UA Budget

A UA Strong sign at the entrance to the University of Alaska Fairbanks campus on Alumni Drive seen Thursday afternoon, June 27, 2019. UA Strong has placed the campaign-style signs in key locations around Fairbanks in an effort to visually show support for the university ahead of today's UA Board of Regents emergency meeting and possible budget announcement.

The University of Alaska Board of Regents declared financial exigency at a special meeting Monday morning in Anchorage.

The declaration came just a week after a Fairbanks meeting at which the board postponed a vote on the declaration until more was known about the state budget. The board and other university officials came to that meeting with plans to approve a declaration of financial exigency prepared by university President Jim Johnsen following a veto of more than $130 million from its budget by Gov. Mike Dunleavy earlier this month. However, several regents expressed concern over what they saw as the rushed nature of the declaration.

The board voted to delay a vote until a July 30 meeting in Anchorage, but on Friday the university announced that the date for the crisis declaration had been bumped up.

During Monday's meeting, in which the declaration was approved 10-1 with Soldotna Regent Lisa Parker the only dissenting vote, regents expressed regret at having to take this step.

Regents Chairman John Davies said the university is "grappling with survival."

"I find this to be a sad day that we have to consider this," Davies told the other regents. "The most recent hearings that House Finance held were overwhelmingly supportive. The outpouring of letters of support for the university from the university community and the business community... the support for this institution is wide and deep."

Davies said he believes the current financial situation is a "political crisis" rather than a "fiscal crisis," adding that the political crisis is due to choices made by the governor and "a handful of minority members."

Anchorage Regent Gloria O'Neill noted she has been troubled over the past week as to how to proceed.

"I had to think about the decision that we made last week as a body and my trouble is connected to the question, 'Did I fulfill my duty as a regent?'," she said. "Under the Constitution, our duty is to ensure the existence of a university. And as we all heard with the (financial) burn rate, and the compound of that burn rate based on the last three weeks that we will not have a university after February if we don't move forward with a decision."

O'Neill referenced numbers outlined last week by university General Counsel Mike Hostina, who broke down the expenditure rate for the university for each month that it continues spending at the current rate without cutting its budget.

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 last week's meeting. At $192 million, the governor's level of state funding for the current fiscal year, 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.

The financial exigency decision indicates 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 allows 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.

While the Legislature is still in discussion over funding levels and has yet to approve a capital budget, the regents who spoke at Monday's meeting noted that the university sinks deeper into financial turmoil as each day passes.

Following the exigency vote, the board discussed a number of consolidation options for the university in an effort to further decrease costs.

The two central plans to be chosen from are a lead campus model and a single-accreditation model. A lead campus model would designate where the statewide system administration would reside and centralize many of the administrative functions at that campus. A single-accreditation model would consolidate the University of Alaska Anchorage, the University of Alaska Fairbanks and the University of Alaska Southeast, which are three separately accredited institutions now, into one accredited university. This second plan would provide for a consolidation of leadership roles present at each individual university, as well as a consolidation of certain programming and units deemed "redundant."

The board plans to discuss these two options further at its July 30 meeting.

Any program reductions will not be proposed until the board's September meeting.

According to Johnsen, who spoke to regents during Monday's meeting, the university had little choice in the need for the declaration.

“Given the poor hand we’ve been dealt, financial exigency is the only tool for us. It will allow us to prepare a plan for continuing our mission,” Johnsen said. “None of us wants to be here today, and as I look at the faces of our students, faculty and staff — their anxiety and their loss — I wonder, how can our university, something so great, that has been built up by so many for so long, be crippled by so few so quickly?"

The university's state funding is still unresolved with members of the House Finance Committee approving an appropriation bill Monday afternoon that, along with paying this year's Alaska Permanent Fund dividend at $1,600, would also restore $110 million of the more than $130 million cut from the university. The proposed House Bill 2001 will now be sent to the full House for consideration and is expected to received hefty debate.

Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter: @FDNMpolitics.