Budget Compromise in Alaska

The state's governor and university officials strike a deal that will cut funding by $70 million over three years instead of a whopping $136 million immediately.

August 14, 2019
 
John Davies, regents' chair, and Governor Dunleavy after signing the budget agreement

Alaska's governor and officials of the University of Alaska system announced an agreement Tuesday that will blunt -- but not avert -- a budget crisis that had in recent weeks become a national symbol of the defunding of public higher education.

Under the agreement, the university system will see its state allocation for the 2020 fiscal year that began July 1 cut by $25 million, with another $45 million total sliced from the state allocation over the two years that follow.

While $70 million over three years is a large excision from operating budget support totaling $327 million, it looked like a net positive to Jim Johnsen, the university system's president, given the $135 million cut that Governor Michael J. Dunleavy had imposed with a swipe of his veto pen in late June.

“This agreement, worked out following a number of budget discussions by the Board of Regents, provides a clear, gradual multiyear funding glide path,” John Davies, chair of the university's Board of Regents, said in a prepared statement. “Most importantly, the supplemental operating budget provides much more certainty and confidence for our students, staff, faculty and the communities we serve.”

“As an educator, a father and a graduate of the University of Alaska, I believe in a strong university,” Dunleavy said in the same statement. “I also believe we must balance state support for the UA system with the very serious fiscal situation we face today. This agreement, which comes after extensive conversations and work with the university, is an honest attempt at balancing both realities. By choosing a multiyear, step-down approach, we provide our communities, campuses and students the certainty they’ve been asking for, while also taking on the serious challenge of reforming the university into a more efficient system.”

The threat of a 41 percent cut in state support spurred warnings from the university system's accreditor about its future, a declaration of financial exigency by the university's president and intense debate about whether the university should combine its three campuses into a single institution for accreditation purposes.

While the $70 million cut over three years -- $25 million for the first two, and $20 million in the last -- is hardly a pittance, it represents a "pivot to the positive," Johnsen said during a news conference announcing the agreement.

In a written message to the university late Tuesday, Johnsen said administrators planned to proceed with the move to consolidate into one accredited institution. "While this agreement gives us more time, future budget reductions compel us to move forward with planning efforts," he said.

The president said that furloughs would no longer be needed, but that travel restrictions and some administrative restructuring -- starting with a consolidation of the various institutions' human resources functions -- would proceed.

 

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