Sustainable Permanent Fund plan a necessary tool to manage Alaska’s fiscal house

  • By CATHY Muñoz
  • Thursday, August 23, 2018 11:04pm
  • Opinion

This piece is in response to a recent editorial submitted by a local teacher on Aug. 16, discussing Gov. Bill Walker’s stance on the forward funding of education. To read the piece, one assumes that 2018 was the first year that public education was forward funded. This is inaccurate.

Education was first forward funded during the 2008 legislative session, and continued throughout the administration of former Gov. Sean Parnell.

In 2014, as oil prices plummeted, Walker presented a legislative package of nine tax measures. All sectors of the economy would see significant increases in taxes, and all personal income would be taxed. In an unusual move, the new governor demanded an all or nothing approach. All nine taxes would have to be adopted, or he would not support any of them.

The unwillingness to compromise created legislative gridlock unseen at any other time in our state’s history, and, for the first time in many years, public education was not forward funded.

Many at the time advised the governor to adopt a more reasoned and phased approach. Reduce spending first, implement a sustainable permanent fund plan second, and last if necessary, implement a broad-based tax. For the next several legislative sessions, the governor dug his heels in.

The Aug. 16 editorial also praises the governor on reducing the state operating budget by 44 percent.

This is also inaccurate because the reduction reflects a large one-time payment made toward Alaska’s unfunded pension liabilities. Reductions to the capital budget have been significant, but actual reductions to the state operating budget have been closer to 3 percent.

The recent news on public school performance has many parents and community members very concerned. Test results show that a majority of students are not meeting state standards — despite Alaska’s ranking as the top-funded public school system in the country.

In Alaska, public school funding is determined by a number of factors. To begin, districts are allotted approximately $6,000 per student. From this number, a formula, tailored to each school district, is calculated. Area costs, the number of special needs students and other factors are calculated to determine a district’s allocation. For Juneau, state funding equates to approximately $8,500 per student.

In the incorporated areas, property tax revenue is also used to augment financial support for schools, and Juneau has historically funded the maximum amount allowed by law.

Despite declining school enrollment, total state support for the Juneau School District increased from $32 million in 2009 to nearly $40 million in 2017.

A sustainable Permanent Fund plan is a necessary tool to manage Alaska’s fiscal house. Fortunately, it was implemented in 2018 without the expansive menu of new taxes on individual Alaskans and Alaska businesses. Its adoption also allowed the Legislature the flexibility to once again forward fund public education while continuing to make adjustments to the size of government and allowing for a more phased approach in determining the components of a broad-based tax.

• Cathy Muñoz is formerly a Republican member of the Alaska House of Representatives.

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