Alaska fails federal disparity test, putting millions in education funding at risk

The Alaska Department of Education and Early Development failed a test that allows it to include millions of federal dollars toward its contribution to education funding. 

Alaska receives millions of dollars in education funding each year called federal impact aid. That money makes up lost revenue for regions with land that can’t be taxed like federal and Alaska Native owned land. The state can put that money toward its own obligation to school districts in those regions – as long as there isn’t too big of a gap, or disparity, in funding between the most and least funded school districts.

In a Friday letter to state Education Commissioner Deena Bishop, the U.S. Department of Education said the state failed the disparity test. That means what’s usually tens of millions of dollars in federal aid won’t count toward the state’s education contribution for the next fiscal year. 

The state failed the test because the gap between the most and least funded school districts it compared was too wide.

The state failed the test before in 2021, but successfully appealed the decision. It received an exemption to leave out state funding for student transportation — a change that allowed it to pass the disparity test.

The letter also says the state can request a hearing with the federal department if it will be negatively impacted by the test result.

Bishop said in a Friday email to KTOO the state is considering its options moving forward.

This comes as the state’s education department is pursuing a regulation change intended to keep it from failing the disparity test. The regulation would further limit how much funding local governments can contribute to school districts. But it’s unclear if local contributions were a factor in the education department’s most recent failure.

The state has 60 days to request a hearing.