Alaska Senate to set aside extra school funding after warning from the feds

"The reason doesn't matter," Tobin said. "At some point, you just have to comply with the regulation."

Because of the failure to comply with the equity requirements, the U.S. Department of Education designated Alaska last month as "a high-risk grantee." That designation could see the federal government claw back pandemic aid from the state. It could also be used when reviewing whether education grants should be awarded to Alaska.

The state Education Department wrote an April 5 letter, asking for reconsideration of the state's high-risk grantee status. Bishop reiterated that the state believed its funding formula had met federal requirements.

In a letter sent last week to Tobin, the U.S. Department of Education said the high-risk status would be lifted by April 25 if the extra school funds are appropriated or an alternative and acceptable plan is presented.

In the letter to Tobin, the U.S. Department of Education detailed correspondence going back almost three years with state officials over the federal equity requirements. Senate members said they have been frustrated after being assured by state officials that the funding issue would be resolved.

The funding said to be owed to school districts is for two fiscal years. The 2021 shortfall would see $6.4 million paid to Anchorage schools and $5.5 million for Kenai schools. For the 2022 shortfall, $5.6 million would go to Fairbanks and Kenai schools, and schools in Anchorage and Juneau.

Around 41 states struggled to meet the federal requirements for 2021 state funding. Every state but Alaska has resolved those concerns. The 2022 requirements are still being negotiated between some states and the federal government.

With competing budget interests, Tobin said the Senate was planning on setting aside funding for the 2021 shortfall. That's on top of $175 million in extra school funding in the Senate's budget for all school districts.

Sitka Republican Sen. Bert Stedman said Tuesday that around $15 million is being budgeted in case the extra school funding is needed. The latest version of the Senate's operating budget is set to be presented to the Finance Committee on Wednesday.