School districts across Alaska are set to receive up to $115 million in one-time funding this year thanks to high oil prices. That’s due to what’s known as a “waterfall” in the state budget that passed shortly before the end of the Alaska Legislature’s regular session in late May.
But how much of that $115 million will actually materialize is, for now, unclear.
“What is really hanging as an unknown right now is whether the state will receive a level of funding from oil on volatile global markets that is high enough,” Anchorage School Board Vice President Kelly Lessens said in an interview.
House Bill 263, the state’s operating budget, instructs Revenue Commissioner Janelle Earls to determine how much will be available to fund the one-time education boost on August 31. The Anchorage School District would be in line to receive as much as $32.2 million, according to the Legislature’s nonpartisan finance agency.
That’s about two weeks after the school year begins in Anchorage, Fairbanks and many of the state’s largest districts. And even if the revenue commissioner determines the funding is available, there could be a significant delay before it flows to school districts, Lessens said.
Lessens and five other school board members from Fairbanks and Anchorage wrote an opinion column in the Anchorage Daily News on Monday asking the state Department of Revenue to give districts an estimate quite a bit sooner — ideally, by mid-July.
“We’re not asking anyone to predict the future or bypass the process established in law. We respect that the final determination must be based on actual state revenues. We’re simply asking for the earliest practical information available,” the group wrote.
The Department of Revenue did not respond to an email Tuesday asking if the commissioner would heed the school board members’ requests for an earlier estimate.
It’s not a problem school districts have reckoned with in recent memory, Lessens said.
“I'm not aware of any other one-time funding that's been contingent on the price of oil through the end of June in any given year with a subsequent two-month delay in announcing whether we've hit that threshold,” she said.
Waiting until August 31 would make it difficult to put that money where it would make the biggest difference, said the president of the Fairbanks North Star Borough’s school board, Bobby Burgess. His district would be in line to receive up to $10.2 million if the waterfall is fully funded.
“There's no shortage of things that we could spend it on because of the cuts that we've had to make over the past several years, and the programs that we would like to restore and invest in when we do have that funding,” Burgess said.
If districts knew the amount, or even a range, before students return, they could put that money toward hiring more teachers or aides to reduce class sizes, he said.
“There are hiring deadlines and contracts with unions, and those types of considerations to take into mind,” Burgess said. “When you're operating a school district, it's very difficult to shift teachers or classes in the middle of the year. That can cause disruption, and isn't the most ideal for student learning.”
Additionally, because the Fairbanks North Star Borough caps the amount of funding its school district can retain year-to-year at a lower level than most other Alaska districts, Burgess said it’s possible that some of the one-time funding could be swept into an account that can’t be used for day-to-day instruction if it comes in too late to be fully spent.
The waterfall mechanism the Legislature devised to take advantage of high oil prices funds three priorities in sequential order: first, a $200 energy relief check to be paid alongside the Permanent Fund dividend at a cost of $127 million, then the $115 million in school funding, then $15 million for a bulk fuel loan fund.
Since lawmakers adjourned, the reopening of the Strait of Hormuz has pushed oil prices sharply lower. A barrel of Alaska North Slope fetched $81 as of Friday, down almost $40, or about a third, since the most recent peak in May shortly before lawmakers passed the budget.
It’s thus uncertain whether all of the funding will be available, the Legislature’s head budget analyst, Alexei Painter, said in an interview. It depends on the actual revenue the department collects and how state officials account for the repayment of a scholarship fund lawmakers tapped last year, Painter said.
“Looks like it's going to be pretty close, but most or all of the funding will probably be there,” he said.
But the Department of Revenue should know soon, Painter said.
“They should have a good idea by mid-July,” he said. “Whether they choose to share that or not, I don't know."