STATE OF ALASKA; OFFICE OF THE GOVERNOR, MIKE DUNLEAVY, in аn 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
THE SUPREME COURT OF THE STATE OF ALASKA
August 12, 2022
Superior Court No. 1JU-19-00753 CI; OPINION No. 7612
Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email corrections@akcourts.gov.
Appeals from the Superior Court of the State of Alaska, First Judicial District, Juneau, Daniel Schally, Judge.
Appearances: Dario Borghesan and Laura Fox, Senior Assistant Attorneys General, Anchorage, and Clyde “Ed” Sniffen, Jr., Acting Attorney General, Junеau, 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
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 appropriatiоn 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 aрpropriations 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 constitutionаl. And
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 lаyoff 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
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
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-estаblished 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,
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 Educаtion 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 during the coming school year. The complaint brought three claims for relief, one for each of the three appropriations made for FY2020 in § 4, § 5(c), and § 5(d) of Chapter 6, SLA 2018. The complaint alleged that the governor‘s failure to disburse the funds infringed on the legislature‘s mandate to maintain a system of public schools under
could continue during the litigation‘s pendency.17
In August 2019 the Coalition for Education Equity — identifying itself as an Anchorage-based non-profit that “champions a quality, equitable and adequate public education for every Alaska child through advocacy, policy development and legal action” — moved to intervene in the lawsuit. Over the governor‘s objection, the superior court allowed the Coalition to intervene (1) “in relation to the eventualities that may come to pass if the Defendants prevail in this suit; and (2) “as part of the cross summary judgments that the present parties will be filing, addressing the issues already part of this case.”18
execute the law by failing to execute the forward-funding appropriations at issue according to the statutory funding procedures.” The court issued injunctions mandating disbursal of the funds “in accordance with the appropriations” and prohibiting the governor “from impounding or withholding money from the appropriations“; it also issued an order requiring the governor to provide the Legislative Council “an accounting of all the expenditures of money pursuant to the appropriations.”
The Legislative Council and the Coalition moved for attorney‘s fees as prevailing parties. The court granted the motions, awarding attorney‘s fеes to the Legislative Council under the partial reimbursement schedule of Alaska Civil Rule 82 and awarding full fees to the Coalition under the constitutional litigant provisions of
III. STANDARD OF REVIEW
“We review summary judgment rulings de novo . . . .”21 We decide constitutional issues by “applying our independent judgment.”22 “In doing so we will adopt a reasonable and practical interpretation in accordance with common sense
based upon the plain meaning and purpose of the provision and the intent of the framers.”23 “Moreover, because these are questions of law, we will consider precedent, reason, and policy.”24 We also “apply the independent judgment standard of review in considering whether the trial court applied the law correctly in awarding attorney‘s fees under
IV. DISCUSSION
A. The Forward Funding At Issue Is Inconsistent With The Annual Budgeting Process Established By Article IX Of The Alaska Constitution.
“Our analysis of a constitutional provision begins with, and remains grounded in, the words of the provision itself.”26 “Constitutional provisions should be given a reasonable and practical interpretation in accordance with common sense. [We] . . . look to the plain meaning and purpose of the provision and the intent of the framers.”27 “We do not interpret constitutional provisions in a vacuum — the document is meant to be read as a whole with each section in harmony with
expressed.”29 Finally, when we are reviewing a legislative enaсtment, “constitutionality is presumed, and doubts are resolved in favor of constitutionality.”30
The parties focus on four sections of the Alaska Constitution as most relevant to the general question of forward funding. First, the Dedicated Funds Clause,
Second, the Budget Clause,
The governor shall submit to the legislature, at a time fixed by law, a budget for the next fiscal year setting forth all proposed expenditures and anticipated income of all departments, offices, and agencies of the State. The governor, at the same time, shall submit a general appropriation bill to authorize the proposed expenditures, and a bill or bills covering recommendations in the budget for new or additional revenues.
Third, the Appropriations Clause,
No money shall be withdrawn from the treasury except in accordance with appropriations made by law. No obligation for the payment of money shall be incurred except as authorized by law. Unobligated appropriations outstanding at the end of the period of time specified by law shall be void.
Last, the Veto Clause,
The Legislative Council argues that these clauses “impose[] no temporal limits on the legislature‘s power of appropriation” and that “[t]he gоvernor has failed to allege a violation of an enumerated clause of the Alaska Constitution.” It argues that the challenged appropriations were permissible under the Dedicated Funds Clause because the clause only prohibits the dedication of revenues from “[t]he proceeds of any state tax or license” or specific revenue streams, whereas the appropriations at issue in this case came from the general fund. The Legislative Council also contends that the governor‘s objections are based on the misconception that forward-funded appropriations, once approved, cannot be reconsidered by the next year‘s legislature. It argues that “the legislature has a long history of approving and then amending or repealing forward-funded education appropriations,” reflecting the reality that forward funding does not meaningfully impair successive legislatures’ ability to adjust their budget priorities in light of current circumstances.
As for the Budget Clause, the Legislative Council notes that it imposes temporal obligations only on the governor: “The governor shall submit . . . a budget for the next fiscal year” and “[t]he governor . . . shall submit a general appropriation bill.”31 It argues that the clause places no such constraints on the legislature‘s power of appropriation and that the limit placed on the governor “in no way binds the legislature or requires the legislature to enact appropriations consistent with the governor‘s request.” It contends that the Appropriations Clausе likewise contains no language expressly prohibiting forward-funded appropriations; the clause provides that no appropriations may be made “except as authorized by law.”32 The Legislative Council maintains that
the “spirit of the appropriations clause” is also not violated because “even after passage of [the appropriations at issue], public education funding continued to
Finally, with regard to the governor‘s veto power, the Legislative Council argues that the power “is not personal” to the governor who happens to be in office on a law‘s effective date; the power belongs to “the governor in office at the time the legislation is passed.”33 The Legislative Counсil observes that “governors are regularly required to enforce and execute laws they did not sign into law“; therefore, it argues, because Governor Walker had the opportunity to veto the forward-funded education appropriations and chose not to, the veto power was not circumvented — it was simply not exercised.
We acknowledge that none of the Constitution‘s budgetary clauses expressly prohibit forward funding. We reiterate, however, that “often what is implied is as much a part of the constitution as what is expressed.”34 Implicit in the budgetary clauses is a requirement that the budget be determined annually; when examined together, the budgetary clauses, the sources from which they were drawn, the underlying policies they were designed to promote, and our case law all support this conclusion.
The Budget Clause introduces the time frame in which the budgetary clauses of article IX operate: “the next fiscal year.”35 The governor‘s budget and the governor‘s general appropriation bill begin the process; the budget must set forth “all
proposed expenditures and anticipated income of all departments, offices, and agencies of the State” for the next fiscal year.36 The legislature is free to create its own budget in response, and its general appropriation bill may differ from that proposed by the governor.37 But the governor may veto the bill or portions of it by line-item deletions or reductions.38
The Appropriations Clause reinforces this process by prohibiting any expenditures not “in accordanсe with appropriations made by law.”39 At the same time, the Dedicated Funds Clause “seeks to preserve an annual appropriation model” by ensuring that the legislature is “free to appropriate all funds for any purpose on an annual basis.”40 Together, these clauses “create a strong executive branch with ‘a strong control on the purse strings’ of the [S]tate”41 and limit the legislature‘s power to impose current spending priorities on future governors and legislatures.42
A report prepared for the Constitutional Convention by expert consultants in public administration provides insight into the policies underlying the Constitution‘s budgetary clauses.43 The report emphasizes the planning
of the state” and “should be avoided at all costs.”46 The report recommends that the legislature be free to change the budget submitted by the governor, subject “[o]f course” to “the governor‘s power to veto items whether in whole or in part.”47
Although this language addresses primarily the executive‘s budgeting task, it illustrates the importance an annual budget held for the constitutional dеlegates. The delegates envisioned an annual budget that comprehensively addresses the State‘s current needs and the resources currently available to meet those needs. The clause counsels against piecemeal consideration and earmarked funds. And while it specifies only the governor‘s responsibility, it envisions that the legislature, like the governor, should be able to view all the State‘s needs and resources at once, being free to change the budget as it sees fit subject to the governor‘s veto.
Necessarily implicit in this model is the idea that the governor‘s budget, and the legislative process in response to it, take place within the same time frame: “the next fiscal year,” i.e. the year for which the governor has collected informatiоn on “all proposed expenditures and anticipated income.”48 If the legislature appropriates funds from a future fiscal year‘s general fund revenues, it circumvents the planning function of the executive budget and undercuts an important aspect of the constitutional design: protecting the State‘s flexibility in the future to respond to then-present needs with then-present resources. The advance dedication of future fiscal year revenues to a particular end takes from future governors and future legislatures the full measure of power and responsibility each is intended to have over the budgets generated during their respective
tenures.49 While the legislature may have a history of approving and then amending or repealing forward-funded education appropriations, as the Legislative Council contends, it is easier to block a proposal in the first instance than to repeal or change it once it has been enacted. Blocking a proposal requires only a majority of one house of the legislature, or the governor‘s sustainable veto; reducing or repealing an appropriation that has already been enacted requires a majority of both houses and the governor‘s acquiescence.50 These additional obstacles seem incompatible with the annual budgeting model our Constitution contemplates.
We have recognized this in past cases, in which we have repeatedly observed that the
but that government departments will not be restricted in requesting funds from all sources.”52 We recognized in Southeast Alaska Conservation Council v. State53 that “the reach of the dedicated funds clause might be extended to statutes that, while not directly violating the clause by dedicating revenues, in some other way undercut the policies underlying the clause.”54
Reading the relevant constitutional provisions together, and in light of the “purpose of the provision[s] and the intent of the framers,”55 we conclude that the budget clauses contain an annual appropriation model that promotes comprehensive planning and budgeting flexibility. The forward-funded appropriations at issue are incompatible with this constitutional model.
B. Education Appropriations Are Subject To The Annual Appropriation Model That Governs All Legislative Budgeting.
The Alaska Constitution‘s Public Education Clause,
legislature, and it confers upon Alaska school age children a right to education.”56 The first version of the clause presented to the Constitutional Convention imposed this duty on “the state” rather than “the legislature.”57 But the Committee on Style and Drafting recommended that the clause “pinpoint [the duty] to a particular division of the state government,” and the provision was adopted in its current form, requiring that the establishment and maintenance of the public school system be specifically a legislative responsibility.58
This case therefore requires us to consider whether, as the superior court determined, the Constitution allows room for legislative flexibility — that is, deviation from the annual appropriation mоdel — in situations like that presented here. The Legislative Council argues that “[t]he need for flexibility in providing public education has been recognized by both the Alaska Supreme Court and the United States Supreme Court, each holding that given the ‘complexity of the problems of financing and managing a statewide public school system . . . within the limits of rationality, the legislature‘s efforts to tackle the problems should be entitled to respect.’ ”59
But we must conclude that the legislature‘s constitutional duty to fund public education does not exempt the subject from the normal appropriation rules. In
State v. Alex60 we
We see no textual justification for a different rule in the education context. And allowing this form of forward funding for education a year in advance would open the door for forward funding in other contexts and more years in advance, weakening the
annual budgeting process intended by the Constitution‘s framers.66
We acknowledge the importance of providing school districts with advance notice of their annual budget, and we agree that the Constitution may allow for some degree of creativity to ensure this is accomplished. But there are avenues that do not raise constitutional concerns. For example, as was the practice from 2010 to 2014, the legislature may appropriate public education funds from the upcoming fiscal year to cover expenditures in the subsequent fiscal year.67 Unlike the forward funding practice at issue here, this would ensure that education funds were set aside well in advance of distribution — giving school districts time to plan their budgets — without appropriating funds from future budgetary cycles. Alternatively, the legislature may prioritize education funding earlier in the legislative session to allow school districts more time to prepare for the upcoming school year.
Regardless, because education appropriations are subject to the same annual appropriation model that governs all legislative budgeting, the forward-funded education
appropriations at issue here are unconstitutional.68
Because we reverse the superior court‘s determination that the appropriations are constitutional, neither the Legislativе Council nor the Coalition remains a prevailing party in the superior court litigation. We therefore vacate the attorney‘s fees awards.
V. CONCLUSION
We REVERSE the superior court‘s order on summary judgment, VACATE the final judgment, and VACATE the attorney‘s fees awards.
Notes
Sec. 4. DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT. The sum of $30,000,000 is appropriated from the general fund to the Department of Education and Early Developmеnt to be distributed as grants to school districts according to the average daily membership for each district adjusted under AS 14.17.410(b)(1)(A) - (D) for the fiscal year ending June 30, 2020.
Sec. 5. FUND CAPITALIZATION. (a) The amount necessary to fund the total amount for the fiscal year ending June 30, 2019, of state aid calculated under the public school funding formula under AS 14.17.410(b), estimated to be $1,189,677,400, is appropriated from the general fund to the public education fund (AS 14.17.300).
(b) The amount necessary, estimated to be $78,184,600, to fund transportation of students under AS 14.09.010 for the fiscal year ending June 30, 2019, is appropriated from the general fund to the public education fund (AS 14.17.300).
(c) The amount necessary to fund the total amount for the fiscal year ending June 30, 2020, of state aid calculated under the public school funding formula under AS 14.17.410(b) is (continued...) (...continued) appropriatеd from the general fund to the public education fund (AS 14.17.300).
(d) The amount necessary to fund transportation of students under AS 14.09.010 for the fiscal year ending June 30, 2020, is appropriated from the general fund to the public education fund (AS 14.17.300).