July 23, 2019

My weekly budget update is coming a day early in response to the Board of Regents meeting yesterday, July 22, in Anchorage, when they considered The BOR voted to enact financial exigency by a vote of 10-1.

A vote of financial exigency does not absolve the university of debt, as would be the case in bankruptcy; it is simply a tool that allows for modification of contracts. Many of you are asking what this might mean for you as an employee or student. For employees, exigency permits the UA system to modify terms of employment, including termination on shortened notice. For students, it has implications for those who have not completed their degree programs. With rapid downsizing there is the potential for unit, program and service eliminations. The university will put students first and per our commitment to our accreditation, we will provide options for students to complete their degree programs.

The BOR also discussed three options for a new university structure that President Johnsen presented. (The options begin on page 11 in this PDF.) They address how the university should respond to unprecedented budget cuts while continuing to serve its mission as the lead provider of higher education for Alaska.
  1. Fewer universities and campuses
  2. Current UA, lead campus
  3. New UA
The BOR asked the president to take a more in-depth look at options two and three along with detailed impacts for each option. President Johnsen will present these scenarios at the next BOR meeting Tuesday, July 30, where we expect they will choose an option to pursue. In addition, President Johnsen announced that there would be an opportunity for stakeholder input in August leading up to the BOR meeting in September.

In Juneau, although the House has twice attempted to pass a capital budget fix, the key funding provisions of the bill failed. The provisions for the Constitutional Budget Reserve draw reverse sweep in SB 2002 lacked the super-majority 30 votes needed to pass. The first vote failed 25-8. A reconsideration vote yesterday also failed by one vote, 29-7. SB 2002 would reconstitute the Higher Education Investment Fund that supports the FY20 Alaska Performance Scholarship, Alaska Education Grant and WWAMI programs. Additional information is available on the government relations website and the Capitol Report provided by Miles Baker.

Bottom line: While numerous attempts at providing additional funding for UA are on the table, so far, none have made significant progress. We do expect more information in this area as discussions continue to shape the path forward.

Following the BOR declaration of exigency and in support of its consideration of budget and university structure, President Johnsen asked the chancellors to provide a plan to reach “pro-rata” budget cuts, pursuant to option 2, above. This reduction would be $68 million for UAF, with the added limitation that one-time bridge funding could only be used to compensate for reductions that do not take effect until after December 2019, and would include a spring tuition increase of 10%.

The president has asked for specific programs to be proposed for elimination. As we consider how to respond to the president’s request, our leadership team believes that input is essential. To that end, I am working on an approach whereby we set up a suite of scenarios that could be available for input and adjustment in the days and weeks following Thursday’s deadline. I should note that the president will also be planning for option 3 this week and identifying ways to reduce costs under a one UA model. For his planning I would expect that Vice President Layer will be reaching out to the provosts, deans, directors and others seeking input on consolidations and eliminations.

I appreciate that this is a lot to think about. I would offer that while the BOR, the president and your university leadership wrestle with ideas around structure and budget, keep on with the work of the university. No matter how the structural or budget issues turn out, we will have students who need serving, a community that needs outreach and problems that need solving. We also still have violins that need playing, collections that need curating and grounds that need keeping.

When I was a faculty member we used to say after long days in the field that science never sleeps. Science will move forward and we will move with it. I will continue to communicate with you as more information comes available. Keep your great ideas coming to the Box of Big Ideas.

Thank you for all you do.

— Dan White, chancellor
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