University Of Alaska Readies For Budget Slash: 'We May Likely Never Recover'

Jul 3, 2019
Originally published on August 8, 2019 7:52 am

The University of Alaska System is bracing for a 41% cut in funding it receives from the state, after Gov. Mike Dunleavy vetoed a $130 million line item in the state's budget.

The announcement came last Friday, three days before the fiscal year began on July 1. Dunleavy vetoed roughly $400 million in items in the budget, with education receiving the largest cut.

The university system will lose $130 million from the veto — on top of an additional $5 million previously agreed upon by legislators. The governor's 182 line-item cuts also included Medicaid, senior benefit payments and homelessness services.

University President James Johnsen says he was caught by surprise.

"I was pretty stunned. No question it was a grim day," Johnsen tells NPR's Mary Louise Kelly. "To get this huge reduction on top of all the cuts we've already taken is extremely challenging. ... There aren't any nickels and dimes laying on the floor anymore. It has to be – to borrow a medical term – amputation at this point."

That means faculty layoffs, furlough notices for 2,500 employees and a freeze on hiring and travel. Johnsen envisions having to close down one of the system's three universities — with main campuses in Fairbanks, Anchorage and Juneau — and all of its 13 community campuses. The university system serves more than 26,600 students.

"We can't possibly serve the entire state, especially a state as geographically distributed as we are, by closing entire campuses," Johnsen says.

The governor campaigned on a promise to close the deficit of $1.6 billion and increase Alaska's Permanent Fund dividend, a share of the state's oil industry revenue that every Alaskan receives annually, to $3,000.

"We can't kick the can down the road, because we're running out of road," Dunleavy said at a press conference on June 28.

"I do believe that the University of Alaska is resilient, I believe they have good leadership and I'd say give them a chance, " Dunleavy said. "I believe that they can turn the university into a smaller, leaner but still very, very positive, productive university here in the Northern Hemisphere."

Johnsen disagrees, likening the cuts to dismemberment and asking for the cuts to be reversed.

"I'm not arguing against the [Permanent Fund] dividend necessarily, but if we didn't have it we would actually have a budget surplus this year," Johnsen says. "But given that 37% of the state's budget is proposed to go to $3,000 checks to every Alaskan – that's what creates this this fiscal challenge."

Alaska's Permanent Fund dividend was $1,600 in 2018.

The university has mounted an advocacy campaign to reverse the cuts, but that seems unlikely with Republicans enjoying a strong presence in both chambers of Alaska's legislature.

If the campaign fails to gain a three-quarters majority to overturn the budget cut, Johnsen will be forced to consider financial exigency, which will allow him to eliminate academic programs and campuses or lay off tenured faculty quickly.

"A cut of this measure is unprecedented and devastating, and now is the time for advocacy," University of Alaska Anchorage Chancellor Cathy Sandeen said in a statement to NPR. "If it stands, we anticipate 700 layoffs, the elimination of 40 programs and a drop in enrollment of approximately 3,000. We're focused on creating enough momentum to embolden the Legislature to override the governor's vetoes."

Critics of the budget cuts worry that a poorly funded university will harm students, limit climate change research and create a brain drain from the state.

Patrick M. Anderson, chief executive of the Rural Alaska Community Action Program, argues that the cuts will have a significant impact on his organization's ability to serve rural Alaskans, especially in areas such as research into suicide in rural Alaska, maintaining Alaska Native arts and training health care employees.

"Any reduction in the capabilities of UA to address Alaska's unique health issues will also be devastating," he wrote in a statement to NPR. "We have many needs that are not being addressed, and the removal of existing programs and capacity make it more difficult to gain the knowledge we need to navigate a rapidly changing future."

Lawmakers will convene next week to decide if they want to override the vetoes. Johnsen is hoping they reconsider and spare the university system what he described in a letter to the UA community as an "institutional and reputational blow from which we may likely never recover."

"We're not perfect," Johnsen says. "We can be more cost effective and there are various other steps that we can take. But the idea that we would take them through a 41%-in-one-year reduction is really severe."

Josh Axelrod is NPR's Digital Content intern.

: 7/05/19

In the audio, as in a previous Web version of this report, we mistakenly say that the Alaska university system is facing a more than 40% cut in its budget. In fact, that cut is only in the state's portion of funding for the system.

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MARY LOUISE KELLY, HOST:

The University of Alaska is facing a more-than-40% drop in its funding this year. That came as a surprise last Friday just days before a new state operating budget went into effect. Republican Governor Mike Dunleavy announced the cuts as part of roughly $400 million worth of vetoes to the state budget.

So what might this mean for the University of Alaska? Here to answer that is university president James Johnsen. Welcome.

JAMES JOHNSEN: Good afternoon.

KELLY: I have to start by asking, did you have any idea this was coming, or did you find out along with everybody else in Alaska just a few days ago?

JOHNSEN: I found out about an hour ahead of the public announcement. The governor called and let me know. Now, the veto amount was the amount he proposed in his original budget in the legislature. So you know, I was certainly aware of that number for several months. But the legislature had walked back most of that.

KELLY: What was your reaction when you got this call?

JOHNSEN: Yeah, I was pretty stunned. We've already taken over 50 million dollars of cuts over the last several years, so there aren't any nickels and dimes laying on the floor anymore. To borrow a medical term, it has to be amputation at this point.

KELLY: So give me an example of what that amputation looks like, a specific example of things you're going to have to cut.

JOHNSEN: Well, if it's $135 million cut this year, I can envision an entire university being closed.

KELLY: Meaning having to shut an entire campus.

JOHNSEN: We have three universities in our system and 13 community colleges all across the state. And so 135 million would be one of our universities and all of our community campuses.

KELLY: What else in the immediate term are you considering doing or are you already doing to comply with this budget cut?

JOHNSEN: We have frozen nonessential travel. We've frozen nonessential hiring. And we've also given all of our staff - 2,500 of them across the state - a 60-day notice of a furlough - that is unpaid leave time - to be taken sometime during the fiscal year.

KELLY: You have asked state legislators to intervene. Have they, and are you optimistic it might make a difference?

JOHNSEN: It's going to be a very heavy lift in that overriding the veto requires three quarters of the legislature in combined session. So 45 of Alaska's 60 legislators need to override the veto.

KELLY: The governor's argument is that these cuts are, A, necessary for the budget and, B, that they would allow the University of Alaska to be - and I'll quote him - "smaller, leaner but still very, very positive and a productive university." If I'm hearing you right, you are not in agreement.

JOHNSEN: No. I mean, I can be smaller and leaner with one fewer arms or a leg that I've lopped off. No, I think it's going to be extremely difficult. We can't possibly serve the entire state, especially a state is geographically distributed as we are, by closing entire campuses.

KELLY: Do you see an impact on enrollment, on students wanting to come to the University of Alaska?

JOHNSEN: Absolutely. Our enrollment has actually been in decline since 2012, certainly over the last several years because we've taken budget cuts four out of the last five years. There's no question in my mind that some students are opting for other institutions because of uncertainty about our budget. And another big challenge here in Alaska - we have in general very low college-going rates. So another negative aspect of this is young people who decide not to go on at all.

KELLY: That is University of Alaska President James Johnsen. He was speaking with us there from Fairbanks, Alaska. James Johnsen, thank you for your time.

JOHNSEN: My pleasure.

[POST-BROADCAST CORRECTION: In the audio of this report, we mistakenly say that the Alaska university system is facing a more than 40% cut in its budget. In fact, that cut is only in the state's portion of funding for the system.] Transcript provided by NPR, Copyright NPR.