Alaska lawmakers approved an additional $144 million in one-time funding for K-12 schools next year, plus a batch of education policy changes that garnered bipartisan support particularly aimed at boosting teacher retention and offsetting districts’ energy costs.
The Legislature has been divided, and at odds with Gov. Mike Dunleavy, over the level of state funding for public education — even as districts across Alaska face significant budget deficits and declining enrollment, forcing steep cuts and school closures.
If approved by the governor, the one-year state aid could bring about $300,000 in additional funding to the Wrangell school district, cutting its budget deficit in half for the 2026-2027 school year, reducing how much money it will need to pull from reserves to cover expenses.
Juneau Rep. Andi Story, co-chair of the House Education Committee, acknowledged the financial squeeze on school districts and said the policy changes and one-time funding are a step in the right direction.
“It doesn’t meet the need, but it moves the dial in the right way,” she said.
The $144 million to help with operating expenses, heating fuel and pupil transportation costs for the 2026-2027 school year represents an almost 11% bump in state spending for public education.
The budget, which lawmakers approved last week, now goes to the governor, who can use his veto powers to eliminate or reduce items line by line in the spending plan.
Last year, lawmakers passed a historic increase to the state formula for K-12 schools and added millions in funding — but only after multiple vetoes by Dunleavy and an equally historic veto override by the Legislature in a special session in August restoring the funding increase.
This year, lawmakers seemed to have less appetite for taking on another education funding battle with Dunleavy. But Alaska schools will see additional funding next year as the U.S. war on Iran and global oil shock has driven up state revenues from the rise in oil prices.
In addition to the $144 million in one-time funding in the operating budget for K-12 schools — which includes $29 million for offsetting rising energy costs next year — lawmakers also approved a student loan forgiveness program for teachers.
“I’m thrilled,” said Story on May 20 after the vote. She authored the underlying bill establishing the loan forgiveness program for teachers, which is aimed at recruiting and keeping young teachers in Alaska.
“It’s an incentive to keep continuity, keep your teachers employed, and that’s great for kids — whenever they can have the same teacher in the building, that always makes a difference,” she said.
If approved by the governor, the bill would establish a new student loan forgiveness program of up to $15,000 over three years. It’s focused on teachers specializing in English as a second language, special education, science, technology, engineering and math. The program is expected to serve up to 120 teachers next year.
In addition to the $29 million lawmakers allocated for schools’ fuel costs next year, they also approved a provision in the education package that would create a structured program for the state to cover school districts’ fuel costs beginning in 2028 — subject to future lawmakers approving the funding.
If approved by the governor, the state would annually reimburse districts based on the average of the past three-years of fuel costs. Districts are asked to make a reasonable effort to manage fuel use and costs, to not exceed the usage from the previous year and report how much they’re spending on fuel to the Alaska Department of Education.
Fuel costs are expected to skyrocket this year with the onset of the U.S. war on Iran, and remote districts are facing bulk fuel orders in the millions of dollars. Officials with the Lower Kuskokwim School District report an 80% expected increase in fuel costs next year for its nearly two dozen village schools in Western Alaska.
The Sentinel’s Larry Persily contributed reporting for this story. The Alaska Beacon is an independent, donor-funded news organization at Alaskabeacon.com.
