Governor requests $20M cut to schools, $130M for earthquake relief

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JUNEAU, Alaska (KTUU) - The governor has proposed a supplemental budget that would spend around $130 million on earthquake relief while also cutting $20 million that had been allocated for schools.

Disaster relief funding
Senate Bill 38 was read in the Senate on Monday morning, the bill calls for just under $22 million to be taken from the disaster relief fund to pay for earthquake recovery. The figure includes costs incurred to individuals, damage to public facilities and costs for temporary housing.

“The disaster recovery bill does require use of those reserve funds which were programmed into the FY19 budget,” said Donna Arduin, the director of the Office of Management and Budget. “It is our policy that using reserves for disaster recovery is the right policy, using reserves for the Operating Budget is not.”

The $22 million figure estimates that the federal government will give an additional $46 million for disaster relief for the November earthquake. The federal government has not yet made a federal disaster declaration to make funds available for the state government.

The administration assumes that there may be more money needed in Spring as more damage, especially to roads, is discovered.

The bill also calls for $6.5 million to go to the Department of Transportation from the General Fund. The figure is a ten percent match needed to receive an estimated $65 million from the feds. Another $1 million would be pulled from the General Fund to pay for damage to Department of Transportation buildings.

Anchorage Republican Sen. Shelley Hughes, R - Palmer, experienced the earthquake first-hand and welcomed the governor calling for state funds to be freed to begin repairs. Sen. Donald Olson, D - Golovin, said the disaster funding was likely “front of mind” for Dunleavy and that he would support the governor’s efforts to pay for earthquake damage.

Senate Bill 38 also calls for $7.9 million for the Department of Natural Resources to be used for fire suppression, again to be taken from the General Fund.

Education cuts
Beyond disaster funding, the Dunleavy administration also put forward Senate Bill 39 that would deliver $5.8 million back to the General Fund by moving funds around and making a number of cuts.

Rep. Lance Pruitt, R - Anchorage, said the governor was delivering on his promises to bring spending down.

A big part of that drop in spending, comes because the administration is proposing for a $20 million reduction in education spending. Officials from the OMB said that cut would bring education funding back to the statutory formula.

Olson says “there is a level of discomfort” he has with funding being cut from education after lawmakers passed legislation in 2018 that made a one-time increase for education spending for fiscal year 2019.

Democrats described a last-minute deal at the end of last session and that spending above the statutory formula was a big part of how the budget got passed.

“I’m disappointed by the governor as a former educator and superintendent in schools in rural Alaska, for yanking out funds for schools in this way,” said Anchorage Democratic Rep. Harriett Drummond, D - Anchorage, who was the Chair of the House Education Committee during the 30th Legislature.

Tom Klaameyer, president of the Anchorage Education Association, said Monday afternoon "$20-million is about 200 teachers, and if you take 200 teachers out of classrooms across the state, imagine the impacts that's going to have on the students learning."

Starr Marsett, president of the Anchorage School Board, said "we've got that money allocated and so do other schools. We would have to go back in the middle of the year and readjust our budget and there would be students that would be harmed by this. We've already counted on those funds. We brought back 25 teachers that we were going to have to cut."

Rep. Pruitt said if people were worried about $20 million for education funding they would have "a heart attack" when the Feb 13 budget was released. He continued, adding that the governor was not in the Legislature when the school funding deal was made and he should not be beholden by agreements made at that time.

Medicaid funding
The supplemental budget also tackles questions of Medicaid funding. In August of 2018, the Legislative Finance Division, a non-partisan organization that advises legislators, estimated that Medicaid was being underfunded by $50 million in Alaska.

According to officials from the Office of Management and Budget, the Department of Health and Social Services was able to find funding to offset $37 million of that shortfall, the Dunleavy administration has proposed stepping in and spending $15 million to bridge that gap and provide assurances for medical providers at the beginning of session.

In March of 2018, the Senate passed a $110 million supplemental budget with $45 million set aside for Medicaid, designed to halt a threat by the state to stop paying medical providers.

Other proposals in Senate Bill 39
- $15 million would be given to the Division of Information Technology from the General Fund for a program to consolidate state web services.

- $10.1 million would be taken from the Alaska Marine Highway System to be put in the Alaska Capital Fund to be spent on deferred maintenance. According to the OMB, the money is not being used by the AMHS and would not impact their current service plan.

- $3 million taken from the Village Public Safety Officer program. OMB officials say the money is not being used by the VPSO program with current staffing levels and it would automatically lapse. Officials say the governor is committed to the VPSO program.

- A $5 million transfer of unused funds from the Alaska Gasline Development Corporation (AGDC) back to the General Fund.

- Increased funding to maintain and renovate trooper housing in rural Alaska and a 7.5% salary increase for Alaska State Trooper retention and recruitment efforts.

- $9.4 million for the Department of Environmental Conservation for statewide clean up of per- and polyfluoroalkyl substances (PFAS), a chemical substance typically found in foam used by firefighters