In fiscal year (FY) 1986, the Alaska State Board of Education continued to work towards its objectives of improving education in the areas of: school finance (by developing a fair and equitable distribution system for state public school funds and funding school construction projects); fiscal accountability (by establishing a system for the entire Alaskan education system); academic accountability (to assure and measure a high quality of education for Alaska's students); the schools for the future project (to identify important issues that will affect public school classroom programs in the 1990s and beyond); and opening Mt. Edgecumbe High School, an educational alternative with a rigorous academic program for rural students. The report includes sections on postsecondary education, educational finance, support and administrative services, adult and vocational education, basic and supplemental education programs in public schools, state museums, library services, vocational rehabilitation, as well as activities of the Historical Commission, the Professional Teaching Practices Commission, School Activities Association, and the State Council on the Arts. Statistical charts on revenues and expenditures, enrollment, high school graduates and personnel, school operating revenues and expenditures, food services, pupil activity, cigarette tax distribution, and debt retirement are appended. (JMM)