an impossible choice: Make millions of dollars in cuts to the underlying education system or properly respond to COVID-19.

“So, essentially, to me that I just heard is, ‘No,’ the answer is that it really isn’t providing very much at all for the districts to deal with COVID-19 if they choose to hold themselves harmless from the cuts imposed a week and a half ago through the veto process,” he said. “You’re basically forcing a Sophie’s Choice onto districts here address COVID-19 or the veto.”

Begich said during the session when legislators were considering funding the $30 million in school funding, districts said they had used the money to do things like reduce class sizes, retain teachers and purchase updated teaching curricula. Those are several areas that are not explicitly covered by the federal guidelines for the new aid.

And that’s not to mention the significant unanticipated costs school districts expect due to COVID-19, particularly for rural school districts that already face a high cost of business and have severely limited internet access. Many of the administrators spoke about new costs like providing internet-connected devices, online classes, supplemental food and planned summer courses.

“Frankly, across the state budgets have gone out the window,” said Norm Wooten, the executive director of the Association of Alaska School Boards. “The budget that was put in place at the beginning of the school is of no effect anymore. Districts are making changes on the fly.”

Asked whether $8 million would be sufficient to cover the costs districts are incurring, Wooten said he doubted it.

“Is that enough money? I doubt it very seriously,” he said. “I just can’t see where that’s near enough money. I was quite surprised that we were using those funds to supplant rather than supplement.”

Several superintendents also testified that they’re uncertain about how the new money can even be used.

The problems don’t end just at whether federal funds are enough or how they can be used.

Rep. Grier Hopkins, D-Fairbanks, noted that federal aid cannot be matched by local school districts and that the switch in funds will end up as a double whammy for districts because it’d effectively lower the cap of how much communities can contribute to schools.

Sanders frequently deflected on whether the governor’s plan was intended to both somehow make districts whole from the vetoes and respond to COVID-19. As the meeting went on and legislators’ frustration continued to grow, Sanders ultimately conceded that the $38 million in federal money isn’t intended to replace the $30 million veto and that the veto was simply intended to cut state spending.

“I want to be clear, to the best of my ability, that these are not replacement funds of the $30 million,” she said. “This is an allocation of the federal funds through the CARES Act. … Federal funds cannot be matched so local contribution amounts will not be increased given the federal allocation. Given our state’s fiscal situation, the governor chose to veto the $30 million and now we are allocating money through the CARES Act.”

Why it matters

In the bigger picture, the trouble over the education funding highlights several underlying problems with the governor’s plan replace hundreds of millions of dollars in vetoes to K-12 education funding and payments to local communities with federal COVID aid:

• That federal dollars are not the same as state dollars, especially when it comes to federal COVID-19 relief money that comes with several strings attached.
• That the plan to supplant state dollars with federal aid ignores the fact that communities are now forced to cope with both the unexpected costs of dealing with COVID-19 and the sudden loss of millions of dollars in state aid. Costs increase while funding stays the “same.”
• That, ultimately, it creates yet another layer of uncertainty for school districts and communities to be handling at a time when uncertainty is already at its peak. Instead of just focusing on the new challenges presented by COVID-19, now they must somehow navigate the governor’s cuts with unclear guidance from the state and federal government.

The federal government released additional guidance on how federal aid can be used on Wednesday, primarily focusing on $1.25 billion in direct aid to the state of Alaska. That’s money that Dunleavy has tagged for direct payments to communities, health care responses and some small-business relief programs.

Dunleavy had justified his vetoes of the cuts to local community payments by claiming that the new payments could be used because communities will have lost revenue due to COVID-19.

Though there may still be some ambiguity about the federal guidance, what was clearly spelled out in that guidance is that the funds CANNOT be used as revenue replacement.

“Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute,” the guidance explains. “Although a broad range of uses is allowed, revenue replacement is not a permissible use of fund payments.”

Following that release, Dunleavy had this to say:

“When I publicly stated CARES funding could be used to replace state funding, I was working with the best available information at the time which led many to believe CARES act funding could be in fact used to offset revenue loss,” he said. “Today, there continues to be a lack of clarity as to whether the use of CARES Act funds can be used to backfill lost revenue as the result of the pandemic.”

Yeahh….

Florida Virtual Schools

Amid the coronavirus pandemic, the Alaska Department of Education blindsided schools and teachers with the announcement of a $525,000 contract with the Florida government-run Florida Virtual Schools to apparently help districts and teachers make the transition to distance delivery of course material. Education Commissioner Michael Johnson found himself frequently apologizing for the disastrous announcement and rollout of the program.

“There was no deliberate intent to not collaborate,” he said of the state’s decision not to notify or consult with any Alaska educators or schools about the plan ahead of time.

While Dunleavy ally Sen. Shelley Hughes praised the administration for signing the contract, using it as an opportunity to gripe about the failure of her own legislation to create an Alaska-run online school, most other legislators were critical of the plan. Sen. Mia Costello, an Anchorage Republican who’s also been friendly to Dunleavy, said that as a parent of a high school-aged student that she had been deeply confused about the program and whether enrolling would remove her children from the Anchorage School District.

“Is this just something for individual families who want to leave their public school and go to this? I’m not quite sure how parents know what their students are doing, if they’re doing courses or if this is something where very engaged, active families would reach out to the department and get signed up for this virtual schooling,” she said. “I’m just think the mechanics are not something I understand.”

Again, Johnson found himself apologizing for the messy rollout.

“In no way is this to take a student away from their local district,” he said, comparing it to Kahn Academy, a free online service. “We put this out there for folks to use it as it works in their local setting.”

Rep. Hopkins pointed out that districts, which weren’t engaged about the contract before it was made, are under no requirement to acknowledge or accept credits from the new online program. Johnson agreed, acknowledging that it was essentially supplemental material. Hopkins noted that the service was also only really available to households with adequate internet and technology.

The sudden shift to online courses has laid bare the inequities in Alaska, said Fairbanks North Star Borough Superintendent Karen Gaborik who said that for many students the only connection to the internet they have in the home is a parent’s cellphone.

Lower Kuskokwim School District Superintendent Daniel Walker said it’s not even an option for many students in rural communities.

The University of Alaska

Finally, the committee also heard from University of Alaska President Jim Johnsen, who laid out the challenges facing the state’s university system, which has already seen hundreds of millions of dollars in reduced state spending over the last decade.

He said under the COVID-19 pandemic, the University of Alaska has incurred an estimated $3 million in new expenses for distance delivery, enhanced cleanings and other accommodations. He said he expects the university to lose between $35 million and $40 million in lost revenue due to sending most students home, declining tuition and other fees collected by the university of Alaska.

Still, always the optimist, Johnsen also highlighted several initiatives that UA campuses have undertaken in order to help the state respond to the COVID-19 pandemic, including creation of medical supplies, expanded testing, early graduation of nurses and housing for first responders.