Alaska Ignored Warning Signs of a Budget Crisis. Now It Doesnt Have Funding to Fix Crumbling Schools.
by Emily Schwing, KYUK This article was produced for ProPublicas Local Reporting Network in partnership with KYUK Public Media and NPRs Station Investigations Team. Sign up for Dispatches to get our stories in your inbox every week. When Alaska House Speaker Bryce Edgmon toured the public school in Sleetmute last fall, he called the building the poster child for whats wrong with the way the state pays to build and maintain schools. The tiny community 240 miles west of Anchorage had begged Alaskas education department for nearly two decades for money to repair a leaky roof that over time had left part of the school on the verge of collapse.Seated at a cafeteria table after the tour, Edgmon, a veteran independent lawmaker, told a Yupik elder he planned to start raising a little bit of Cain when he returned to the Capitol in Juneau for the 2025 legislative session.Other lawmakers said similar things after an investigation by KYUK Public Media, ProPublica and NPR earlier this year found that the state has largely ignored hundreds of requests from rural school districts to fix deteriorating buildings, including the Sleetmute school. Because of the funding failures, students and teachers in some of Alaskas most remote villages face serious health and safety risks, the news organizations found. Sen. Elvi Gray-Jackson, an Anchorage Democrat, called the investigations findings heartbreaking and said in an email during the legislative session earlier this year that the current state of these schools is unacceptable. Sen. Scott Kawasaki, a Fairbanks Democrat, wrote to say that the responsibility lies squarely on the legislature and acknowledged we do not do enough. Senate Majority Leader Cathy Giessel, a Republican from Fairbanks, wrote, We are working to right the ship! Yet during a legislative session where money for education was front and center, lawmakers were only able to pass $40 million in school construction and maintenance funding, about 5% of the nearly $800 million that districts say they need to keep their buildings safe and operating. Alaska House Speaker Bryce Edgmon visits Sleetmute students last fall. (Emily Schwing/KYUK) In June, Alaska Gov. Mike Dunleavy vetoed more than two-thirds of that, nearly $28 million.Basically, we dont have enough money to pay for all of our obligations, Dunleavy explained in a video posted on YouTube. In the video, seated at an empty table in a darkened room and flanked by U.S. and Alaska flags, Dunleavy, a Republican, painted a grim picture of the states future. The price of oil has gone down; therefore our revenue is going down, he said.The crisis Dunleavy described isnt just a short-term problem. State officials have known for decades that relying on oil to fund the budget is risky as prices and production have declined. But year after year, they have failed to agree on a solution to finance school repairs and renovations. Alaska is one of only two states without an income tax or statewide sales tax. Average annual spending on education facilities declined by nearly 60% after 2014, the year oil prices plummeted, according to a 2021 report by the University of Alaska Anchorage. Overall spending on rural facilities is now less than half of what the National Council on School Facilities recommends. Sen. Lki Tobin, a Democrat from Anchorage who chairs the Senate Education Committee, said its hard to get momentum around various ideas to fund education, let alone just getting folks to realize that we have been by attrition defunding our schools. Education Front and CenterAlaskas Legislature seemed primed this year to address education funding. Several new candidates from both parties campaigned on education and won seats in Novembers statewide election. We flipped an entire statehouse, said Tobin, who was elected to the Legislature in 2022, based on the question of adequate school funding.Lawmakers filed a bill to fund education before the session even began. And in the first months of the year, dozens of superintendents, students and school board members traveled to Juneau to testify before lawmakers and urge them to increase funding for curriculum, teacher salaries and other costs.During one Senate Finance Committee hearing, panel co-chair Lyman Hoffman, who has represented rural Alaskan school districts for 38 years, raised the specter of a civil rights lawsuit similar to those the state has faced in the past over education in primarily Indigenous communities.The prospect, he said, could be more costly to the state than if we came forward and tried to do something about the condition of these schools. Sleetmutes roof has been leaking for so long that the wall has started to buckle under the weight of snow and ice, first image, and a bathroom ceiling is covered in mold. (Emily Schwing/KYUK) In April, Alaskas House and Senate passed a bipartisan bill that would have offered the largest increase in nearly a decade in what the state spends on each student annually. It did not include capital funds for school construction or maintenance. Days later, Dunleavy, a former superintendent and school board member, vetoed it. He said it didnt include enough support for homeschooling and charter schools policy changes that hes long pushed for. Before the legislative session adjourned in May, lawmakers passed a compromise bill that included less spending and eased regulations for charter schools. Dunleavy again vetoed it, but lawmakers overrode the veto. The next month, Dunleavy used his line-item veto power to slash 3% from the education budget, the largest cut to any department in the state. This years total state budget came to $14.7 billion, about $1 billion less than the previous year. Some lawmakers have described it as bare bones and flat funded. Among Dunleavys cuts was more than $25 million that was supposed to pay for school construction and maintenance. School districts have to apply to the state for those funds each year, and their proposed projects are then ranked. The reduction doesnt leave enough money this year to pay for even the top three projects among the 84 maintenance proposals school districts submitted. Seventeen major construction projects, including the replacement of five rural schools, received no funding at all.One of those projects is a new school in Stebbins, a Yupik village on the coast of the Norton Sound and the Bering Sea where the building burned down last year. More than 200 K-12 students now attend classes in about a dozen small temporary buildings. Mayor Sharon Snowball said several students left the community after the fire to attend boarding school or live with family in other communities. First image: The remains of the Tukurngailnguq School in Stebbins, Alaska, last June after a fire. Second image: Workers apply the finishing touches to a temporary yurt in Stebbins in September. (Ben Townsend/KNOM) At a potlatch in Stebbins last fall, Yup'ik residents practiced their traditional dance. (Ben Townsend/KNOM) Two hundred miles southwest in Mertarvik, a village that recently relocated due to climate change, the school district did not receive the funds it applied for to build a wastewater system for a school thats set to open in 2026. The district said it couldnt answer questions about how it will move forward with the project. Dunleavy has called lawmakers back to Juneau on Aug. 2 for a special session to discuss reforming the states education system. Its unclear whether maintenance and construction funds will be part of those discussions.Scrapping for SolutionsAlaskas budget crisis has been detrimental to the states rural school districts, which rely almost entirely on the annual budget for funding to fix and maintain buildings because they serve unincorporated communities that dont have the power to levy taxes. The budget depends heavily on profits from the production and sale of crude oil, which go into the states Permanent Fund, a state-owned investment fund. Returns on those investments pay for more than half of Alaskas operational needs each year. Prices of crude oil from Alaskas North Slope dropped by more than a third from 2014 to this spring, according to the Alaska Department of Revenue. The result is a budget deficit that some economists say will exceed $1 billion by next year. State lawmakers have failed to address the warning signs of a budget crisis for decades. By the early 2000s, Alaskas daily oil production had fallen by half from its peak in the 1980s. Last year, it was a quarter of that. But for a time, high oil prices allowed Alaska to make it work. When Edgmon came into office in 2007, he said every day was a windfall. We put a ton of money into schools both operationally and capital budgetwise, he said.Legislators have weighed numerous options to fund the budget. Theyve considered whether to trim the annual dividend checks that Alaska pays to its year-round residents from the return on Permanent Fund investments. Last year, Alaskans received just over $1,700. Cutting payments is wildly unpopular, in part because research has shown the money reduces the number of Alaskans in poverty by up to 40%. Lawmakers have dipped into the states dwindling savings accounts to cover the deficit, said Matt Berman, a University of Alaska Anchorage economics professor who co-authored a 2016 report that examined various deficit-reduction methods. The fact that the study was done 10 years ago and that absolutely no action has taken place since then speaks for itself, Berman wrote in an email. Mertarviks school district did not receive the funds it needs to build a wastewater system for a school thats set to open in 2026. (Emily Schwing/KYUK) Some lawmakers have long called for Alaska to adopt a statewide income or sales tax, but neither idea has gained much traction. A bipartisan working group studied the possibility of enacting taxes in 2021. After a year on the working group, state Rep. Kevin McCabe, a Republican from north of Anchorage, said he wasnt convinced taxes were the answer.We experimented with sales tax, maybe a seasonal sales tax, we tried an income tax, progressive income tax, he said. Its just not gonna bring in the money that we need for all of our infrastructure deficit. Alaska used to have a special tax on every employed resident to help pay for education. But it was repealed in 1980 after the construction of the Trans-Alaska Pipeline, which allowed the state to sell more oil from North Slope. Ill never forget my first payroll check, said Click Bishop, a former six-term Republican senator from Fairbanks. He said his boss went through the statement with him. He gets down here on this line, and it says education head tax $5, and he said, Kid, that $5 is going to the state to help you get your education, he recalled. Bishop, who is exploring a run for governor, has proposed reinstating an annual education tax. But his proposal would only raise about $14 million each year, hardly enough to scratch the surface on the states school maintenance needs. Instead of taxes, McCabe and other lawmakers say a more long-term solution for both schools and Alaskas overall budget would be to build a natural gas pipeline that would raise money from gas sales.Estimates from the U.S. Geological Survey show the state is home to more than a hundred trillion cubic feet of untapped natural gas, but theres no way to bring it to market.Described by the industry as big, expensive and complex, the pipeline project has been in discussions for at least 50 years. In 2020, the Alaska Gasline Development Corp., an independent state corporation tasked with developing the infrastructure, estimated construction could cost close to $40 billion. Though an energy developer recently announced interest from dozens of international customers, its unclear who would foot that bill.
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