Republican Gov. Mike Dunleavy vetoed a bill increasing Alaska’s $5,960 base student allocation by $1,000 Thursday, setting the stage for an expected failure of an override vote by the Legislature next Tuesday and a renewed battle about education during the final month of the session.

Dunleavy said he vetoed House Bill 69 because it contains no policy changes during a press conference Thursday at the Alaska State Capitol. Also, he said, the funding increase is unpalatable since “the revenue situation has deteriorated a lot” for the state since December due to decreasing oil prices and potential reductions in federal funding.

He previewed a bill he plans to submit to the Legislature in the coming days, which includes a $560 BSA increase and policy-specific measures totaling about $140 more in per-pupil funding.

“This is a bill that, if agreed upon by the Legislature, I’ll sign tomorrow morning,” he said, adding, “we’ll have policies that will help kids, and it will have the funding that is also being requested as well.”

The governor’s new bill revisits numerous policies he has advocated for, including allowing students to enroll in any district statewide regardless of where they live, easing the regulatory process for new charter schools, boosting homeschool funding, and offering financial incentives to school districts based on K-6 reading scores.

The total price tag of the governor’s bill is roughly equal to the $175 million a one-time $680 BSA increase in effect this year is costing the state. A $1,000 BSA increase is projected to cost the state more than $250 million annually.

The House on Wednesday passed a budget with the $1,000 BSA increase and a Permanent Fund dividend of about $1,400 that would result in a $450 million deficit lawmakers would need to remedy through further cuts, new revenue, or tapping a budget reserve fund. However, that budget includes an unspecified $79 million “cut” the governor is supposed to make, which legislative attorneys have said may not be legal, meaning the true deficit is about $530 million. Dunleavy’s bill would shrink that cumulative deficit to about $455 million in the House’s budget.

The version of HB 69 sent to Dunleavy passed the Senate by an 11-9 vote — with three members of the bipartisan majority caucus opposing it — and the House by a 21-16 vote. A total of 40 votes would be needed to override the veto, and leaders of the majority caucuses in the House and Senate have said they don’t believe they can reach that total.

Dunleavy has vetoed BSA funding increases the past two years. He used a line-item veto in 2023 to cut half of a $680 one-time increase approved by the Legislature in the operating budget. Last year, he vetoed a permanent $680 BSA increase, but after legislators failed to override that veto he agreed to a one-time increase of that amount as part of an overall budget package.

In a letter explaining the veto to House Speaker Bryce Edgmon (I-Dillingham), Dunleavy wrote, “While we agree that additional funding for education is necessary, the fiscal reality dictates that the amount put forward match this reality. The amount put forward in this bill does not.”

State Education Commissioner Deena Bishop discussion the status of school districts’ finances during a press conference with Gov. Mike Dunleavy at the Alaska State Capitol on Thursday, April 17, 2025. (Jasz Garrett / Juneau Empire)

The original version of HB 69 introduced this year by Rep. Rebecca Himschoot (I-Sitka) contained a $1,289 BSA increase for the coming year and a total increase of $2,550 over three years. She said those amounts were necessary to make up for the erosive effect of inflation on the BSA, which has remained relatively flat since 2011.

“The Governor says he supports increasing the BSA,” Himschoot said in a prepared statement. “He acknowledges that rural energy costs are holding schools back. He says inflation is an issue we need to address. Those are all important points that need to be addressed right now.”

Himschoot’s proposed increase was trimmed to $1,000, and several policy provisions — some favored by Dunleavy — were added to the bill before the House first passed it on March 12. The governor called that version of the bill a useful “starting point,” but he called the Senate version passed last Friday without any policy changes “a joke” and promised an immediate veto.

Senate leaders have stated throughout this year’s session they want to keep the BSA and education policy debates separate since a funding increase is a necessary top priority, while policy is a more complex series of discussions, Senate Rules Chair Bill Wielechowski (D-Anchorage) told reporters Tuesday when asked about Dunleavy’s promised veto.

“The things that we’re hearing from the school boards, the school districts, the teachers, the principals, the parents, the students — they’re not (talking about) the policy specific needs,” Wielechowski said. Instead, “what they’re concerned with is they want class sizes to stop exploding and stop growing. They want teachers to be adequately paid. They want to stop laying off teachers. And the way that you do those things is to increase the Base Student Allocation.”

Dunleavy said increasing funding without policy reform does not result in improved educational outcomes and pointed to how Alaska ranks 51st in reading, while spending more per student than almost any other state, and pushed the importance of the Alaska Reads Act.

“Many Alaskans also agree that we need to improve educational outcomes in our schools to ensure that Alaska’s young people receive the best education that we can provide,” he said, citing a poll showing support for change and reforms. “With 34 days left in the legislative session, there is still plenty of time to agree upon a bill that contains both needed funding and educational policy.”

If the Legislature fails to override the veto, the debate about funding and policy will essentially return to where it was many weeks ago. Himschoot said when she introduced her bill a primary goal was lawmakers approving it by mid-March so school districts could include the funding while drafting their budgets for the fiscal year that starts July 1.

Instead, as usual, districts are taking varying approaches and guesses. The Juneau Board of Education is assuming a $400 BSA increase to draft a balanced budget, for instance, while the Anchorage School District is planning large-scale layoffs and cuts, such as eliminating middle school sports, if lawmakers don’t approve a BSA hike.

An errant characterization of Juneau’s budget was made during Dunleavy’s press conference by state Education Commissioner Deena Bishop, who said, “At the $680, the Juneau School District came out with a balanced budget. A few weeks later, their board voted on a $0 input, and now they do have a deficit as well as others.”

Kristin Bartlett, JSD’s chief of staff, sent a statement on Thursday afternoon refuting Bishop’s description.

“The Board of Education works diligently to create balanced budgets that take into consideration the ever-present inflationary pressures and our students’ educational needs, while at the same time dealing with the fiscal uncertainty surrounding education funding in the state,” Bartlett wrote.

“At no time during the FY26 budget process did the board entertain the idea of developing a deficit budget. Rather, the district maintained operations, avoided layoffs, and followed its policy to maintain a 1.5% ending fund balance.”

• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306. Contact Jasz Garrett at jasz.garrett@juneauempire.com or (907) 723-9356.