The federal government plans to withhold nearly $17.5 million in COVID-related grant funds after it says the state underfunded some Alaska school districts.
During the pandemic, Alaska’s education department received $358,770,937 in federal relief funds through the American Rescue Plan. As a condition of the grant, the state was not allowed to disproportionately reduce funding for districts serving large numbers of low-income students.
The federal government says Alaska failed to meet that requirement and underfunded districts in Anchorage, Fairbanks, Juneau and the Kenai Peninsula. Earlier this year, the federal Department of Education warned the state it would be designated a high-risk grantee if it didn’t fix the error by allocating $17.5 million to those four districts.
Now, the federal Office of Elementary and Secondary Education says it’ll withhold more than half of the state’s remaining COVID relief funds. Only once the state pays what it owes the four districts will that hold be lifted.
The state and feds have clashed for months over the state’s alleged noncompliance. Although dozens of states initially failed to meet the grant’s so-called “maintenance of equity” requirements, Alaska is the only state to remain out of compliance.
The state maintains it adequately funded the districts during the pandemic.
In a letter this past May, state Education Commissioner Deena Bishop argued that the state actually increased per-student funding during the pandemic. That’s through a $30 bump to the base amount districts receive per student.
The number of students enrolled in a school district largely determines the amount of money that district receives from the state. During the pandemic, enrollment numbers fluctuated, as some families pivoted to home-schooling and other remote learning options.
State lawmakers tried to partially settle the dispute by including $11,893,486 in this year’s budget to address the problem. That would have covered the outstanding amount for fiscal year 2022, including about $5.5 million for the Kenai Peninsula Borough School District. But Dunleavy vetoed the money, saying the total amount needed is unknown.
The federal government’s move to withhold grant money comes as districts across the state struggle with what they say is inadequate state funding.
For the upcoming fiscal year, the Kenai Peninsula Borough School District is facing a $17 million budget deficit. The feds say the state owes the district almost $8 million across two fiscal years.
Clayton Holland is KPBSD’s superintendent. He said the district’s been monitoring the maintenance of equity dispute since last year, but hasn’t counted on getting the money anytime soon.
“Once we heard about it, it was something like, ‘Okay, if this happens, we could do this or that,’” he said. “But we never did factor that into our budget, just because of all the uncertainties about it, and really not hearing anything from DEED to depend on that funding.”
Holland says it’s “been awhile” since the district heard any updates from DEED, and that they’ve grown tired of pushing for answers. He says it’s clear DEED believes it funded districts adequately.
“I think earlier on, there was still maybe thought that it could be debated or challenged,” he said. “At this point, it doesn’t seem like that.”
Holland says he hopes to connect with Bishop soon to learn more about what the latest development means for Kenai Peninsula schools.
As first reported by the Alaska Beacon, the state plans to appeal the federal government’s decision to withhold the money. Per the federal government, the state has until Oct. 15 to submit its appeal.
