State plans to appeal possible hold on $17.5 million in federal school aid

ANCHORAGE, Alaska (KTUU) – U.S. Department of Education officials said Wednesday the state will appeal the U.S. Department of Education’s threat to withhold $17.5 million from Alaska schools after the federal government found the state failed to provide adequate pandemic funding to four state schools it said needed it most during the pandemic.

“The problem is they felt there was no fair formula in Alaska,” DEED Commissioner Deena Bishop told Alaska’s News Source.

On Wednesday, Bishop stressed that the state is following the requirements set out in the school funding formula, which raises concerns from federal authorities.

“First of all, it’s a bipartisan — legislatively passed — formula in the state of Alaska,” Bishop said. “So by releasing these funds and our state aid to school districts, it’s actually being done in accordance with the law. Alaska law. The federal government has no control over this. Education is in the hands of the states.”

Bishop’s comments come after U.S. Department of Education Deputy Assistant Secretary Adam Schott sent a letter to DEED on Sept. 13 saying he intended to withhold an additional $5.6 million, on top of the $11.9 million the state was informed in July would be withheld from any remaining COVID-related relief funds.

Federal officials say the amount is equal to the per-pupil amounts the state cut in fiscal years 2022 and 2023 at the state’s four schools with the greatest need or poverty:

Kenai Peninsula School District – over $8 million
Anchorage School District – $6.6 million
Fairbanks North Star District Schools – $2.8 million
Juneau School District – $90,000

In a statement, Anchorage County School Board President Andy Holleman questioned the procedure.

“I am confused as to why the state is not taking action to address this issue so that we can continue to receive and disburse federal funds that cost the state nothing but to continue the work we are already doing,” Holleman wrote. “At a time when budgets are tight and our district is facing a very significant shortfall, these funds would be welcome, for us and other affected districts.”

The Alaska Legislature was somewhat prepared for the federal government’s response, passing an $11.9 million bill that Gov. Mike Dunleavy vetoed on June 28.

“The need for funding is undetermined at this time because the underlying funding request remains outstanding,” the governor said in his statement on the veto.

Since December 2023, federal authorities have repeatedly contacted DEED about what they call noncompliance.

“Alaska is the only state that has not met these statutory, non-waivable requirements for fiscal year 2022 and one of only two states that have not met the corresponding requirements for fiscal year 2023,” Schott said in his letter. “By receiving nearly $359 million in ARP ESSER funds, AK DEED has ensured that it will meet these requirements.”

He further stated that as of Sept. 13, DEED still designates the state as “high risk” and that Alaska has not met the requirements or submitted a plan.

As of September 13, Alaska had approximately $31.9 million in COVID-19 response funds remaining.

In the letter, Schott stated that DOE will eliminate the deductions once DEED provides additional funding to affected schools or enters into a formal written agreement with DOE to address the situation.

Bishop said she does not expect the appeal to have an immediate impact on school funding and is not concerned about future funding needs because she believes the state will be successful in its appeal.

Addressing the matter, an Anchorage School District spokesman said district officials are closely monitoring the dispute over federal aid funds between DEED and the U.S. Department of Education.

“We created our budget without the possibility of additional funds. We do not plan to make any changes at this time,” ASD spokesman Corey Allen Young said.

Alaska News Source reached out to Kenai Peninsula School District, Fairbanks North Star Borough School District and Juneau School District for comment. They did not respond at the time of publication.