By Tim Bradner
University of Alaska regents voted to declare a financial emergency facing the university by a 10 to 1 vote Monday, July 22. Only regent Lisa Parker voted ‘no’ on the resolution.
John Davies of Fairbanks, chair of the board, stressed that the declaration is a tool that allows UA President Jim Johnsen to develop a plan to restructure the state university.
Meanwhile, the Legislature continued its gyrations Sunday and Monday in votes on state capital budget funding. The Senate had earlier passed the bill on Sunday the House Republican minority blocked the three-quarters vote of that body needed to access the state’s Constitutional Budget Reserve to pay for it. Eight House Republicans voted against the CBR draw on Sunday with seven Republican members absent, which counts as “no” votes.
Twenty-five members of the House Majority, led by Democrats, voted yes. Thirty members of the 40-member House are required to vote yes to reach the three-quarters threshold.
The bill was up again Monday on a procedural motion for “reconsideration.” Some Republicans, under intense pressure from constituents and businesses, switched their votes, bringing the “yes” total to 29, one vote short of the threshold. Absent Republicans dropped to four.
There will likely be another try Tuesday or Wednesday through another procedure, a motion to rescind the Monday vote, so the bill may ultimately pass. It could still be vetoed, in whole or part, by Dunleavy.
The state’s construction industry is pushing for passage because without an approved state capital budget there will be no matching funds for about $1 billion in federal transportation funds for the year.
The university’s declaration of financial emergency – financial exigency is the legal term – is a direct result of a massive $136 million (41 percent) reduction in state funding, projected additional losses from declining enrollment and reduced research activity, and the lack of sufficient reserves to fund current operations through the year, the university said in a statement.
“Given the poor hand we’ve been dealt, financial exigency is the only tool for us. It will allow us to prepare a plan for continuing our mission,” said UA President Jim Johnsen.
“We will not have a university after February if we don’t make a move,” said regent Gloria O’Neill.
Johnsen said he will have a preliminary plan for another emergency regents’ meeting set for July 30 and a more detailed plan at the regents’ next regularly scheduled meeting on Sept. 12.
If circumstances change the resolution can be altered or even withdrawn, but the outlook for any substantial change in a grim financial situation.
Several regents commented that they reluctantly voted for the resolution from an expectation that the political situation in the state Legislature is unlikely to change in the next few days, given the position taken by Gov. Mike Dunleavy, who recently imposed a major veto of state funds for the university and the House Republican Minority, who so far have blocked resolution of key budget issues.
Even if some of the university’s funds are restored, the reductions will be so drastic as to require a major restructuring of the 100-year-old university in a matter of months. If changes are not made quickly, UA will be out of money early next year, Johnsen said.
The basic math is grim: To accommodate Dunleavy’s reduction $47 million will be cut from the University of Alaska Anchorage budget of $104 million in state funds; $67 million will be cut from the University of Alaska Fairbanks’ $126 million budget, and $10 million from the University of Alaska Southeast budget, Johnsen said.
This assumes no reduction in student enrollment, and that tuition revenue stays the same.
There are other budgets that will have to be cut, such as $45 million for facilities maintenance and $18 million for statewide administrative support for the system. The university also spends about $22 million supporting research, mainly at the Fairbanks campus, most of which is matched by federal research dollars.
What makes matters worse is the timing. Students have already enrolled in the fall semester that begins in late August, and the university has made commitments to faculty and staff to teach classes.
What that means is that the institution is unlikely to achieve major budget reductions through the fall, so the major savings will have to come in the spring semester. That is when the real impacts will hit, Johnsen said.
“I still have hopes that something will happen (in Juneau) but as early as this morning’s (Monday’s) vote, those are dashed by the indecision,” in the Legislature, Johnsen said.
This is not really a financial crisis because the state has adequate funds but a political one brought about by the governor and a handful of Republican legislators in the House, who have the power to block budget measures, he said.
“None of us wants to be here today,” Johnsen said. “As I look at the faces of our students, faculty and staff — their anxiety and their loss — I wonder, how can our university, something so great, that has been built up by so many for so long, be crippled by so few so quickly.”
The board also discussed two options for further consideration: a “lead campus” model, and a single accreditation model.
Though administrative reductions may proceed more quickly, the Board asked for more detailed information to be presented at its meeting on July 30, the university said in a statement. Specific programmatic reductions will be proposed at the board’s September meeting.
After deciding on programmatic reductions in September, notices to affected faculty and staff would be distributed shortly thereafter, the statement said, and work would begin to address the “teach-out” responsibilities of the university owes to affected students.
Either approach will require close cooperation with the Northwest Commission on Colleges and Universities (NWCCU), the organization that provides UA campuses institutional accreditation.
Maintaining institutional accreditation is of paramount importance for UA, the university said in its statement.