State v. Alaska Legislative Council

• Decision Date: 12 August 2022
• Docket Number: Supreme Court Nos. S-17666/17785
• Parties: STATE of Alaska ; Office of the Governor, Mike Dunleavy, in an official capacity; Department of Administration, Paula Vrana, in an official capacity; and Department of Education & Early Development, Michael Johnson, in an official capacity, Appellants, v. The ALASKA LEGISLATIVE COUNCIL and Coalition for Education Equity, Appellees. State of Alaska ; Office of the Governor, Mike Dunleavy, in an official capacity; Department of Administration, Paula Vrana, in an official capacity; and Department of Education & Early Development, Michael Johnson, in an official capacity, Appellants, v. Coalition for Education Equity, Appellee.
• Court: Alaska Supreme Court

515 P.3d 117

STATE of Alaska ; Office of the Governor, Mike Dunleavy, in an official capacity; Department of Administration, Paula Vrana, in an official capacity; and Department of Education & Early Development, Michael Johnson, in an official capacity, Appellants,

v.The ALASKA LEGISLATIVE COUNCIL and Coalition for Education Equity, Appellees.

State of Alaska ; Office of the Governor, Mike Dunleavy, in an official capacity; Department of Administration, Paula Vrana, in an official capacity; and Department of Education & Early Development, Michael Johnson, in an official capacity, Appellants,

v.Coalition for Education Equity, Appellee.

Supreme Court Nos. S-17666/17785

Supreme Court of Alaska.

August 12, 2022

Dario Borghesan and Laura Fox, Senior Assistant Attorneys General, Anchorage, and Clyde "Ed" Sniffen, Jr., Acting Attorney General, Juneau, for Appellants.

Megan A. Wallace and Hilary Martin, Alaska State Legislature, Legislative Affairs Agency, Division of Legal and Research Services, Juneau, for Appellee The Alaska Legislative Council.

Howard S. Trickey and Peter A. Scully, Schwabe, Williamson & Wyatt, P.C., Anchorage, for Appellee Coalition for Education Equity.

Scott Kendall, Holmes Weddle & Barcott, PC, Anchorage, for Amicus Curiae Alaska Council of School Administrators and Association of Alaska School Boards.

Before: Bolger, Chief Justice, Winfree, Maassen, and Carney, Justices, and Matthews, Senior Justice.^* [Borghesan, Justice, not participating.]

OPINION

MAASSEN, Justice.

I. INTRODUCTION

The Alaska Legislature passed a bill in 2018 that appropriated money for public education spending for both the next fiscal year, FY2019, and the year after that, FY2020. The second year's appropriation had a 2019 effective date. Governor Mike Dunleavy took office in December 2018. He disputed the constitutionality of the second year's appropriation — and the general practice known as forward funding — asserting that it violated the annual appropriations model established by the Alaska Constitution.

The Alaska Legislative Council, acting on behalf of the legislature, sued the governor, seeking a declaratory judgment that the governor violated his constitutional duties by failing to execute the appropriations and an injunction requiring him to do so. A nonprofit education advocacy group intervened in support of the appropriation bills and the practice of forward funding. On cross-motions for summary judgment, the superior court decided that the appropriations were consistent with the legislature's duty to fund public education, that they did not violate any specific constitutional provision, and that the governor's refusal to disburse funds pursuant to the appropriations violated his duty to faithfully execute the laws. The court awarded attorney's fees to the Legislative Council and the advocacy group as prevailing parties. The governor appeals the court's grant of summary judgment and the award of attorney's fees to the advocacy group.

We conclude that a requirement that funds be appropriated annually is implied in the Alaska Constitution's text and was intended by the framers. We therefore reverse the superior court's decision that the forward-funded appropriations are constitutional. And because neither the Legislative Council nor the advocacy group is a prevailing party, we vacate the superior court's attorney's fees awards.

II. FACTS AND PROCEEDINGS

A. Facts

In May 2018 the Thirtieth Alaska Legislature passed House Bill 287, which appropriated funds for public education for the next two consecutive fiscal years,¹ FY2019 and FY2020. The act's provisions took effect on July 1, 2018, except for the FY2020 appropriations; they were given an effective date of July 1, 2019, more than a year after the bill's passage. To be clear, the legislature did not appropriate public education funds from the FY2019 general fund revenues to cover spending in both FY2019 and FY2020;² rather, it in effect appropriated public education funds from two successive years’ general fund revenues to be spent in those two successive fiscal years.

This legislative strategy of "forward-funding" public education was intended to resolve a specific and ongoing problem. The legislature had typically passed the State's operating budget late in the legislative session (i.e. late spring),³ giving Alaska's school districts little notice of how to budget for the upcoming school year. And a budget passed by the legislature remains subject to the governor's veto, adding to the uncertainty. One of HB 287's sponsors, Representative Paul Seaton, described the dilemma by reference to recent history:

In 2015, the [legislature] needed to come back in special session to pass a second operating budget that included education funding. In 2016, the state operating budget was passed by the legislature on May 31 and signed by the governor on June 28. Last session, the state operating budget did not pass the [l]egislature until June 22 and [was] signed by the [g]overnor on July 1. All this uncertainty for the funding amount forces school districts to draft multiple budgets. Anticipating low amounts requires districts to give termination notices (pink slips) to non-tenured teachers by May 15 and tenured teachers by the last day of school.^{[4 ]}

According to Representative Seaton, "[a]n early, separate appropriation for education that has existing funding identified would prevent these problems and will allow school districts to finalize their budgets on time." The proposed bill was therefore "intended to pass separately from the regular operating budget and early in the session to prevent school districts from issuing mandatory teacher layoff notices." Support for HB 287 came from school boards and school districts across the state, as well as NEA–Alaska (a union representing 13,000 Alaska teachers and administrators), the Alaska Council of School Administrators, individual educators, school administrators, and parents, many of whom described their own frustrations with the uncertain education-funding process.

Then-Governor Bill Walker's legislative director asked the Department of Law for an opinion on the bill's constitutionality, and the attorney general advised that the forward-funding provisions were lawful: "Although not common, it is permissible for the legislature to include in a budget bill appropriations [from future general funds] for future fiscal years."⁵ The attorney general reasoned that "[t]hese appropriations do not bind a future legislature because a future legislature can always amend, reappropriate, or repeal the future appropriations."⁶

Governor Walker signed HB 287 into law on May 3, 2018, and it became SLA 2018, Ch. 6. The forward-funding provisions — Chapter 6, §§ 4, 5(c), and 5(d)⁷ — appropriated two amounts from the general fund to the public education fund⁸ : one "calculated under the public school funding formula under AS 14.17.410(b)" and the other in an "amount necessary to fund transportation of students under AS 14.09.010."⁹ It also appropriated $30 million to the Department of Education and Early Development as grants to ensure funding for public schools and the transportation of students for FY2020.¹⁰ A "Contingency" provision in Chapter 6, §§ 7-8, provided that the forward-funded appropriations did not take effect until July 1, 2019, and were "contingent on passage by the Thirtieth Alaska State Legislature and enactment into law of a version of Senate Bill 26" (a bill related to the amount of funds that may be drawn from the permanent fund earnings for state government).

Governor Mike Dunleavy was elected in November 2018. His initial budget — submitted to meet a statutory deadline — largely adopted his predecessor's numbers, including the forward-funded education appropriations for FY2020; it also proposed forward funding education for FY2021. But the governor's amended budget submitted two months later sought to reduce the education appropriations and repeal the forward-funding provisions. The new attorney general issued an opinion that reached a conclusion different from the Department of Law's advice on the same issue in 2018.¹¹ Citing Alaska's "well-established annual budgeting model" as shown by "[t]he Alaska Constitution, court decisions, and historical practice," the attorney general concluded that the legislative attempt to forward fund education expenditures violated the constitutional prohibition on dedicating revenues, the governor's right to strike or reduce appropriations by veto, and statutes governing the budget and appropriations process.¹²

The legislature did not make a new education appropriation for FY2020, instead relying on the previous year's forward funding for FY2020 while at the same time making another forward-funded appropriation for FY2021.¹³ The governor, relying on the advice of his attorney general, asserted that there was no valid education appropriation for FY2020 absent further legislative action, and he encouraged the legislature to make a single-year appropriation.¹⁴

B. Proceedings

In July 2019, without compromising their differences on the legality of forward funding, the governor and the legislature negotiated a stipulation that would ensure that public schools continued to be funded during FY2020. The stipulation provided monthly disbursements from the State's general fund to the public education fund so that Alaska's schools had money with which to operate while the underlying constitutional controversy was adjudicated.

The Alaska Legislative Council¹⁵ then filed a complaint for declaratory and injunctive relief in superior court, along with a proposed order reflecting the parties’ stipulation. The complaint alleged that Governor Dunleavy, then-Commissioner of Administration Kelly Tshibaka, and Commissioner of Education and Early Development Michael Johnson¹⁶ failed to disburse the duly appropriated education funds for FY2020, a failure which the Council alleged would prevent public schools from operating...