Governor’s budget gives school bond debt relief to property taxpayers, but will school districts just build and bond for more?

Colony Middle School


Gov. Mike Dunleavy released his 2023 budget with few changes in K-12 education funding. The education industry and its special interest cohorts may declare that Dunleavy is “flat funding” education, and that is correct, in part. Legislators may reply that the Base Student Allocation has been flat-funded since 2016. And they would also be correct, in part.

Here’s the rest of the story: If the Base Student Allocation has been flat-funded for the past 5 years, why has K-12 funding increased by nearly $43 million over the same period? 

The funding for K-12 education consists of many factors, just one of which is the BSA. Some call this funding formula “the student multiplier effect,” which maximizes funding for a school district.  

For example, the Anchorage School District final budget for 2020-21 showed 42,862 students. Once this number is put through the funding formula, the total number of students grows to 75,066.  So, even though the BSA is flat-funded, the number of students in the calculation grows by 75 percent, which neutralizes the flat funding argument. 

Dunleavy also reinstated the state’s school bond debt reimbursement program which has been put on hold by the governor and Legislature until 2025.

The reimbursement he proposes would apply to those bonds passed before 2014, and the appropriation asked for by the governor is $79 million. This is great news for the education/architecture/construction complex.  

Under this reimbursement program, the State would pay 100 percent of a school’s old bond debt, prior to 2014, which will incentivize new school bonds on local election ballots. 

With the old school bond reimbursement program, a school district could build Taj Mahal-like buildings and the State would have to foot a majority of the bill. 

When the debt was issued in the past, there were various levels the State had committed to reimburse — 90%, 80%, 70%, 60% — based on statute. There is currently a moratorium on the reimbursement of new debt.

That was like the state paying 80 percent of your mortgage, allowing you to build a much more expensive house because it’s “free.”  The State has very little cost control over a new school project.

This reimbursement proposal may be a political calculation because of the upcoming election year, with the promise now at 100 percent for those old bonds.

The school bond debt reimbursement is tagged for 18 local governments, including Anchorage, where there is now 7.8 million square feet of heated space for its 42,000 students. More accurately, there are fewer than 40,000 students who are actually in those facilities, due to homeschooling or charter schools that are not counted in the overall square footage.

The last time Anchorage had student enrollment that was this low was three decades ago, when the district was 1.8 million square feet less than it is today. Building has been aggressive through the decades.

Yet already the Anchorage School District is planning bond packages for April’s ballot. The total is $111 million over the next two years, which more than consumes the $79 million the State would be giving in property tax relief. That $111 million is part of a six-year capital plan the school board approved earlier this month. Voters will see this on the ballot, and property taxpayers will be responsible for 100 percent of the bond.

Despite the increase in funding over the last five years, only 40 percent of Alaska students are proficient in reading at grade level. It gets even worse for math — only 32 percent of all Alaska students are proficient at grade level.


  1. Money won’t solve the low test scores. It will take family involvement. Read to your students. Help with homework. Know where they are at 10 pm. Set aside time each day to be a responsible parent. Get involved with your students life. That is the root cause of low test scores. Bad parenting.

    • Greg, you are partially right. The other part of this equation is the curriculum changes every few years and there is no consistency, as well as more and more social engineering classes instead of hard sciences. Social promotions are another big issue for students, who are not ready to advance, but get promoted because it would hurt their feelings or make the parents/teachers look bad. Our education system is not outcome driven (as in graduating students actually being able to read, do math, understand basic science and have a modicum of understanding how our system of government is supposed to work). It has become a social engineering test field for egghead academics, who wish to try out their mostly marxist ideas on an unsuspecting audience.
      If we could eliminate half of the administrative staff, and return that money to the classroom, it would go a long way to actually get a better outcome.

      • I concur 100%. I have been saying the exact same thing. I have witnessed this focus on social engineering with my kid, which should be pressured onto the parents. If a kid is rude or acts out, the parents needs to know about it immediately, but that’s not how they have been handling it because teacher to parent interactions are scary and stressful, and ya, they want to try out all of these methods they have come up with. Teachers need to buck up. And parents need to hold themselves accountable and not be jerks when it is completely unnecessary or especially when something is on them. And parents can help hold teachers more accountable (without being complete jerks) if they are required to interact more. But most of all, parents can help hold their kids accountable if they know what’s going on.

  2. Glad my boy only has 1-1/2 more years in this God forsaken school district. In the top 1% of his class, and as Greg has mentioned, it all begins with parenting. We were reading every night to our son from several months old up until he could read on his own – sometimes reading the same little book dozens of times in row with the “Again”, “Again”, and on and on. Makes a HUGE difference!!

    • Good for you. Many parents hand the student off to the school as if their job is finished raising them. They have no business raising a kid if they are going to halfway it. That’s what’s wrong today.

      • Greg: it’s not the only problem, but I’ll agree it’s a major battle front. And the teachers could help by interacting with parents more and informing them of what’s going on, especially when a kid is needing it.

    • Both my wife and I did that with our three children. Our 3rd child is quite a bit younger that the first 2. They would read to our youngest both the things they were reading for school and the little books he liked. Reading time was a fun activity. Frequently we would all be reading at the same time without telling the children to read. My youngest got his first tablet with books prior to kindergarten.

    • I have read a Curious George book so many times that I can literally read it while I sleep. I have many times.

  3. Unequivocally, YES! All any govt needs to do to trigger unions is make more $$$ available. Almost 90% of per student funding in ASD goes to staff while we consistently have some of the lowest math & LA scores in the nation. Giving the status quo more just means more of the status quo.! More $$$ for new administrators (how ASD LOVES creating, defending, & protecting these); & for subjectively choosing & changing ($$$$$$) curriculum w/o sufficient evidence of outcomes & no accountability when eduational fads have to be replaced. Before we give more, why not require that a certain % of per student funding actually GO TO STUDENTS; & 2. Require districts to use curricula that has already been repeatedly proven (based on performance OUTCOMES) in several highly diverse populations. $$$ doesn’t fix the problems, in education ation- we’ve seen that over & over; but school choice, high standards, accountability, TRANSPARENCY, choosing curriculum that is well-supported by SCIENCE & OUTCOMES, & FAR less administration would sure help!

    • MJ
      Very well said. Too top heavy. Cut the budget 50 % then pay good teachers to teach, not babysit. Get rid of all the fat.

  4. Not sure why the author is bustin on Anchorage, this bond reprieve is aimed squarely at Dunleavy’s Mat-Su base which has been on a school bonding spree

    • Has their student enrollment increased? Sincere question. I know that Anchorage is wanting to at least build a new 20 million dollar Inlet View Elementary school building despite its budget issues and reduced enrollment. But if the valley is going a spending spree, that ain’t cool with me either. School districts, boards, parents, and teachers are pretty bad about treating tax dollars like monopoly money and think money grows on trees if they can justify “need” or see an opportunity because the Joneses just got better school, so the answer to this question in the headline is definitely YES. And the ASD is a fat cat. I learned they have 9 software developers on full time salaries but they can’t successfully post an online bus schedule. And the funny thing about software developers, they certainly don’t reduce their need. Takes a lot of time to reinvent that wheel. I would hate to just have better teaching and more rewards for teachers that deserve accolades for helping to fix our literacy rate. 20 million would go a long way in attracting more teachers up here if it went into salaries.

    • Frank, please note that the ASD school board has approved a $111 million bond for the next election. Hard to justify when we have fewer students.

  5. And in the master’s chambers
    They all gather for the feast
    They stab it with their steely knifes
    But they just can’t kill the Beast

  6. Typical Dunleavy, throw more money at the issue to buy votes and do nothing creative to solve the problem. Standing small.

    • How is he throwing money? He is making the taxpayers accountable which in turn keeps the districts in check. If parents want new buildings they have to contribute, or least some of us will.

  7. The issue is not performance or need or budgets. The issue is moral hazard. Moral hazard occurs when an entity has an incentive to increase its exposure to risk because it does not bear the full costs of that risk.

  8. As wasteful as this program of incentivizing long-term debt is the situation is sometimes far worse! Juneau is a great example. Voters turned down new debt (despite state debt reimbursement being then all but assured) to construct a second high school a number of times until it squeaked by on a stormy and obscure election night. The combination of the NEA, trade unions, people who figure the construction jobs alone overcome the debt burden net of state reimbursement, and people who plan on leaving the state once they retire in PERS or TRS means that debt is usually approved regardless of need. But the school district claims that having the second high school, even when total students are fewer than was the case with just the one high school (due to demographics), gives a net “profit” of $300,000 under a school foundation formula anomaly. Systemic gaming is rampant throughout the state budget but nowhere is it more egregious than with the wrongheaded successes of the Alaska education industry and the municipal government lobby; the people who continually work to establish a state income tax. The results on standardized tests, far worse than one would have found here in the 1950s and 1960s, brings outright fiscal malfeasance to the situation. As someone who benefitted greatly from a public education I don’t have many solutions. Ending school debt reimbursement was a good move. I think moving schools with less than perhaps 100 students to tele-education makes sense. Forcing teachers to live in rural situations has serious shortcomings. Consolidating the rural attendance bureaucracies into one single school system could incentivize rural schools to make local contributions in order to have local autonomy. I believe that teachers work very hard. Teachers are much more likely to leave the profession when test results are so poor, but teachers who give high grades to students who do poorly on standardized tests are both a cause and an indicator of the problem. Advancing students to the next grade level when they cannot meet the standards of the current grade level is a terrible practice, fooling parents until one day they realize they have a Baby Huey who cannot read. Segmenting students into groups based upon performance (A, B, and C, of ten to twenty students each, in the school system I attended) can help the best students while dampening down the stringing along of the poorer students and their parents. Judging by contemporary Alaska results the emphasizing of political correctness over test performance can hurt students for the rest of their lives. Shame on all Alaskans for spending so much money to do so much harm!

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