State Supreme Court upholds Dunleavy decision that depleted funds for Alaska College Scholarships

JUNEAU — The Alaska Supreme Court on Tuesday upheld a lower court ruling against a handful of Alaskan students who sued Gov. Mike Dunleavy’s administration, challenging a ruling that drained the Alaska’s $410 million higher education investment.

The decision means that the Alaska Performance Scholarship Program and WWAMI, the equivalent of the state’s medical school, do not have a dedicated funding source and must compete with others programs in the annual state budget process, but a separate effort by the legislature may reinstate a dedicated account. .

“Although the plaintiffs attempted to argue for alleged policy appeals made by the executive branch, the Court recognized that the state was merely following the Alaska Constitution,” Deputy Attorney General Cori Mills said. in a statement released after the court ruling.

“No one disputes that performance scholarships are an important program, which is why Governor Dunleavy included funds to pay for scholarships in his budget. But that doesn’t mean the Higher Education Investment Fund is beyond the reach of the constitutionally required sweep in the CBR (Constitutional Budget Reserve),” Mills said.

Scholarship programs remain funded until at least June 30, and the budget making its way through the Legislature has money to fund the programs in the next fiscal year.

The legislature is separately considering a bill that would remove the fund from the public treasury so it cannot be emptied by the end-of-session legislative sweep. That measure, House Bill 322, passed the State House on Monday and is heading to the Senate for consideration.

“We are not giving up,” Pat Pitney, president of the University of Alaska system, said in a statement on Tuesday. “We worked simultaneously to fund HEIF and the programs it supports through legislative action.”

The fund “is too big,” Pitney said. “The future of our state is inextricably linked to the success of our people and their access to high quality manpower training and higher education.”

Pitney said the university will focus its efforts on “addressing this issue by supporting HB322.”

This bill would create separate accounts for graduate scholarships and for the Alaska Marine Highway System.

“Critical ongoing public services such as Alaska’s marine highway system should not experience the destabilizing effects that could result from sweeping funds,” said Rep. Dan Ortiz, I-Ketchikan. The bill would create “necessary certainty” for both the ferry system and the higher education investment fund, he said.

The bill originally applied only to the Alaska Marine Highway System Fund and was amended to cover the Education Fund.

“It’s about our workforce. These are our future engineers, our future business accountants, our teachers. Many important jobs need to be filled,” Rep. Andi Story, D-Juneau, told the House before the House voted 25-15 to pass the bill.

Lawmakers who opposed the measure said the creation of separate accounts defied the state constitution.

In the Superior Court decision that was upheld by the Supreme Court, Anchorage Superior Court Judge Adolf Zeman said the Dunleavy administration properly classified the higher education fund as part of from the state’s general fund in 2019. This made it subject to a clause in the Alaska Constitution that requires money left over from the general fund to be automatically paid into the Constitutional Budget Reserve, a special savings account.

The Alaska Legislature regularly votes to reverse that sweep, but it did not do so in 2021 due to opposition from Republican lawmakers in the State House. This failure, combined with the classification of the administration, emptied the fund.

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