The University of Alaska Board of Regents postponed the declaration of financial exigency until more is known from the Legislature on possible funding restoration.
The board and other university officials met Monday afternoon in Fairbanks with plans to approve a declaration of financial exigency prepared by university President Jim Johnsen following a cut of more than $130 million by Gov. Mike Dunleavy earlier this month.
However, several regents expressed concern over what they felt was the rushed nature of the declaration. The board voted 10-1 to delay the vote until a July 30 meeting in Anchorage.
A number of regents noted that the fiscal situation could change between now and the end of the second special session of the Legislature.
"We need to be just a touch more patient here and see what happens in the next few days," said Regent John Bania of Wrangell.
Financial exigency would designate that the university is in such a dire fiscal situation that it cannot continue in a similar structure or with the same level of function. It would allow university administrators to send layoff notices to tenured faculty and enact budget-reduction measures in a more immediate manner than they would be able to otherwise.
Johnsen said he understood the regents' desire to hold off on a declaration of exigency.
"While we have raised the concept of financial exigency with them a number of times, up until this point they haven’t had the deep conversation like they did today, looking into the pros, cons, risks, benefits," Johnsen told the Daily News-Miner in a later phone interview. "It’s totally understandable that they want to take a little more time. It’s a major decision with big implications."
The university president of nearly four years has told reporters on multiple occasions that cuts of this magnitude will likely result in not only more than 1,000 fewer positions and likely multiple program discontinuations but also the probability of whole campus closures. Whether that includes rural satellite campuses as well as the main campuses in Anchorage, Juneau and Fairbanks remains uncertain.
University General Counsel Mike Hostina outlined to the board during Monday's meeting what exactly exigency would mean for the university and what will happen if the university delays in making spending reductions.
At $327 million, last year's funding level, the average monthly spend rate was $27 million in unrestricted general funds per month, according to statistics presented by Hostina during the meeting. At $192 million, the governor's proposed state funding level for the current fiscal year, the average monthly spending cannot exceed $16 million per month.
Hostina noted that such a sharp drop in funding will require the university to cut programs and services by $11 million per month beginning at the start of the new fiscal year July 1, which has already passed.
"Each month we delay reducing, the required reduction per month increases because the number of months remaining in the fiscal year is less," Hostina noted. "For example, after six months, the required reduction doubles –– to $23 million per month beginning Jan. 1 –– with twice as many programs and employees impacted."
Hostina continued to explain the dismal funding outlook should delays occur, noting that even if the university were ready by Jan. 1 to operate at the governor's preferred funding level of $192 million, or $16 million a month, the university would run out of funds the next month.
This is not the first time the university has been forced to discuss a declaration of financial exigency. A declaration was prepared in 1986 following a previous round of intense cuts in state funding. However, the declaration never went into effect after university officials were able to negotiate funding levels with then-Gov. Bill Sheffield. The university faced about a 20% cut to state funding then. The university currently faces a 41% cut in state funding.
Johnsen noted that university officials will be meeting with the governor's team Wednesday and are in regular discussions with legislative leaders.
"We met Friday last week in Anchorage, it was a good conversation, we didn’t get into details or numbers at all but basically we agreed we would continue discussing the budget and our teams would meet this week and work through the numbers and to see what they can put together," Johnsen said.
The regents also approved a motion requiring Johnsen to prepare a presentation explaining which cost-reduction approach he feels is most prudent. These include, as Johnsen outlined during Monday's meeting, closures of whole campuses; a horizontal approach with reductions of the same percentage across the board; or a targeted approach focused on eliminating duplications and working to increase collaboration between universities and campuses to reduce the need for classes and programs at each campus.
Johnsen noted that he is heavily leaning toward a more strategically focused approach, though he said each approach has its pros and cons.
A meeting will be scheduled for next week to hear from Johnsen on the topic.
The board will take up the issue of financial exigency for consideration again at its regular meeting July 30.
But for now, Johnsen wants faculty, students and the public to know that the university, while hit hard, is still here.
"Ultimately, our students will be taught out. If a program closes, we have a positive obligation to help them complete at either that university or another within our system," he said. "We’re trying to support our faculty and let them know you’re here for this fall at least and we’re doing our very best to make it through."
Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.