The recovery of Alaska from the pandemic requires a strong University of Alaska, but the institution is facing a health and economic crisis of its own.
To continue to serve its essential function for Alaskans, the university must be transformed. There is no time to waste.
The UA Board of Regents audit committee received grim news in a presentation May 13 by UA President Jim Johnsen: “The board’s challenge/opportunity is to consider transformational change needed to avoid decline and potential exigency in FY (fiscal year) 22, and to position the university to lead for the state’s future.”
No one wants a repeat of the turmoil a year ago that led to the declaration of financial exigency and its later reversal, but the financial conditions have gotten worse. Incremental program cuts won’t solve the crisis.
The bind has become severe with the combination of budget cuts demanded by Gov. Mike Dunleavy and the chain reaction collision brought about by the COVID-19 outbreak.
The financial gap for the fiscal year that begins in mid-2021 is already expected to be from $40 million to $66 million, based on optimistic expectations about enrollment. The university is likely to try to hold classes on campus this fall, if conditions allow, while preparing for the possibility that everything will be delivered remotely. Some officials are hoping to keep enrollment declines to 10 percent, but nationally many universities are thinking it may be 20 percent.
“Obviously, the outlook is extremely dire,” said UA Regent Mary Hughes, an Anchorage attorney. “For those of us who are used to the private sector, this is a playbook for a Chapter 11 bankruptcy.”
Speaking at the audit committee meeting, she and others said the university needs to become a smaller institution to better serve Alaskans. She said the university can’t rely on using one-time funds to fill gaps in the budget in the fiscal year that begins this summer.
“After ‘22, we’re not here, on this course,” she said.
The committee adopted a motion calling on the UA administration to present options in June about additional integration of programs, the distribution of cuts and possible mergers, closures and and “changes of mission.”
“The regents cannot just be spectators,” she said. “The people of Alaska are relying on us to provide education in the future and not just through FY (fiscal year) 22.”
All of these items are likely to touch off fierce debate and controversy, but the university is trapped by circumstances. The federal and state relief money has helped, but it is nowhere near enough.
Johnsen said the administration will provide data and the assessment of options for the regents, as it grapples with the problem. “Time. however, is of the essence,” he said.
By the end of the spring semester all UA classes had been moved online or to some alternative to in-person delivery on campuses. “I think we can move quickly, that’s been demonstrated. We have just a few weeks between now and the board meeting in June. But I do think it’s critical for us to get some additional guidance and direction from the board so that we can focus our efforts and bring you an approach, a plan that will not only suffice for the near term, but position us to thrive in the long term.”
Fairbanks regent John Davies agreed with Hughes that “this is a very dire outlook” and recommended that the regents prepare to make major decisions in June about what lies ahead.
“What it does show us is that we have to be in some kind of financial equilibrium” a year or two from now, he said. The university has much to do to get to that balance point.
Fairbanks regent Karen Perdue said the university has dealt with the dual challenges of creating a sustainable budget, while building and keeping the confidence of students and parents about the potential for success by enrolling at UA.
She said the university has to find a way to communicate the severity of the situation to the public. “We struggle with our ability to present the picture and provide a positive outlook to the students,” she said.
Getting through this is not going to be easy. Reducing major programs, closing campuses, closing buildings and eliminating jobs is going to make a lot of people mad. But without taking major action soon, it appears the university will have to declare a financial emergency once more. The way to avoid that is to act decisively.
Columnist Dermot Cole has been covering Alaska politics for 40 years.