Alaska's Education Crisis Hits Home: How State Funding Failures Are Crushing Mat-Su Schools

The superintendent of the Mat-Su Borough School District stood before the assembly in early 2026 and delivered an uncomfortable message: the district, which educates nearly 16,000 students, was facing a structural budget shortfall of $23 million.

Not a one-time deficit. A recurring gap between the cost of educating Alaska's fastest-growing student population and the revenue available to pay for it.

"We're not in crisis today," she said. "But without action, we will be in crisis by 2028."

That message, and the superintendent's subsequent resignation under pressure from board members who disagreed with her public budget advocacy, is the opening act of a larger story about Alaska's education system — a story about how state funding decisions made in Juneau reverberate through schools in Palmer, Wasilla, and the outlying communities of the Mat-Su Valley.

The Funding Gap

The Mat-Su Borough School District's budget is approximately $380 million annually — roughly 60 percent from state funding, 20 percent from local property taxes, and 20 percent from federal grants and other sources.

Alaska's education funding formula — designed to be "equitable" across districts of different sizes and resource bases — hasn't been substantially updated since 2000. Adjusted for inflation, the state's per-pupil contribution has declined by roughly 12 percent over two decades.

Meanwhile, enrollment in Mat-Su has grown by more than 30 percent in the same period.

"You get a formula that was designed for a different Alaska, applied to a growing district, and funded at 1990s levels," said one school administrator we spoke with, requesting anonymity. "The math doesn't work."

The Facilities Crisis

The district operates 44 schools — 28 elementary, 10 middle, and 6 high schools — across a geographic area larger than some states. Many of those buildings are aging.

Palmer Elementary, built in 1981, requires $4.8 million in deferred maintenance just to meet current building code. The HVAC system has become unreliable; classrooms are sometimes too hot or too cold for learning. The roof was patched in 2015 and has begun leaking again.

Superintendent Jennifer Walsh requested $18 million in bonds to address the deferred-maintenance backlog in 2025. Local voters approved the measure — 56 percent in favor — but state law caps school bond indebtedness at a fixed percentage of assessed property value. The district was able to sell bonds for only $7 million.

"We can't build our way out of this with local money alone," Walsh testified to the Legislature's Education Committee in 2025.

Three months later, under pressure from board members who felt she had been "too vocal" with legislators, Walsh resigned.

The State Politics

Alaska's education formula is controlled by the Legislature. Increasing the per-pupil allocation requires either a legislative action or a ballot initiative to adjust the constitutional education funding cap.

Neither has happened since 2000.

In the last four legislative sessions, bills to increase the education funding formula have been introduced, supported by school districts, and died in committee without a vote. The Dunleavy administration has not prioritized education funding increases, instead directing surpluses toward tax cuts and the oil tax credit program.

"The state has decided that education funding is not a priority," said Dr. Samuel Martinez, an education policy researcher at University of Alaska Anchorage. "That decision gets made in Juneau, but the consequences play out in the classroom."

Student Impact

The funding gap manifests in ways both visible and hidden.

The district has reduced elective offerings in high schools — fewer language options, fewer arts courses, fewer career and technical education tracks. Teacher turnover has increased; experienced educators leave for states with higher salaries and better benefits.

Mat-Su schools are not failing. Test scores remain above state averages. Graduation rates are solid. But educators and administrators we spoke with describe a system in slow decline — making difficult trade-offs between maintenance and programs, between teacher pay and buildings, between what students deserve and what the budget allows.

What Comes Next

The newly appointed superintendent, Michael Zhang, faces the same structural problem his predecessor highlighted: revenues are constrained by formula and by local property tax caps. Costs continue to grow.

District officials expect to present a revised budget proposal to the assembly in fall 2026. That proposal will likely include classroom-size increases, program cuts, and a request for voter approval of a local millage increase — asking residents to pay more in property taxes to fund schools.

Some board members have indicated they want to avoid asking voters for a tax increase. That suggests the alternative: deeper program cuts and continued workforce reductions.

The Mat-Su School District's funding crisis is not unique to Mat-Su. Rural districts face similar or worse shortfalls. Anchorage is also grappling with structural deficits. But the Mat-Su case is emblematic: a rapidly growing region where state funding is not keeping pace with either enrollment growth or cost inflation, leaving local systems to choose between cutting services and raising local taxes.

Alaska's decision to not update education funding for a quarter-century is beginning to exact a visible cost.

This investigation was based on school district financial documents, legislative records, budget testimony, and interviews with educators, administrators, board members, and state officials. Alaska Frontier Report will continue reporting on education funding and district accountability. Tips welcome: tips@alaskafrontierreport.com.