By Sentinel Staff
JUNEAU – Gov. Dunleavy took action on Tuesday that eliminated the Alaska Higher Education Investment Fund, which provided $15 million annually to finance the Alaska Performance Scholarships, Alaska Education Grants, and the WWAMI Regional Medical Education Program.
The education funds were eliminated when Dunleavy swept the $340 million balance of the higher education fund into the Constitutional Budget Reserve (CBR) account. Previously, the earnings of the fund paid for merit- and needs-based scholarships for qualified young Alaskans.
“This is yet another deliberate attack on education and opportunities for young Alaskans by Gov. Dunleavy,” said Sen. Tom Begich (D-Anchorage) in a news release by the Senate’s Democratic minority.
“If you stand with the governor on this action, you do not stand for opportunities for Alaskans,” he said.
The press statement by the House majority coalition explained that during its regular session this year the Legislature “by overwhelming margins” passed a budget adding funds to the Higher Education Investment Fund to support the three programs.
“To maintain the funds, the Legislature needed to pass a “reverse sweep” budget provision preventing state accounts from being deposited into the Constitutional Budget Reserve fund,” the coalition’s statement said. “During the final days of the budget process, the House Republican minority, a 15-member caucus out of 60 legislators, unilaterally failed the motion to accept the reverse sweep. This action by the House Republican minority prevented passage of the essential language, handing Dunleavy the authority to all but eliminate performance scholarships, education grants, and the medical school financial assistance.”
“Over 5,000 students benefit from these educational funding programs,” said Sen. Bill Wielechowski (D-Anchorage). “We owe it to them to provide stability throughout their educational tenure and give them the opportunities to become entrepreneurs, educators, and leaders in this great state.”
The Democrats’ news release said nearly one-in-five degree-seeking students receive the merit-based Alaska Performance Scholarship, and more than 1 in 10 degree-seeking students received needs-based Alaska Education Grant financial aid, totaling roughly $15 million of the annual $22 million in earnings from the Higher Education Investment Fund. Altogether, they said, APS and AEG support more than 30% of University of Alaska students, and WWAMI funding assists 80 Alaskans with attending medical school.
“These are smart investments in young Alaskans, which they have earned. Failure to address this will continue to drive young people from this state and cause a brain-drain in our economy,” Wielechowski said. “We need to come together as a legislature and fix this.”
“Second Budget Nightmare”
Sitka’s Rep. Jonathan Kreiss-Tomkins, a Democrat who is a member of the House majority coalition, commented on Facebook today about a story in the Juneau Empire about the Dunleavy raid on the education fund.
He said the Legislature was not notified in advance about the elimination of the program, and learned about it only when the Alaska Commission on Post Secondary Education “recently began notifying tens of thousands of students whose education is funded through the HEIF, basically: ‘Sorry, the money for the thing you’re planning your life around just evaporated 12:01 a.m. July 1.’”
Following is the text of Kreiss-Tomkins’ online comments:
“The ‘sweep’ and ‘reverse sweep’: these are pieces of jargon with billion-dollar, real-world implications for Alaskans above and beyond the vetoes we all are familiar with. Yes, a second budget nightmare.
“Here’s my honest best attempt at an explanation.
“When the Constitutional Budget Reserve (CBR) was created in 1990, it came pre-loaded with a budget function called ‘a sweep,’ in which every State of Alaska general fund dollar left unappropriated or unobligated at 11:59 p.m., June 30 (the end of the fiscal year) is automatically swept into the CBR, for a future rainy day.
“Think of it like the budget version of a child’s mom, as a matter of habit, sweeping any food left uneaten from dinner off his plate and into a Tupperware to be saved as leftovers for lunch the next day. (Or something like that!)
“The intention of the CBR sweep was good. It’s a complicated thing, arguably with a lot of unintended consequences (for which a ‘reverse sweep’ is instituted), but the sweep is there and has been there for decades.
“The State of Alaska has a lot of money in lots of places for a lot of things. There’s a vaccine fund. The Commercial Fishing Revolving Loan Fund. The Higher Education Investment Fund. The Power Cost Equalization endowment. But the CBR sweep applies only to general fund dollars.
“For many years and across many administrations, a quasi-consensus legal interpretation emerged from the executive branch, specifically from the Department of Law, which funds are independent and immune to the CBR sweep, and which money is general fund money and therefore automatically swept into the CBR 12:01 a.m. every July 1.
“Evidence emerged today that the Dunleavy Administration has dramatically broadened this historical consensus of what is considered to be “general fund” money. Anything interpreted to be “general fund” gets swept and is gone — as a colleague joked today, like Thanos snapping his fingers at the end of Infinity War.
“The administration has not communicated anything to anyone. That includes the Finance Committees, legislative leadership, or Leg Finance Division (the Legislature’s nonpartisan budget analysts).
“We’re all still guessing. It’s like a game of budget forensics.
“But the Alaska Commission on Postsecondary Education, which manages the Higher Education Investment Fund, which in turn funds all Alaska Performance Scholarships as well as the WWAMI medical education program (and more), recently began notifying tens of thousands of students whose education is funded through the HEIF basically: ‘Sorry, the money for the thing you’re planning your life around just evaporated 12:01 a.m. July 1.’
“So, it appears the $350 million HEIF was swept into the CBR; basically, the HEIF is no more. (It can be brought back to life, even after the fact, through a ‘reverse sweep,’ however.)
“More press to come in the coming days. We’ll find out whether other funds, such as PCE, were swept under the administration’s new and still unknown interpretation, as well.
“I’m hoping that the administration’s Office of Management Budget will respond to a request from the Legislature with its definitive interpretation of which funds it believes are ‘sweepable’ into the CBR and which funds are safe so we don’t have to guess and can start planning contingencies.”
-JKT
