Legislature must act to preserve sustainable funding source for scholarships

Ten years ago Gov. Sean Parnell told legislators it was time to "build a strong fence of moral obligation" around the $400 million the state had set aside in 2011 as an education endowment, with the earnings to be used for scholarships.

It’s time for the Alaska Legislature, despite continued opposition by Gov. Mike Dunleavy, to repair the fence.

The moral obligation was that income from the $400 million account would be designated to pay for post-secondary scholarships for students who did well in high school. Parnell said it was critical to have a long term source of money that students and their families could depend on.

"Let us create a fund for that money so the fund's earnings can pay for these scholarships for future generations," Parnell said. "Send our students this unmistakable message: If you keep your end of the bargain in the classroom, we will keep our end of the bargain in this chamber."

The Legislature approved its end of the bargain unanimously in 2012, with supporters saying the "Alaska Higher Education Investment Fund" would be a way to transform education for future generations.

The state sent an unmistakable message.

But the first holes in the fence of moral obligation appeared in 2016 and 2017 when the Senate Finance Committee proposed getting rid of the fund because oil prices had dropped. Public opposition kept the fund from being wiped out.

The program has made higher education more accessible to Alaskans and helped thousands become better prepared to deal with an uncertain future. It is one of the success stories of the Parnell administration.

Starting in 2019, however, Dunleavy began a series of attempts  to wipe out the investment fund, efforts that continue to this day. 

Three years ago temporary budget director Donna Arduin claimed “all money is green” and there was no point in keeping an endowment to pay scholarships or an endowment for the Power Cost Equalization program.

Getting rid of the endowments was a central part of the Dunleavy/Arduin budget. They said all programs should compete every year for any available funding.

“We began on Day 1 of the administration. We started with eliminating budget silos, tearing down those silos,” Arduin told legislators on Jan. 23, 2019. One of the silos was the endowment to pay scholarships.

“Removing these funds will contribute to a more transparent annual budget analysis,” Dunleavy said of his 2019 bill to do away with various accounts, including the PCE and the scholarship fund.

The Dunleavy bill never had a hearing.

But Dunleavy and Arduin, working with House Republicans, managed to get rid of the PCE endowment and  the higher education endowment for a short while in 2019, though the Legislature managed to bring them back to life.

In 2021, the cycle was repeated, with Dunleavy and House Republicans trying to gain leverage by redirecting the cash away from PCE and scholarships, doing so by killing a procedural move known as the reverse sweep.

A majority of legislators approved funding for the scholarships, but a super majority was needed and House Republicans—with encouragement from Dunleavy—stopped the funding because they wanted larger Permanent Fund dividends.

Dunleavy made the policy call to shut down the Power Cost Equalization program for rural Alaska July 1 and to suspend funding for higher education scholarships and support for Alaskans training to be doctors in the WWAMI program.

The PCE program was later funded after Dunleavy lost in court. He reversed himself on the scholarship funds in late August.

On Tuesday, the Alaska Supreme Court rejected a lawsuit about the education endowment. The court found that the education fund was emptied last year because of the procedural roadblock by House Republicans. The court said the education fund is part of the general fund and a super majority vote was needed to keep it as a separate account.

After Dunleavy’s court victory, a state attorney claimed that this was not about a policy call by Dunleavy, telling the Anchorage Daily News that the governor was “just following the Constitution.” 

Deputy Attorney General Cori Mills, who told that whopper, didn’t mention the numerous attempts by Dunleavy to get rid of the endowment. And she didn’t mention Dunleavy’s refusal to introduce a bill to save the endowment, which is also a policy call.

The court action is timely in the sense that it becomes imperative for the state Senate to take up a measure approved by the House, HB 322,  to create a separate account in the state budget for the investment fund, which also supports the WWAMI medical school program.

“The Higher Education Investment fund needs to be protected for Alaska’s students and including this provision in HB 322 will help ensure that in future fiscal years this fund is not subject to the political whims of any given legislature or administration,” said Rep. Andy Josephson. “It is the responsibility of the Alaska Legislature to guarantee that our existing grant and scholarship programs, and WWAMI remain intact.”

That is one way to fix the “strong fence of moral obligation” that Dunleavy has repeatedly sought to tear down.

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