Alaska senators consider bill to protect accounts used for scholarships, ferries

The University of Alaska Southeast campus in Juneau, shown on July 25, 2019 (David Purdy/KTOO)
The University of Alaska Southeast campus in Juneau, shown on July 25, 2019 (David Purdy/KTOO)

The Senate Finance Committee is weighing a bill that’s aimed at protecting state accounts used to pay for university scholarships and the ferry system.

The intent of Senate Bill 224 is to keep any money in the accounts from being swept into a state piggy bank, the Constitutional Budget Reserve. 

A Superior Court judge recently ruled against university students who sued to keep more than $400 million in the Higher Education Investment Fund.

It pays for Alaska Performance Scholarships, Alaska Education Grants and the state’s medical education program, WWAMI, named after the initials of the states that participate, Washington, Wyoming, Alaska, Montana and Idaho.

The sweep grew the Constitutional Budget Reserve from roughly $1 billion to $1.5 billion.

Bethel Democratic Sen. Lyman Hoffman said at a committee meeting on Tuesday that Alaskans who rely on the scholarships and the ferries want more certainty. 

“I think these two need to be taken care of as soon as possible, particularly the Alaska Higher Education Fund, because this one has the most funds in it and to put them aside and get them unsweepable, I think, is something that the people of Alaska are looking forward to,” Hoffman said.

Dozens of other accounts wouldn’t be protected through the bill. They range from a fund for tobacco cessation programs to one that pays to maintain the Whittier tunnel. 

Wasilla Republican Sen. David Wilson said he’s concerned about that. 

“I don’t want to pick winners or losers and [be] trying to pick out, you know, this fund versus this fund – I believe we should just take action to either do them all or none,” he said.

RELATED: Judge rules against students who sued the State of Alaska over scholarship fund

Hoffman said he wants to start with the higher education and marine highway accounts so that the bill is less likely to get bogged down in the legislative process. 

The bill would put the accounts in a similar legal position as the Power Cost Equalization Endowment Fund, which pays to reduce the cost of power in high-cost areas. In a separate court case last year, a judge ruled that $1 billion in that fund is not subject to being swept into the Constitutional Budget Reserve. 

The House is considering two bills on related subjects. House Bill 229 focuses on protecting the higher education fund, while House Bill 57 seeks to protect all of the separate accounts.

Even if the Legislature passes any of the bills, it would need to take another step to put the money back into the accounts that’s already been swept out of them. 

It would take three-quarters of both legislative chambers to agree to draw money from the Constitutional Budget Reserve. If that doesn’t happen, the Legislature could put money into the accounts as part of the regular budget bill, but that would leave less money available for other programs.

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Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.

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