Gov. Mike Dunleavy’s attorney general says an educational funding appropriation last year, which has become a key point in this year’s school funding debates, violates the state constitution.

In a seven-page letter Wednesday, Kevin Clarkson answers a question from the governor regarding whether “an appropriation of future revenues for K-12 education spending for fiscal year 2020 included in an appropriation bill enacted in 2018 was consistent with the requirements of article IX of the Alaska Constitution.”

Upon review of the matter, Clarkson and his staff found that the funding ran afoul of legislative and judicial precedent for Alaska’s annual budget process, in which spending appropriations are negotiated and determined each year.

“Although the Legislature’s action in this regard has been referred to as ‘future funding,’ the more appropriate description of the Legislature’s action is ‘future appropriating,’” Clarkson wrote. “In essence, in [fiscal year 2019] the Legislature future appropriated future [fiscal year 2020] revenue for education in [fiscal year 2020].”

Clarkson cited language from a 2017 Alaska Supreme Court decision upholding then-Gov. Bill Walker’s halving of 2016 Permanent Fund dividend checks. State Sen. Bill Wielechowski had challenged Walker’s move, citing an amendment to the state constitution which stated in part that, “All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.” The court rejected that position in its ruling.

“Absent another constitutional amendment, the Permanent Fund dividend program must compete for annual legislative funding just as other state programs,” the court’s justices wrote at the time, in the passage cited by Clarkson.

Wednesday’s opinion also cited a provision in the state constitution that “the proceeds of any state tax or license shall not be dedicated to any special purpose.” As an example, Clarkson mentioned Sonneman v. Hickel, another Alaska Supreme Court decision which upheld a state fund for the Alaska Marine Highway System — because it was phrased “permissively,” Clarkson said, without legally requiring that the fund be spent on state ferries.

“The key to the court’s holding in Sonneman is that the anti-dedication clause is violated whenever the Legislature attempts to restrict the use of future revenues to a single purpose — thus making the future funds immune from either a future Legislature’s appropriation power or a future executive branch’s reach,” Clarkson wrote.

Clarkson also characterized the manner of the Legislature’s 2018 education appropriation as constituting an “end-run” around future governors’ line-item veto power. In theory, he said, lawmakers could appropriate several years of veto-proof future funding with no opportunity for an incoming governor to intervene.

Last week, the Division of Legal and Research Services sent a five-page memorandum on the issue to Senate President Cathy Giessel, which states, "there is no specific restriction on the legislature's appropriation power under the Constitution of the State of Alaska that would limit the ability of the legislature to forward fund education."

In an interview, Giessel said the purpose of forward funding education was to create certainty for the constitutionally mandated public school system.

"Both of us have legal advice and that legal advice differs. At the end of the day it may come down to taking this issue to court and letting the courts decide," she said. "Our own legal attorney has told is it’s a close call."

Giessel said she worries postponing funding could jeopardize teachers who want to continue in their jobs but now aren’t sure they’ll be rehired, as well as hinder school districts as they try to hire new teachers each year.

In a prepared statement, House Speaker Bryce Edgmon, I-Dillingham, concurred with Giessel:

“The governor is subjecting students, parents, and teachers to an unnecessary legal and political fight,” he said. “We stand with the Senate and remain firm in our belief that the Legislature acted in a legal and appropriate fashion when it forward-funded K-12 schools last year.”

Dunleavy personally addressed the topic during a Facebook Live town hall on Tuesday, noting that neither chamber of the Legislature had passed education funding this year — because lawmakers believed those spending levels were set by the appropriation made last year.

“We have said to legislators, ‘Make sure you fund education, make sure it’s in the budget,’ because there’s questions right now as to whether there is funding in the budget, we’re having those discussions,” Dunleavy said Tuesday. “Although we initially proposed reductions in education, we have said to legislative leadership ‘put the funding in, make sure there’s funding in the budget and we will not veto that funding in any form or fashion.’"

Although Dunleavy has proposed sharp cuts to education as part of his austerity budget, he offered during the Facebook Live event not to veto any education funding approved by lawmakers this year in anticipation of future discussions on spending levels.

In a morning press briefing, House Minority Leader Lance Pruitt, R-Anchorage, criticized leaders in both majorities defending how they handled education funding.

“The game is from the Legislature trying to sit here and say well, we’ve already made a statement,” he said. “I get that, but an unconstitutional statement is still unconstitutional. Don’t push it to the brink. He’s already said he isn’t going to veto it.”

The attorney general's opinion arrives as the governor is separately being sued to release $20 million in education funding approved by lawmakers in 2018. Last week the nonprofit Coalition for Education Equity filed its suit against Dunleavy, whose Senate Bill 39 has targeted the appropriation for repeal.

Clarkson plans to issue a formal opinion following up on his letter, which he sent to Dunleavy as an initial notification of where the Department of Law stands.

“I thought it was important to raise this concern with you now so you can consider this information as you continue your deliberations on the [fiscal year 2020] budget,” Clarkson wrote.

Department staff noted that Clarkson’s letter is a legal opinion rather than a policy decision.

Steve Quinn contributed information to this story.

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