Alaska could lose $80 million in school money over a two-point miss

Alaska could lose $80 million in federal money for its public schools, and it may have tripped the wire itself.

The U.S. Department of Education found last year that Alaska's school funding formula fails a federal equity test, one meant to ensure the state doesn't let spending vary too much between its richest and poorest districts. The gap is allowed to be as wide as 25 percent. Alaska came in at 26.88, missing by less than two points. Because of that, the department says the state can't count a stream of federal aid toward what it owes its schools, a shift that puts $80 million at risk.

Nothing is final. Alaska is appealing, and the department hasn't ruled. What no one can yet say is what happens if the appeal fails: whether the $80 million simply disappears, whether the Legislature would have to backfill it, or whether it would be spread thin across districts.

The narrowness of the miss is the maddening part, because it traces to a bookkeeping change Alaska made on its own. The state started counting district money differently, in a way that widened the measured gap, and the federal government rejected the change and recalculated. Alaska says it made the change partly to comply with what the same federal department had told it to do earlier, an argument at the center of its appeal.

The state's case is that the money in question isn't really discretionary. Transportation and food-service dollars are earmarked, can't pay for classroom teaching, and reflect the brute cost of educating kids across a roadless state, including flying students to school. By another accounting method, Alaska argues, it would pass.

The dispute started with a single city budget. In 2023, Juneau approved $2.3 million in extra school funding, for transportation, an after-school program and community activities, and labeled it as outside the state's cap on local contributions. The department told Juneau, and then every municipal district in the state, that calling money "outside the cap" doesn't make it so. The cap exists for a specific reason: state law limits how much a district can add on top of its required contribution, and that ceiling was set decades ago precisely to keep the disparity between rich and poor districts under the federal 25 percent line.

There is a partial safeguard in motion, and it's stalled. The state proposed a regulation last year to head off exactly this kind of failure. The Board of Education declined to adopt it on an emergency basis in June 2025 and opened it for comment instead. Thirteen months later, the record shows neither adoption nor withdrawal.

For the next year, at least, the immediate risk has eased. The department certified Alaska for the 2027 budget year on a disparity of 21.3 percent, back under the line. That certification is separate from the unresolved appeal over the $80 million. "Alaska's formula accounts for the unique challenges of educating students across a vast and diverse state," Commissioner Deena Bishop said.

Districts are writing their 2027 budgets now, without knowing how the appeal ends.