The Alaska Supreme Court took another look at the safety of university investment funds | Techno Glob

on May 25, 2022 at the University of Alaska Southeast Campus in Juneau. (Photo by Lisa Fu/Alaska Beacon)

The Alaska Supreme Court is taking a second look at a September ruling on a new state law intended to protect state higher education investment funds from automatic drains under a provision of the Alaska Constitution.

7 Oct. On , the Alaska Law Division asked the court to hear, in effect, a do-over, on a footnote sentence: “The Legislature has since amended the HEIF Act, removing the HEIF from the general fund and creating it as such. Ineligible for sweep.”

Investment funds are used for college scholarships and in-state medical school equivalents.

If the court agrees to the hearing and then reverses itself on that sentence, it could reopen questions about the fund’s legal status, potentially eliminating the $400 million account forever.

The Legislature and the plaintiffs who originally brought the case opposed the rehearing request.

It’s the latest twist in a three-year-old case as Gov. Mike Dunleavy’s administration reexamines the list of state funds eligible to be swept into the state’s constitutional budget reserve at the end of the fiscal year.

That sweep is required under a constitutional amendment passed by voters in 1990, but until 2019, the Legislature had annually and controversially overturned the sweep by a majority vote.

Prior to 2019, it was believed that higher education funding and the Power Cost Equalization Endowment (used to subsidize rural household electricity costs) were immune from sweeps if the Legislature failed to repeal them.

But that year, Dunleavy proposed a budget that called for the sweep, and the Office of Management and Budget concluded that the earlier analysis was incorrect and that both education and PCE funding were eligible for the sweep.

In 2021, the Legislature failed to reverse the sweep, which transferred both funds — as well as several other, smaller accounts — to budget reserves.

Proponents of PCE filed suit and a Supreme Court judge ruled that PCE funds should not have been used.

That law preserved a reliable source of funding for rural-strength programs, and many university students also filed lawsuits in hopes of preserving higher education funding.

That case went the other way, with a Supreme Court justice ruling that the way the Legislature wrote the law establishing the higher education fund was entitled to a sweep. The students appealed, but the Alaska Supreme Court affirmed the decision in a brief order earlier this year.

Shortly after that order, state lawmakers enacted a new law, creating a higher-education fund similar in structure to the PCE fund.

In September, the high court issued a lengthy explanation of its decision, which included a detailed analysis of when funds are sweepable and when they are not.

In his footnote, he notes that the Legislature’s new law will defund higher education.

Attorneys for the Alaska Department of Law objected, saying the Legislature’s new law was not part of the case.

“That sentence purports to resolve a question of Alaska constitutional law not before the court,” he wrote in a request for a hearing.

Dicta is the legal term for a comment in a court opinion that is not necessary to decide a case but may be cited in future cases.

Hearings are rarely requested by the court, but in October, a judge asked for more information before making a final decision.

Attorneys representing the Alaska Legislature and the students who brought the original lawsuit have submitted written arguments against the hearing.

“The rehearing requested by appellees would create unnecessary uncertainty where there was none,” wrote Kevin Cuddy, an attorney representing the Legislative Council, a House-Senate committee that acts on behalf of the Legislature.

Attorney Scott Kendall, a frequent Dunleavy critic who represents students, said he sees the state as trying to keep higher education funding available for sweeping.

Law department spokeswoman Patty Sullivan said that’s not the case.

“We make no representations about any particular fund. We are simply requesting that the Alaska Supreme Court remove a footnote that addresses an issue not before the court,” she said via email.

“Courts generally prefer to avoid deciding questions unnecessarily, especially questions presented by the case and without complete information. Our petition merely shows that a footnote can be read to decide the question and that can lead to uncertainty and confusion,” she said.

The matter is now in the hands of the court’s judges after both sides filed written arguments. There is no time limit for the decision.

The Alaska Beacon is part of the States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. The Alaska Beacon maintains editorial independence. Contact Editor Andrew Kitchenman with questions: Follow Alaska Beacon on Facebook and Twitter.

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