News from the Alaska State Legislature, the Office of Senator Hoffman
For Immediate Release: April 05, 2018
Senate Finance Moves Forward on Early Funding for Education
JUNEAU – Members of the Senate Finance Committee today moved forward on a plan to early fund education.
The committee substitute for HB 287 delivers two years of funding certainty for K-12 education, bolsters the Constitutional Budget Reserve (CBR) and offers a path to compromise between the House and Senate.
“Early funding for education will give Alaska’s education community the certainty it needs,” said Anna MacKinnon (R-Eagle River), co-chair of the Senate Finance Committee. “The Senate wants to end the gridlock and avoid a situation where districts are forced to send out pink slip notices to teachers because they don’t know the funding level from the state.”
The bill directs $1.25 billion in Fiscal Year 2019 toward K-12 education—fully funding the base student allocation and pupil transportation.
“We can take positive, meaningful action this year to move our state forward—like forward-funding education—if we stabilize Alaska’s revenue,” said Sen. Lyman Hoffman (D-Bethel), co-chair of the Senate Finance Committee. “A responsible draw from the Permanent Fund’s earnings, committing a percentage to government and a percentage to ensure dividends, provides the stabilization we’re looking for.”
On the heels of record Permanent Fund earnings, the bill also adopts a 5.25 percent of market value (POMV) draw for Fiscal Year 2018, which is effectively a 4.21 percent draw due to the five-year average provision. The draw would generate $1.8 billion for the general fund, leaving the state with a $300 million deficit and a CBR balance of $4.2 billion for the current fiscal year. A healthy CBR balance is necessary to provide a cushion for cash flow purposes, so money managers can schedule transfers in the most prudent and responsible manner.
The Permanent Fund Corporation would not have to sell off assets to provide for the draw because instructions have been developed for the Permanent Fund Corporation and Department of Revenue to work together on a schedule of payments from the fund to the state.
Additionally, with the passage of SB 26—a bill to protect the use of Permanent Fund earnings and ensure a dividend—districts can count on another $1.25 billion in Fiscal Year 2020.
View the bill's fact sheet here.
For more information, contact Senate Majority Press Secretary Daniel McDonald at (907) 465-4066.
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