Alan Wu/Flickr
Alan Wu/Flickr

Strapped for cash, Alaska politicians aim to open door for school vouchers

After slashing oil taxes, lawmakers propose amending state constitution to address school funding shortage

Editor's note: This story has been updated to reflect the resolution Alaska lawmakers reached after closing an extended legislative session.

In its early days, public education in Alaska was uneven at best.

A jumble of home schooling and correspondence schooling covered remote areas. Territorial schools, similar to the public schools Alaska operates today, were open in some towns. So were segregated boarding and day schools, which the federal government used to indoctrinate Alaska Native children.

Smoothing out the tangled school system was a priority for Alaska’s constitutional delegates as they prepared to make the jump from territory to state in the late 1950s.

The delegates wanted to provide broad access to free, functional schools, paid for with public money.

Since Alaska became a state, its school system has grown larger and more complicated to assess, operate and fund. The one constant is the constitution and its declaration that “no money shall be paid from public funds for the direct benefit of any religious or other private educational institution.”

This winter, Republican lawmakers doubled down on a campaign to move foward on an amendment to remove that restriction from Alaska’s constitution. It was a drastic move that came at a critical time for schools. Districts are scrambling to fill holes in their upcoming budgets created by fluctuating funding from the state created primarily by a cut in oil taxes.

Oil production — the driver of Alaska’s economy — is slowing down, and tax revenue is drying up after lawmakers caved to pressure from the oil industry last year to stimulate development by cutting taxes.

The oil tax cuts — now known as the oil giveaway by opponents — dominated Alaska’s last legislative session. But right now, education is what has sent Alaska’s legislators into overtime. Instead of traveling home to their far-flung constituencies, lawmakers spent five extra days at the Capitol debating how — and how much — to fund education.

Hazy voucher outlook

The constitutional amendment was one proposal among many meant to expand educational options for Alaskan kids.

There were bills that would add more charter schools, let private contractors run those schools and expand technical training and occupational learning. But none of them had as big an impact out of the gate as the amendment.

State Sen. Mike Dunleavy, R-Wasilla.
Becky Bohrer/AP

Its sponsor in the Alaska Senate is Mike Dunleavy, a Republican who represents a mix of suburbanites and rural residents living outside Anchorage, the largest city in the state. Dunleavy is a freshman senator, and has credibility on education: He’s a former public school superintendent.

Dunleavy wasn’t available to comment for this story in the last packed days of the Alaska legislative session, but his stance is clear: Legislators should approve an amendment and give “voters the power to decide what is right for them, their families and the state of Alaska,” he told the Senate Finance Committee in February.

If the legislature passes the measure and if voters approve it in the November general election, lawmakers will have the power to create a voucher program. Vouchers provide students with public funds for tuition at religious or other private educational institutions.        

It’s anyone’s guess what a voucher program would look like in Alaska or how much it would cost. Alaska only has about 11,000 kids in private schools right now — mostly in urban areas — but that could grow.

A ballpark estimate from the nonpartisan Legislative Research Service is about $100 million a year. That would be a big investment for a state that’s trying to watch its expenses — and struggling with how to support the schools it already has.

Lost revenue

State Sen. Berta Garnder, D-Anchorage.
Becky Bohrer/AP

Sen. Berta Gardner is a Democrat from Anchorage who opposes vouchers. She says they’re unnecessary if the state’s operating a solid, diverse public school system.

“You might live in a neighborhood that has people mostly of your income level. You might never have a normal interaction with people not like yourself until you go to a public school,” Gardner said. “The Anchorage School District has 103 different languages spoken by their students.”

Starting next school year, it will also have 159 fewer teachers and larger class sizes. The Anchorage School District is making those cuts in an effort to close a $23 million budget gap. It’s the biggest district in the state, with about 48,200 students enrolled — one-third of all K–12 students in Alaska.

Part of the problem is that the fundamental figure Alaska uses to calculate school funding — the base student allocation — hasn’t gone up in four years. But the cost of almost everything else has.

Shortly before the layoffs were announced in January, the Anchorage School District financial officer, Mark Foster, was featured in an article about the shortfall by the online newspaper Alaska Dispatch. Foster described how the legislature had intervened in the past to provide cash infusions and prevent layoffs.

“But they are no longer going to ride to the rescue under the current revenue predictions,” he said.

Alaska’s income is expected to fall by $2 billion in the next fiscal year. Most of that income — most of Alaska’s annual budget — comes from taxing oil production. Amid heavy lobbying by the oil industry, lawmakers slashed taxes in 2013 to stimulate new investment on Alaska’s oil fields.

According to the state Department of Revenue, production will increase a bit over time, but so will the cost of producing oil. Companies can deduct those costs and, in the end, pay less tax to the state.

This summer, Alaskans will vote on a ballot initiative to repeal the new oil tax system. But in all likelihood, they won’t be voting on the constitutional amendment to change Alaska’s education system.

Constitutional long shot

To get a constitutional amendment out of the halls of the Capitol and onto the ballot, two-thirds of lawmakers in both the state House and Senate must approve it.

It’s not impossible to get that support. But changing the education provision was a tough sell this year. Parents and teachers from around the state mobilized against it. Many senators were skeptical — even those in Dunleavy’s party.

Dunleavy tried to argue the issue both ways. Amending the constitution didn’t have to lead to a voucher system in Alaska, necessarily. But if it did, he asked, what harm would it do?

“There’s no case that we could find in which it’s spun out of control — in which it emptied the coffers, in which it bankrupted school districts,” he told his fellow senators on the finance committee, pointing to about 26 other states that have tried to adopt some form of vouchers.

Josh Cunningham tracks them all for the National Conference of State Legislatures, a bipartisan research agency. Cunningham said school choice programs are growing more popular, but the finances are fuzzy. It’s hard to say what vouchers cost a state because no one agrees on how to calculate savings at the state level or losses at the school or district level.

Cunningham said other states are in Alaska’s position, governed by constitutions that bar public funding for private schools. Since the 1960s, seven states have tried to remove those provisions through a constitutional amendment.

“Voters always rejected it,” Cunningham said. “States have had a lot more success just passing legislation and fighting it out in court, hoping that their state’s courts will rule in their favor.”

That method has already been tried — and failed — in Alaska.

In 1979 the state’s Supreme Court considered whether a private college tuition program was constitutional. The private colleges that brought the case argued that they benefited indirectly from public money, since the grants were going to students. Unlike other states, Alaska’s constitution doesn’t bar private or religious schools from reaping indirect benefits.

But the court waved that aside. The private colleges were getting public money, pure and simple, and that still counted as a direct benefit — and a direct violation of Alaska’s constitution.

In the wake of that case, it appears that the only way to legally extend vouchers to Alaskans is to change the constitution. 

Tapping the Permanent Fund?

In February, Alaska’s education commissioner, Mike Hanley, was back at the Capitol after traveling around the state. He said he didn’t set out to collect opinions on spending public funds at religious or other private schools, but as he told the Senate Finance Committee, he received quite a few.

In urban areas, Alaskans were “mixed” on the prospect of letting public money go to private schools. In rural Alaska, it barely registered.

“It’s just difficult for many communities to see how that would impact them — if they were able to provide funding to a private entity that’s not there,” Hanley said.

For rural families, educational choice boils down to a few options: online learning or sending kids to public schools in bigger hub communities. Even in hub communities, schools face high fixed costs such as heating and utilities — and tough financial choices.

That’s part of the reason the education debate has changed so drastically over the course of the legislative session. Parent groups such as Great Alaska Schools, which claims 2,000 families as members, came out fighting against the constitutional amendment. As that proposal stalled in the Senate, Great Alaska Schools switched gears. Now the group is rallying and circulating petitions to get more funding for all public schools.

“We want to see them fully staffed,” co-founder Deena Mitchell told the Senate. “We can be quickly mobilized if there’s a threat to children’s education.”

That didn’t go unnoticed: The Senate tried to write a three-year, $300 million grant into its draft of the state budget. The House proposed a one-time infusion of $30 million, along with an increase within Alaska’s formula for funding schools.

The legislature went into overtime trying to reconcile those ideas and a long list of education finance reforms. Once they exceeded their deadline for the legislative session, Alaska’s lawmakers took exceptional steps to resolve their differences. They convened a bipartisan committee comprised of members from both the House and Senate, which hashed out a plan to increase education funding by $300 million.

The compromise is in the structure: $150 million will be an immediate cash injection, while the other half will go toward the base student allocation — the building block in Alaska’s school funding formula. That per-student allotment will increase by $250 over the next three years. After that, it’s not clear how it would it change.

Public school advocates aren’t calling this a clear victory. They wanted bigger increases to the per-student grant, and they wanted the grant to be tied to inflation.

Great Alaska Schools and others said that if school funding could grow on its own, districts might be able to avoid more years of flat funding and emergency aid from the legislature. That’s especially important, considering the state’s tight budget outlook over the next few years.

But many legislators say the state’s formula for funding education has too many problems without adding inflation to the mix.

Gardner, the Democratic senator from Anchorage, isn’t one of them. She introduced a bill to “inflation-proof” the education funding formula during the legislative session. It didn’t pass and she admits it would be costly — exactly how costly, no one can say. But Gardner says there are ways for Alaska to manage it.

“We’ve got $17 [billion] to $19 billion in state savings accounts right now,” she said before the legislative session closed Friday, “and we’ve got the [Permanent Fund].”

The Permanent Fund was established in 1976 by constitutional amendment to extend some of Alaska’s oil wealth to future residents. Dividends are disbursed to Alaskans every year — as much as $2,000 in a single check. They’re almost a sacred rite.

“I’m not proposing going into it,” Gardner quickly added at the time. “But if you can only do one thing? The first thing is protect public safety and the second thing is to take care of kids.”

“That’s your seed corn. The first thing you protect is your seed corn.”

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