'It's not actually a promise,' Dunleavy administration says of state scholarship programs

Good evening, Alaska!

In today’s edition: We’re back in court for the oral arguments over Alaska’s Higher Education Investment Fund, which the Dunleavy administration has targeted for liquidation; Senate President Peter Micciche’s long-challenged alcohol rewrite passed the Senate for the third time since it was introduced in 2015 today and now heads to the House where it’s died twice; Covid conspiracist Sen. Lora Reinbold has once again found her way to a committee’s gavel; and a note about legislative citations.

Spice level: 🥂

‘It’s not actually promise,’ Dunleavy administration says of scholarship program promised to Alaskans

The Superior Court heard oral arguments today in the lawsuit brought by several University of Alaska students to challenge Gov. Mike Dunleavy’s decision to sweep the Higher Education Investment Fund into the Constitutional Budget Reserve. The fund was set up under former Gov. Sean Parnell (now the UAA chancellor) as a means to fund scholarships in perpetuity through an endowment-style model. It was one of the first programs that Dunleavy and former budget director Donna Arduin set their sights on when entering office as the fund’s roughly $400 million made for a prime target for one-time money. As I wrote about yesterday, Gov. Dunleavy sought to weaponize whatever tools at hand to achieve his political goals. In this case, he sought to use a broadly expanded reading of the Constitutional Budget Reserve’s sweep provisions to attack the funding for programs that were otherwise out of reach with the other headliner being the Power Cost Equalization Fund.

What is the sweep, anyways? The Constitutional Budget Reserve sweep requires any money left over at the end of a budget year that’s available for appropriation (among several other factors) be swept into the Constitutional Budget Reserve to replace previous withdrawals. With the fund once standing at more than $10 billion, the sweep is expected to be a factor of Alaska budgeting for the foreseeable future. Once a perfunctory part of the process, the three-quarter vote in both the House and the Senate needed to reverse the sweep has become political leverage.

While the PCE Fund was ruled out of reach of the sweep in a lawsuit last year, that ruling didn’t directly apply to the Higher Education Investment Fund. Unlike the PCE Fund, the HEIF was established within the general fund and thus would satisfy one of the tests for sweep-ability. This lawsuit argues that other factors should be brought into consideration when judging what is and isn’t available for appropriation. The argument is on the technical side of things but basically boils down to a question of how long appropriations last. The plaintiffs, represented in court today by former Alaska Attorney General Jahna Lindemuth, argue that the original appropriation that filled the HEIF is still valid and therefore the money cannot be swept.

Judge Adolf Zeman put it into plainer terms when he asked Assistant Attorney General Margaret Paton-Walsh how the Higher Education Investment Fund was different than any long-term appropriation for capital projects, like a bridge.

“Talking about a long-term construction project, how is that different than four-year education or medical school education in terms of the Legislature has chosen to invest its money in an endowment to pay these scholarships that students are relying on in the long-term?” he asked.