Volume 5 number 3, April 2003 The Schools Trust: the Homestead Act of 1862 and Public Education in Alaska Much can be heard recently about funding cuts in the public school system in Alaska as the state budget is being negotiatied between the governor and the Legislature. Niilo Koponen, former member of the Alaska House of Representatives, provides a little historical overview to the debate, and suggests an alternative source of funding. Under the Morrill Act, the Homestead Act of 1862, Congress set aside Sections 16 and 36 of every township of federal land granted to states and territories. This was to provide income (rents, leases, sales—at market value) with the money going into a trust to provide school funding. In territorial days the Legislature set up a "Permanent School Fund" with the income from those sales and property leases. The same was done for the university and for the Mental Health Trust (one section out of every township). These were congressionally mandated funds. Much of these lands—especially in Anchorage—were leased by entrepreneurs at far below market value and subleased to stores, hospitals (Alaska Regional, formerly the Teamster’s Hospital) and all sorts of ventures. After statehood, agencies such as DOT took over the land without paying, arguing that it belonged to the state, so why pay. The Anchorage situation resulted in a lawsuit wherein the decision—written by former Chief Justice Jay Rabinowitz—decided that the property leased or sold must be paid for at full market value and that the money must go for public education as directed by Congress. The Anchorage establishment blew its cork and started a campaign to "put the property on the tax rolls." In 1977 and ’78 the Legislature, pushed by Representative Ralph Meekins, Jr., (who in the 1981 session took over the Speaker’s chair, thus sparking the "coup" which led to a Republican-led Legislature for more than a decade), reclassified the School, University, and Mental Health Trust lands as general state public lands. It also allowed municipalities to take ownership of 10% of state public lands within municipal boundaries. Anchorage did so (as did other municipalities) and passed an ordinance "selling" the parcels to the original lessor (not the sublessor who may have built the structure on it!) for the equivalent of two years under the market value rent! The properties were not offered at auction or to any other purchasers! The property did go on the Anchorage tax rolls, but the property taxes were not set aside for school, university, or mental health purposes, but were used for whatever purpose the borough assembly wanted—such as the Convention Center, etc. The result in other communities was that state agencies such as DOT, Corrections, and Health and Social Services appropriated the lands, often before the municipalities acted to appropriate their full share. When municipalities did so, they often took the lands for establishing or expanding needed municipal functions, although outlying areas often were made available to private development. The loss of income from the Mental Health Trust lands led to immediate lawsuits against the state. The University of Alaska first sued to reclaim the lands that the state had specifically transferred from the federally mandated University Land Trust. On February 27, 1981 the Alaska Supreme Court found in favor of the university. Later the university sued for compensation or lands of equal value for other trust lands taken by the state—including university lands given to municipalities. The university also won this suit. The Mental Health lawsuit was also won and led to considerable political conflict in the Legislature over which agency should be compensated. The Mental Health Trust was established and eventually given lands and funds to create a mental health system statewide. However, since the original congressional act—the Alaska Mental Health Enabling Act, passed in 1956—granted one million acres to be held in public trust to help create and operate mental health facilities throughout Alaska, it was felt that this implied regionalization, rather than centralized operation. This led to controversy among the supporters of the Mental Health Trust. The State of Alaska lost both that lawsuit and a less onerous one by the university system. Several school districts considered suing, but, afraid of political repercussions, decided against it. The initial legislation creating the territory of Alaska did not include any provision for public education; Congress apparently assumed that the U.S. Office of Education would provide what was needed. Large, stable mining and fishing communities, having taxing powers, took it upon themselves to open schools for children of local families. In the next decade, Judge Wickersham, as Alaska’s delegate to Congress, got Congress to amend the Territorial Act to give the responsibility to the Alaska Legislature to oversee the creation and support of public schools; further, Wickersham got federal lands surveyed in settled parts of Alaska and extended the Morrill Act provisions for the funding of public schools from sections 16 and 36 in such surveyed areas as the Tanana Valley (surveyed 1910-1916) and throughout the "Railbelt" slightly later. Following World War II the influx of population into the Territory created a stressful boom in school attendance. Dr. James Ryan, former head of the teacher education department at the University of Alaska, who had been appointed Commissioner of Education by Governor Ernest Gruening, created the Permanent School Fund with the income from the Morrill Act School Lands. He further lobbied Congress, which created a two-cent-per-package cigarette tax, which went to the Permanent School Fund. The School Fund still exists, but is far from adequate and local property taxes support a large share of school costs. In territorial days, the territory (and tobacco taxes) paid the largest portion of school costs. Local "Independent School Districts" could tax themselves and did so to improve school quality and for locally needed programs. The state constitution (and federal court decisions in other states) places the responsibility for public education directly on the state. In fact, Alaska’s constitution fixes the responsibility on the Legislature—with restrictions, stating: "The Legislature shall by general law establish and maintain a system of public schools open to all children of the state, and may provide for other public educational institutions. Schools and institutions so established shall be free from sectarian control. No money shall be paid from public funds for the direct benefit of any religious or other private educational institution." (Article VII, Section 1). We should consider fully funding the school fund by reconstituting the public school land trust as has been done for the Mental Health Trust and/or giving the public school fund—as a trust—income equal to the income from two sections of every township (including oil, mineral, gravel, and timber lands) of state lands—including reimbursement for the funds lost since the legislative action in 1978 before some parents, property owners, or interested folks file a lawsuit that will make the Mental Health suit look like a nickel and dime affair. This would largely alleviate the burden on municipal property taxpayers and help solve the problem of funding schools in unorganized areas (those without municipal or borough infrastructure). In a case in the Lower 48 the U.S. Supreme Court ruled that the state could delegate, but not abrogate its responsibilities for public education. Alaska’s own constitution is even more specific, fixing the responsibility squarely on the Legislature. The proposal currently mooted by the Administration, to use the Permanent Fund to supplement the School Fund, is yet another raid similar to the Legislature’s 1975 theft of Mental Health Lands. Historically, Congress intended that the income be provided from land income: be it agricultural, commercial, industrial, or mineral—including oil. The University of Texas endowment, probably the largest of any public university, is based on the profits of the oil lands that U.T. owns and leases out. Why didn’t we do that with Prudhoe Bay for the public schools of Alaska, urban, rural, or suburban? Local taxes will never be sufficient. Children are not born only in wealthy communities (and even in those communities, adults often find other things they want to spend public monies on!). Read Article VII Section One of the Alaska State Constitution again. It is part of the constitutional job description of members of the Alaska Legislature. | ||
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