Gov. announces 3-year $70 million funding cut agreement for University

Published: Aug. 13, 2019 at 1:54 PM AKDT
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Gov. Mike Dunleavy announced a funding plan that would cut in half the amount of his original veto of $130 million and would spread out a $70 million cut over three years.

The agreement was announced on Tuesday afternoon. The governor announced the deal as a compromise.

"It started out a little bit apart, but we’ve worked toward the middle," he said.

John Davies, the chair of the Board of Regents, said that the deal would provide some stability for the system that has faced uncertain funding.

"One of the biggest problems has been the uncertainty and I think that this agreement provides a great deal of certainty," he said.

The agreement establishes requirements for the University of Alaska, including that it report to the Office of the Governor each year until 2021 on its strategic plan. The items listed include the following, among others:

  • Structural consolidation and consideration of single accreditation.
  • Growth in the monetization of the University assets
  • Operating cost reductions
  • Administrative overhead reductions
  • Research income increases
  • Development of UA lands
  • Technology investments to lower costs and increase access

Several other requirements are also mentioned.

The governor's office, in return, agreed to the following stipulations, among others:

  • Support expanded dual-enrollment of college-ready high school students
  • Support FAFSA completion for high school students
  • Continue supporting Alaska Performance Scholarship and the Alaska Education Grant programs
  • Explore more appropriate structure for WWAMI appropriation
  • Continue $1.2 million each year of the agreement for facility debt reimbursement
  • Support land grant transfers

The budget calls for a $25 million reduction in both FY2019 and FY2020, and then a $20 million reduction in 2021. Meanwhile, the governor agreed to support a $5 million capital budget allocation for FY2020.

The governor credited his late June veto of $130 million with setting the groundwork for today's agreement.

"The budget vetoes in many respects allowed us to get to where we are today to where we are able to discuss this budget and talk about what the budgets going to look like next year," he said.

But he also admitted that the financial situation hadn't substantially changed, and said the millions from the original veto that are now back in the budget will have to come from somewhere.

"We’re gonna have to work with the Legislature and we’re gonna have to look at more savings and maybe reductions in other areas as we move forward," he said.

Despite his commitment to the agreement, the governor made clear that he saw a possibility that the compact could be renegotiated in the case of an emergency, namely, if oil prices fall. When asked whether admitting that the agreement is subject to change with financial pressures makes the point of an agreement null, Dunleavy said he didn't think so.

"No," he responded, "I don’t think it does, but if we have oil at $20 a barrel, or some catastrophic oil drop for some extended period of time, we’re gonna all be having conversations as to what Alaska’s gonna look like."

The agreement comes after the Board of Regent's decision to look into a single accreditation model for the university. That plan, according to President Johnsen, is still something that administrators are exploring. He said he thought that it was part of reducing unnecessary expenses.

"I continue to support that move," Dr. Johnsen said about single accreditation model, "I think that the university is spending too much of its share of resources … on administration and administrative overhead, and I want to put a larger percentage of whatever money we’re allocated ... going to academics."

Meanwhile, the university's accreditation was previously put under question after the president of the Northwest Commission on Colleges and Universities (NWCCU) president Sonny Ramaswamy said that he was concerned that the governor's administration was being heavy handed in its dealings with the Board of Regents. According to Ramaswamy, NWCCU requires that Boards of Regents function autonomously.

When reached over the phone on Tuesday afternoon, Ramaswamy said that he hadn't yet had time to analyze the agreement, but that he was encouraged by what he knew.

"That the governor is allowing the board and the administration to make the decisions independently is really encouraging," he said. "Everybody’s gonna breath a sigh of relief."

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