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Here is the latest review of the federal stimulus law distributed to Alaska legislators:

State Fiscal Stabilization Funds (education funding)

The U.S. Department of Education has confirmed that states may not decline Part A (education) of the Stabilization Funds and then turn around and request Part B (discretionary). It is a package deal.

The department is expected to issue its formal guidance Monday. Part A for Alaska is worth $93 million, to flow through to school districts. Part B for Alaska is $20.7 million, which the Legislature may appropriate for education or any other government service.

The Department of Education also anticipates releasing additional guidance Monday regarding all education funding provisions in the stimulus bill, including the application forms for State Fiscal Stabilization Funds.

And the department has announced it will be ready to start distributing half of the special education, Title I (disadvantaged), vocational rehab and independent-living funds to states on Monday.

Meanwhile, Education Secretary Arne Duncan has explicitly warned school districts to follow the rules and use the stimulus money wisely and responsibly, and has cautioned districts that he intends to get on a plane and personally visit any district that violates the rules in the expenditure of stimulus funds.

"These are one-time funds, and state and school officials need to find the best way to stretch every dollar and spend the money in ways that protect and support children without carrying continuing costs," Duncan said in a recent statement.

“We are going to have to keep very close track of the money, and we're going to have to implement this impeccably. And it's very important … that the money goes where it's needed. We want to look at those projects, are they really making a difference in students' lives. … At the end of the day, we want to see student performance increase,” he explained in a recent interview.

Unemployment Modernization Funds

Regarding the state’s options for use of the potential $15.6 million in Unemployment Modernization Funds:

The state could use the money to upgrade and improve its unemployment benefits operations and Jobs Centers, OR it could deposit some or all of the money into Alaska’s unemployment trust fund to help hold down employer contribution rates to the fund.

If all of the $15.6 million would put toward improving Jobs Centers and unemployment system operations, employers would see a small cost in their contributions to the unemployment trust fund.

But if some of that $15.6 million were deposited into the trust fund (as is allowed under the stimulus bill), it would reduce the cost to employers.

In order to obtain the $15.6 million in stimulus money, the state needs to adopt a statutory change to the base-period eligibility for unemployment benefits.

The Alaska Department of Labor estimated, based on 2008 actual numbers, that the change would have allowed an estimated 1,300 additional unemployed Alaskans to receive benefits.

The unemployment trust fund is self-supporting (no state dollars), and any increase in pay-outs requires a corresponding increase in contributions to the account. Based on the 2008 numbers and actuarial projections, the department estimates that the statutory change would cost employers an average of $10 per worker per year (starting in 2010, if the Legislature adopted the change and made it effective in 2010).

Employer contribution rates will be going down next year, so the $10 would simply mean less of a reduction than otherwise would occur.

However, for example, if the Legislature appropriated $5 million of the $15.6 million to the trust fund, that would reduce the cost to employers, while still leaving $10 million available for Jobs Centers and the unemployment program to, hopefully, help more people find work and get off unemployment.

How other states are dealing with energy program requirements

In order to receive State Energy Program Funds (Alaska’s share is $28 million), the stimulus act requires states to certify that they will make an effort to change their utility regulatory structure to encourage and reward conservation, without hurting utilities, and certify they will meet energy-efficiency standards within eight years for 90% of the square footage of new and renovated commercial and residential structures.

As you might expect, states are looking for ways to obtain the energy program funds without locking themselves into unreasonable or unachievable statutory promises.

Because the stimulus law only requires that states certify they “will seek to implement” the utility regulatory changes, and because the law allows states eight years to meet the building energy-efficiency goals, states are wording their assurances to the Energy Secretary at the minimum required to obtain the funding. For example:

For example, Kansas Governor Kathleen Sebelius, in her letter to the Energy Secretary, says, “I have written to our public utility commission and requested that they consider additional actions to promote energy efficiency, consistent with the federal statutory language contained in HR1 and their obligations to maintain just and reasonable rates, while protecting the public.”

The governors or Rhode Island, California and South Dakota have used the exact same language in their certification letters -- and the Department of Energy has accepted the language as sufficient for the utility ratemaking requirement.