Alaska’s education spending lags behind national average when costs are factored in, economists say

Alaska spends a lot of money on education – roughly 40% more than the national average per student. But research presented by the University of Alaska Anchorage’s Institute of Social and Economic Research on Thursday suggests that number doesn’t tell the whole story. 

Anyone who’s spent time in Alaska knows that things just cost more here. Education is no exception. 

But how much more?

Dayna DeFeo, who leads UAA’s Center for Alaska Education Policy Research, tried to answer that with a study last updated in 2022. She and her coauthors first looked at the state’s cost factor, part of the education funding formula that corrects for the higher cost of living in smaller, rural communities. DeFeo and her team also adjusted for the fact that small schools are more costly per person to run.

“That adjustment alone – it’s explained more than half of the difference between Alaska spending and the national average,” DeFeo told attendees.

So, if you take into account the cost of living in, say, Unalakleet or Thorne Bay and compare it to Anchorage, Alaska spends about 20% more than the rest of the country on educating its kids. 

But, of course, prices in Anchorage are quite a bit higher than they are in the rest of the country. So DeFeo and her fellow researchers took a look at a widely used cost-of-living index published by the Council for Community and Economic Research and used that to make an apples-to-apples comparison.

“And when we did that, we actually find that Alaska dips below the national average by seven percentage points in 2019,” DeFeo said. She said her team looked at 2019 data because of lags in reporting and irregularities brought on by the pandemic.

So, after you consider the cost of gas, groceries, medical care, school supplies, electricity and everything else it takes to make an economy run, Alaska actually spends less per student than the rest of the country. And the gap has grown bigger in recent years – when they first looked at the question using 2017 data, Alaska’s spending was just about on par with the national average.

But Alaska’s per-student spending grew 3%  between 2017 and 2019. So how did the state fall further behind?

“What that means is that other states are investing more in public education,” DeFeo said. “They’re doing it more and faster than we are.”

Where is Alaska’s school money going? DeFeo points to three big drivers of rising costs. First is the large number of small schools dotting rural communities across the state. Small schools are just more expensive to run than bigger ones – turnover is high, they have to pay higher wages to attract teachers, and they can’t take advantage of shared resources in the way that larger districts can.

Another is health care – even outside of education, Alaska has the highest per-person health care costs in the U.S.

The third is energy. Fuel is expensive in remote communities, and electricity can cost three to five times more in rural areas than urban ones. And DeFeo says schools don’t benefit from the state’s Power Cost Equalization program, which offsets high electricity prices for rural residents. 

DeFeo said those issues complicate the funding puzzle.

“Those things aren’t really education policy issues, but they’re certainly affecting how we’re doing education policy, and they’re affecting our spending,” she said.

So even as education costs as a whole continue to grow, DeFeo says the higher spending in Alaska doesn’t keep pace with the nation. And she says that’s a worrying sign for Alaska’s schools.

“Alaska doesn’t produce all of the teachers that it needs to hire every year, and so we’re competing for teachers in a national market,” she said.

She says higher salaries, better benefits and working conditions for teachers and school staff could help keep Alaska from falling further behind.

“Of course, this is not just the teachers who need these quality and competitive resources,” DeFeo said. “Our students need this and deserve this, too.”