The Juneau School District is determining how to respond to a letter from the Alaska Department of Education Early Development, which could endanger $2.28 million in “outside the cap” funding in the district’s budget for the current year. (Clarise Larson / Juneau Empire File)

The Juneau School District is determining how to respond to a letter from the Alaska Department of Education Early Development, which could endanger $2.28 million in “outside the cap” funding in the district’s budget for the current year. (Clarise Larson / Juneau Empire File)

State challenges Juneau’s ‘outside the cap’ funding to district

Years-long practice of extra funding may be halted across the state; millions on the line in Juneau.

The state may put the Juneau School District in a $2.28 million hole by disallowing an allocation of that amount from the city because it exceeds the statutory “funding cap” for education spending, according to a letter from the Alaska Department of Education and Early Development.

“A review of the district’s prior years’ financial statements confirms this is a continuing issue and must be addressed,” Lori Weed, the department’s school finance manager, wrote in the June 29 letter. While the state will not require the district to reimburse past “outside the cap” amounts, “this issue must be corrected” beginning with the current fiscal year that started July 1.

Weed, in an interview Wednesday, said the letter was sent because the state in recent years has failed federal disparity tests due to districts allocating “special revenue funds” for purposes like pupil transportation. The disparity test is a little-known rule involving areas affected by Federal Impact Aid, which for Alaska means proving there is less than a 25% funding difference between the highest- and lowest-funded districts.

“Providing additional local funding outside of the established funding cap creates inequity amongst Alaska school districts and has major repercussions on the above-mentioned certification from the U.S. Department of Education,” Weed wrote in the letter to the district.

Local school district and city officials said Wednesday they disagree with the state’s assessment, arguing numerous expenses such as student transportation and school maintenance are exempt from the cap, and similar allocations have been made by Juneau and other districts statewide for decades.

“Educating kids and the district administration, those things are paid for through the formula. And they are subject to the cap,” said state Sen. Jesse Kiehl, a Juneau Democrat who has spent more than two decades as a lawmaker and staff member at the Alaska State Capitol, and seven years on the Juneau Assembly. “Pupil transportation has a different formula. And there’s no cap — it’s a different section of law — the cap doesn’t apply to it. Maintaining school buildings isn’t paid for by the formula at all. And the cap doesn’t apply to Community Schools — that isn’t paid for by the formula at all, not one penny.”

Weed said that while Juneau is the only district to receive such a letter so far, similar letters stating the department’s position on “outside the cap” funding are being prepared to send to all other districts in the state, whether they are in violation or not.

“If they want to roll forward with this it won’t just be Juneau that will want to challenge it,” Juneau Board of Education President Deedie Sorensen said Wednesday. “I’m sure that municipal governments across the state will challenge it.”

The letter to the district coincides with the school board’s recent cut of about $760,000 in spending from its budget for the current fiscal year, including cutting two staff positions, as a result of Gov. Mike Dunleavy vetoing half of an increase in education funding approved by the Legislature. The veto left the Juneau School District — and many districts across the state — with major gaps in their budgets.

[Juneau school board makes cuts to cope with vetoed funds, eyes legal challenge to state]

“This looks just like one more attack on school funding,” Sorensen said.

City Manager Rorie Watt said the potential loss of the $2.28 million to the district’s $95 million budget would cause a major disruption to the district’s already bare-boned spending plan.

“It’s such a big piece of the district’s budget and if they have to forgo this amount of funding it’s going to have impacts to their operations,” he said. “I think there is a bigger question here, which is ‘What happens in other school districts?’ I think this is the start of something big.”

Watt said if the district can’t successfully challenge the state’s position, the Juneau Assembly will have to rescind the $2.28 million in funding.

Sorenson said school board officials, who discussed the state’s letter during an executive session Tuesday evening, aren’t yet considering the impact of losing those funds.

“I’m not going to prepare for an eventuality that I think is unlikely,” she said. “The aggravation factor I think across the state is going to be huge.”

Sherri Layne, acting municipal attorney for CBJ, said the city law department is waiting to hear what direction the school board wants to take in response to the letter before any action is taken.

“I think that if it’s non-instructional funding, then DEED is incorrect — but we don’t have enough information to determine what they have a problem with yet,” Layne said. “It may very well be a situation where it ends up in court, but I think it’s way too soon to know that yet.”

The Juneau Assembly is expected to receive an update regarding the letter at its upcoming Committee of the Whole meeting Monday evening.

• Contact reporter Clarise Larson at or (651)-528-1807. Contact Mark Sabbatini at

More in News

Jasmine Chavez, a crew member aboard the Quantum of the Seas cruise ship, waves to her family during a cell phone conversation after disembarking from the ship at Marine Park on May 10. (Mark Sabbatini / Juneau Empire file photo)
Ships in port for the week of June 22

Here’s what to expect this week.

Participants in a pro-choice abortion rally gather outside the Governor’s Residence on Saturday to demand a pro-life flag flying at the entrance be taken down. (Mark Sabbatini / Juneau Empire)
Pro-choice abortion protesters march to Governor’s Residence to demand removal of pro-life flag

Rally on second anniversary of U.S. Supreme Court’s Dobbs decision also focuses on fall election.

Eddie Petrie shovels gravel into a mine cart as fast as possible during the men’s hand mucking competition as part of Juneau Gold Rush Days on Saturday at Savikko Park. (Mark Sabbatini / Juneau Empire)
Mucking, trucking, chucking and yukking it up at Juneau Gold Rush Days

Logging competitions, live music, other events continue Sunday at Savikko Park.

(Michael Penn / Juneau Empire file photo)
Police calls for Thursday, June 20, 2024

This report contains public information from law enforcement and public safety agencies.

Pins supporting the repeal of ranked choice voting are seen on April 20 at the Republican state convention in Anchorage. (James Brooks/Alaska Beacon)
State judge upholds most fines against group seeking repeal of Alaska ranked choice voting

An Anchorage Superior Court judge has ruled that opponents of Alaska’s ranked… Continue reading

Joshua Midgett and Kelsey Bryce Riker appear on stage as the emcees for MixCast 2023 at the Crystal Saloon. (Photo courtesy Juneau Ghost Light Theatre)
And now for someone completely different: Familiar faces show new personas at annual MixCast cabaret

Fundraiser for Juneau Ghost Light Theatre on Saturday taking place amidst week of local Pride events

Jasz Garrett / Juneau Empire
A section of Angoon along the coast is seen on June 14. Angoon was destroyed by the U.S. Navy in 1882; here is where they first pulled up to shore.
Long-awaited U.S. Navy apology for 1882 bombardment will bring healing to Angoon

“How many times has our government apologized to any American Native group?”

Juneau Mayor Beth Weldon announced this week she plans to seek a third three-year term. (Juneau Empire file photo)
Mayor Beth Weldon seeking third term amidst personal and political challenges

Low mill rate, more housing cited by lifelong Juneau resident as achievements during past term.

(Michael Penn / Juneau Empire file photo)
Police calls for Wednesday, June 19, 2024

This report contains public information from law enforcement and public safety agencies.

Most Read