The Alaska Legislature last week passed a major increase in the state’s per-pupil base funding formula for schools, but Gov. Mike Dunleavy said he will veto the measure because it lacks any of the provisions he wants such as more state support for homeschooling.
The formula change passed the Senate and the House with no votes to spare — 11 votes in the 20-member Senate and 21 votes in the 40-member House.
Assuming the governor makes good on his veto pledge — he called the legislation “a joke” last week — it would take a supermajority of 40 legislators to override the veto, far more than the 32 yes votes last week.
The Senate approved the measure on April 10; House approval followed on April 11.
Dunleavy posted a statement on social media soon after the Seante vote, saying the bill “will be vetoed immediately.”
The bill would increase the base formula by about 17%, at a cost to the state of about $250 million a year.
Under the $1,000 increase in the base, Wrangell schools would receive about $600,000 in additional state aid for the 2025-2026 school year, according to the district’s business manager. That would wipe out about half of the district’s estimated budget deficit for the year and extend the life of its reserves fund another year.
Lawmakers and education advocates have been working all session to increase the state funding formula, which has been essentially flat since 2017.
Last year’s Legislature approved a one-time boost of just over 11% in the base formula, with supporters coming back this year for a larger increase and a permanent change in the formula.
Lawmakers approved a permanent increase last year, but Dunleavy vetoed the bill. The House and Senate fell one vote short of a veto override.
School districts statewide are facing large revenue gaps in their budgets, prompting fears of widespread cuts to staff and programs for the 2025-2026 school year unless lawmakers and the governor can reach a deal.
A political alternative to the $1,000 formula increase — which could be acceptable to a majority of legislators and the governor — would be repeating last year’s $680 boost, about 11%, but as a permanent change in state law, not merely a one-year addition.
“Based on the many conversations I had at the Capitol … the belief is that the final amount will change,” Wrangell Schools Superintendent Bill Burr said last week of the $1,000 increase. “We will likely receive a $680 BSA (Base Student Allocation) increase.”
Even with that, however, the Wrangell district budget would still be short of revenue and would need to draw on its dwindling reserves to cover spending.
“Each cut affects our schools, students, staff and communities,” Burr said in an email.
During Senate debate of the legislation last week, Anchorage Democrat Sen. Löki Tobin, chair of the Education Committee, urged support for the bill: “We have heard from hundreds of parents and students and teachers asking us to raise the Base Student Allocation.”
The leader of the Senate Republican minority, Wasilla Sen. Mike Shower, said he couldn’t support the additional funding without a balanced state budget. “We’ve all said this is important, the BSA needs to be increased. Nobody is arguing that,” he said. “But at what cost, and at what reasonable cost that we think we can make it work?”
House Republican Minority Leader Mia Costello, of Anchorage, took a similar position. “The amount that’s in this bill is not something we can afford at this time,” adding that she would support the same increase as legislators approved last year.
Bethel Democrat Sen. Lyman Hoffman, a co-chair of the Senate Finance Committee, said he could not support the $1,000 increase given the state’s financial picture. “So, I plan on voting no on this bill, regretfully,” he said.
“To address education and all the other things that we need to address that are coming before us requires additional revenue,” the senator said of the Senate majority’s consideration of bills to increase oil production tax revenues and expand the state corporate income tax to cover privately held oil and gas companies.
The state is facing its own budget crisis this year as low oil prices, years of no taxes on individuals and continued political pressure to pay out large Permanent Fund dividends are taking a toll on state finances.
The state is looking at a combined budget deficit of hundreds of millions of dollars this year and next, depending on how large of an increase lawmakers approve in school funding and how much they appropriate for this year’s PFD.
The House on April 11 approved a budget amendment for a $1,400 dividend. If left unchanged this week in the House and in subsequent negotiations with the Senate, that would leave the state short several hundred million dollars to balance its spending, likely requiring a draw on the Constitutional Budget Reserve Fund — the go-to account much of the past three decades when revenues are short of what legislators, the governor and public want to spend.
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