Div. of Legislative Finance Report on Education Items in Governor Dunleavy's FY19 Supplemental Budget

The Div. of Legislative Finance puts together a report on the items in the governor’s supplemental budget. They add more details than the Office of Management & Budget puts in their reports – technical things such as fund source codes, cross-referencing, and notes and comments. The comments are color-coded. An orange color code means that the Div. of Legislative Finance does not have enough information to comfortably discuss an item, yellow is when they believe the information is sufficient, and green is when an item is ready to be put in a bill.

The notes about the education items in the Div. of Legislative Finance report are:

  • Repeal FY19 State Aid to School Districts
    • The FY19 budget contains a $20m appropriation to be distributed to school districts in proportion to the foundation aid they receive. District plans to spend the $20m are in place. Justification for this request includes statements that the supplemental payments have not been physically distributed to school districts. School districts cannot unspend money that they have already spent. This reduction effectively transfers reserves from school reserves to the CBR.
  • Updated Estimate for School Debt Reimbursement
    • School Debt Reimbursement language for FY19 appropriated "the amount necessary" for state aid. The estimated amount is frequently greater than the amount actually needed--for FY19 the estimate is revised downward by $2 million (to $106.1 million). FY20 projections are $97.8 million. Changing the estimate is not necessary and has no impact on the budget.
  • School Broadband Access Grant Reduction
    • The School Broad Band Access Grants (BAG) program is run by the Division of Libraries, Archives, and Museums and helps bring schools broadband speeds up to 10mbps, with the remaining costs being paid by the federal E-Rate program. All eligible applications have been paid and this request removes excess grant money. Program cost has been dropping every year as the 10mbps becomes a standard floor rather than a target. Districts that can afford it are aiming for higher speeds. The program has gone from 125 schools in FY15 down to 80 schools in FY19. Excess grant authority lapses to the Higher Ed fund automatically at year-end. No supplemental action is necessary.
    • The 10mbps ceiling of this program is quickly becoming obsolete for many districts with advancements in broadband access speeds. There is great interest in raising the programs bar to 25mbps to make it more relevant for districts. Without this change there is considerable excess authority that could be removed in future years. Will the FY20 budget contain a decrement?
  • National Petroleum Reserve - Alaska Impact Grant Program Additional Distribution
    • Adds to the amount in the FY19 capital bill for a total of ~$25 million in revenue and grant projects. 5 year average of revenue and grants paid out is ~$3.5 million. $25 million is a 6 fold increase over that average.
    • Additional scrutiny should be considered for further FY19 impact grant projects. Legal opinion is: "...the amount of NPR-A revenue that the legislature determines to appropriate.......and the specific projects that are funded in the impacted communities are subject to legislative discretion. So long as the legislature has examined the claims for financial assistance, evaluated them, ranked or prioritized them, and appropriated from the fund for those purposes found to warrant assistance, the legislature should be found to have fulfilled its obligation." After impact grants are made, 25% of gross revenues would flow to the permanent fund principle without appropriation. If there is a remainder, 0.5% goes to the Public School Trust Fund. After that, any remaining funding may be appropriated to the PCE Fund or for any purpose (e.g. to general fund). An argument can be made that the legislature has met its obligation for FY19 and therefore this $13.4 million should be distributed as such: $6.3 million to Permanent Fund principal; $124.9 to Public School Trust; and $7 million to the general fund or for UGF spending.