Study says Alaska is underfunding maintenance of schools

Lockers at Kenai Central High School. (Sabine Poux/KDLL)

The state of Alaska should be spending more on building maintenance for its K-12 schools, according to a recent study from the Institute of Social and Economic Research.

Institute research professor Bob Loeffler authored the study. He said it’s part of the institute’s ongoing analysis of Alaska’s revenue and fiscal issues.

“Right now, our level of funding is not sustainable,” he said. “And our schools will degrade if we spend the money we’re spending now. We need to spend more.”

Loeffler looked at capital projects across Alaska districts between fiscal years 2000 and 2020. Whereas many district expenses fall under a district’s operating budget, large capital projects are funded by a combination of bonds and state grants.

The National Council on School Facilities recommends spending 4% of a state’s schools’ current replacement value on capital projects.

Alaska’s current replacement value for its almost 500 K-12 schools is $9.4 billion. Under the National Council’s guidelines, Alaska should invest $374 million each year on school capital projects.

What Alaska actually spends, Loeffler found, is $249 million — 2.6% of its current replacement value.

Spending was higher before the state’s budget crisis. Since 2015, when the budget crisis first hit, capital spending has dropped from an average of $300 million per year to $124 million.

In 2015, the state stopped reimbursing school bond debt. Before, the state promised reimbursement between 60% and 70%.

The moratorium has raised the costs for school districts, which now have to fully fund bonds with their own tax revenue. Since 2015, only two districts approved school bonds — Anchorage and the North Slope. Capital spending from those districts currently accounts for almost two-thirds of the total spending for Alaska’s municipal schools.

“The most poignant finding is really how much our school districts, most of our school districts, the municipal ones, have relied on the bond reimbursement program,” Loeffler said. “And how much both the moratorium on new bonds, and some government vetoes of the reimbursement, have affected how much we spend on maintaining our schools. I didn’t know that going into the study.”

The Kenai Peninsula Borough is considering a $30 million bond for a litany of district projects. The biggest is the construction of a new school for Kachemak Selo, since the current building has fallen into disrepair. The state has appropriated $10 million toward the project if the district can come up with a 35% match, as part of a Department of Education grant.

Loeffler says the funding problem is even more stark for municipal school districts.

“Our boroughs and cities with taxing authority spend some of their own money, and yet they split how much money they spend on capital projects with the Legislature,” he said. “But the rural areas don’t have any taxing authority. And so they’re wholly dependent on the Legislature.”

The Legislature is mandated to spend a certain amount on funding in rural areas, so those schools are guaranteed a minimum amount of capital funding. Municipal schools aren’t.

Loeffler does say the guidelines from the National Council are just guidelines and won’t account perfectly for Alaska’s situation. But, he said, the difference between what the National Council proposes and what Alaska is actually spending is startling.

He says a potential fix might be to rescind the moratorium on bond debt reimbursement. The moratorium is in place until 2025.

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