Budget update: Feb. 5, 2020

February 5, 2020

Tori Tragis

— by Dan White, chancellor

During the last year, UAF “cost per student” has been compared to other universities in the UA system and other universities in the country. These are not, however, like comparisons and they do not account for differences between the university’s different cost structures. The fact is that many factors go into the cost of educating students and when taking those into consideration, UAF does an extraordinary amount with the resources it receives. 

In this week’s budget column, I’d like to provide some context and analysis of UAF’s revenue and expenditures. Provost Emeritus Susan Henrichs retired in summer of 2018 but she has been busy working behind the scenes on breaking down analyses of costs. Her latest analysis (PDF) can be found posted on my website. Copied below are her conclusions:

  • Comparing University of Alaska (UA) institutions with each other is not an apples-to-apples comparison.  They are fundamentally different due to their different missions.

  • Comparing UA institutions with their peers is complicated by the combination of community colleges with universities in Alaska, unlike almost all universities outside Alaska. 

  • University of Alaska Fairbanks (UAF) research activity and productivity in research is disproportionately large compared with other public universities of its size, which skews any comparisons based on expenditure per student ratios.

  • UAF research brings a major revenue stream to the university and to Alaska. Research revenues, which are primarily Federal, support a large fraction of faculty and staff salaries and infrastructure costs. That said, UAF research cannot survive on its own without some state support.

  • Per student revenue or expenditure information is meaningless when it includes funds used for research and public service and the associated facilities and administration.

  • UAF has been burdened with significantly more debt than other Alaska institutions, primarily through decisions made by governors and the Legislature.  Sixty percent of the current outstanding debt is due to the vital combined heat and power plant. 

  • After adjusting for facilities-related, research and public service costs paid with unrestricted revenues, the remaining unrestricted revenue is proportional to enrollment of the three UA universities.

What does this mean for us? Firstly, it is important whenever possible to explain the numbers that are not understood and correct the numbers that are wrong. UAF has some practical basis for some higher costs (e.g., research facilities). While that is true, it is also true that those costs add significant value to students. Opportunity and quality need to be considered in the equation because students do and will continue to come to UAF because of those key factors. 

Secondly, some of the comparisons being made are simply not accurate. They are apples to oranges. Unfortunately if you don’t have the tools available to break apart the data to do actual comparisons, apples and oranges appear to be about the same size, they are both fruits and both grow on trees. Hopefully former Provost Henrichs’ analysis can provide some of the tools to present comparable numbers. 

Thirdly, there are opportunities to balance the equation. UA is seeking appropriation in the capital budget for funding that could be used for debt service or deferred maintenance relief. Since UAF’s operating numbers, or “cost per student” numbers are disproportionately high because of disproportionate debt load and deferred maintenance, relief in this area could balance the equation. 

Former Provost Henrichs’ report contains useful information to help everyone understand and move forward. I encourage you to actively engage in the conversation, knowing that after taking into account the unique landscape of UAF’s costs and revenues, the remaining unrestricted funds are proportional to enrollment of the three UA universities.

Thank you for choosing UAF.