The Kenai Peninsula Borough School District will not be receiving a total of nearly $10 million in COVID-19 relief funds that the federal government repeatedly said it was owed by the state this year.

That’s according to a letter from the U.S. Department of Education on Friday that says the state has newly been found to be compliant with federal requirements that previously led to the federal government withholding education funding from Alaska.

Since December 2023, the federal Department of Education has sent multiple letters to the State Department of Education and Early Development that said Alaska was out of compliance with requirements that the state agreed to in accepting funding from the federal American Rescue Plan Act. The KPBSD, specifically, was owed around $9.7 million, the federal government said, of a total of $29 million owed to four districts.

That funding is owed because of “maintenance of equity” requirement, per previous Clarion reporting. Because a decline in KPBSD enrollment during the first years of the pandemic, the district saw less funding — but the maintenance of equity requirements say that the state can’t decrease funding for a school district and then make up the difference with federal grant money.

The State Department of Education and Early Development has repeatedly said they deny any allegations of wrongdoing. The state budget passed by the State Legislature in May included $5.5 million for KPBSD in outstanding pandemic relief funds to address the maintenance of equity issue, but the money was vetoed by Gov. Mike Dunleavy in June.

In the new letter from the federal department, Principal Deputy Assistant Secretary Adam Schott writes that new information provided by the state on Dec. 5 shows that the one-time education funding provided by the state in fiscal years 24 and 25 exceed the maintenance of equity shortfall for the four affected districts. That finding “resolves” the matters and the federal funds withheld from Alaska since July 30 have been released.

Dunleavy celebrated the finding in a Friday press release, calling the issue a “case study” of “abuse of power” by the federal education department and evidence for “why I support the concept of eliminating it.”

“It is a triumphant day for Alaska’s students, as our Maintenance of Equity battle with the US Department of Education has ended, and Alaska’s stance on the matter has been vindicated,” said Alaska Department of Education and Early Development Commissioner Deena Bishop in the release.

Facing a budget deficit of $13.7 million last year and forecasting a deficit of more than $17 million next year, the KPBSD Board of Education has repeatedly discussed the maintenance of equity funding as potentially helpful, though KPBSD Superintendent Clayton Holland most recently in August said that he had “no idea if we would receive any of that funding or not.” He did not respond to a request for comment on Friday.

Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.