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The Capitol Report

The second session of the 29th Alaska State Legislature will start January 19, 2016. To receive each Capitol Report as its distributed please sign up to the Support UA list serv. To subscribe, please click here!

End of First Session: Final Capitol Report of 2015

June 11, 2015

The Capitol Report
By Chris Christensen
Associate Vice President for State Relations

It has been 143 days since the 29th Alaska State Legislature gaveled in on January 20. After a 98-day regular session and two special sessions, the legislature is getting ready to adjourn after reaching an agreement on the FY16 operating budget.

The agreement obtained the three-quarters vote needed to access the Constitutional Budget Reserve (CBR). The CBR is the savings account that will be used to cover the estimated $3.2 billion deficit that the state will have in FY16. Prior to this agreement, the Senate was able to achieve a three-quarters vote but the House was not; the House minority refused to provide the necessary votes unless additional funding for certain items was added to the operating budget and the pay raises in the collective bargaining agreements were approved.

The operating budget that finally passed the legislature reduced UA’s budget from the FY15 level by $26.4 million. This cut is $5 million smaller than the $31.4 million cut that was on the table when the regular session ended on April 27. One of the demands of the House Minority was that UA’s cut be reduced by $5 million, and this demand became part of the final compromise.

The final operating budget also approved the collective bargaining agreements negotiated by UA and by the state, and it provided funding for pay raises for union and non-union employees. However, after providing additional money for the raises, the budget gave the executive branch (including the university) an unallocated cut in an amount equal to the amount of the raises. Basically, this means that no additional funds were provided to cover pay raises.

The cost of raises for UA’s union employees is approximately $8 million. The cost of raises for non-union employees is approximately $12 million.

The following intent language for the pay raises was added to the budget:

It is the intent of the legislature that the following appropriations be one-time increments to the operating budget. It is the intent of the legislature that there be no cost-of-living pay raises beginning with collective bargaining agreements negotiated in 2015.

It is the intent of the legislature that language in each of the negotiated collective bargaining agreements allow for the agreements to be re-opened if the oil price of Alaska North Slope West Coast reaches $95.00 and if that price is maintained or increases over that amount for a period of 60 consecutive days; this language shall be reviewed at the end of the three-year negotiated agreements.

It is the intent of the legislature that language in each of the negotiated collective bargaining agreements allow for the agreements to be re-opened if the oil price of Alaska North Slope West Coast falls below $45.00 and remains below that amount for a period of 60 consecutive days; this language shall be reviewed at the end of the three-year negotiated agreements.

There was also intent language relating to the unallocated reduction that was equal to the amount added for the pay raises:

It is the intent of the legislature that the unallocated reduction be implemented in a manner that results in a minimum number of state employee layoffs and that is geared toward finding internal agency and department efficiencies. It is the intent of the legislature that no supplemental funding be requested during the next regular session to fill the unallocated reduction.

You can find more information on the compromise budget bill (HB 2001) that was just passed here:

The budget will now go to Governor Walker for signature or veto. The assumption is that he will sign it into law. With the passage of a fully-funded operating budget, there should be no additional special sessions on the budget this year.


For more information, contact Associate Vice President Chris Christensen at

FY16 Budgets and Bills: Capitol Report May 1, 2015

May 1, 2015

The Capitol Report
By Chris Christensen
Associate Vice President for State Relations

Session Status

Ninety-seven days after it began, the First Session of the 29th Alaska State Legislature adjourned on April 27. This was one week later than scheduled. Immediately upon adjournment, Governor Walker called legislators into a special session to address issues that were not dealt with to the governor’s satisfaction during the regular session. Special sessions can last for up to 30 days.

The FY16 budget deficit was estimated to be $4 billion, assuming no cuts were made to the operating and capital budgets. The legislature passed FY16 operating and capital budgets during the regular session that contain approximately $800 million in cuts, meaning that the deficit for the next fiscal year will be about $3.2 billion. In other words, it is predicted that the revenues received by the state in FY16 will be $3.2 billion less than the level of spending that was just approved by the legislature.

With expenses that are $3.2 billion more than revenues, the legislature needed to access funds in the Constitutional Budget Reserve (CBR) to cover the gap. Keep in mind that unlike the federal government, the state can’t run a deficit; it can only spend as much as it has available either in revenue or in savings accounts.

The CBR is a savings account that had billions of dollars put into it when oil prices and production were much higher than they are now. The legislature can tap the CBR to fund the budget when revenues are less than expenses. The problem is that while the budget normally needs a simple majority vote in the House and the Senate to pass, taking money from the CBR requires a three-quarters vote. In the Senate, the operating budget did get a three-quarters vote to withdraw money from the CBR. Unfortunately, the operating budget did not get the three-quarters vote for the CBR in the House. This means that while an operating budget has passed the legislature, it is not fully funded; without accessing the money in the CBR, the state’s revenues and other savings accounts will run out sometime around September, and there will be no money to continue operating state government.

The House did not get the three-quarters vote to withdraw savings from the CBR because the House minority doesn’t agree with the cuts made in the operating budget. They want to add money back in some areas and reduce funding in other areas. Essentially, needing the CBR to fully fund the budget means that the House minority has influence over the final budget that it normally would not have. Governor Walker also does not like the final operating budget, and wants funds added back.

The assumption last week was that the legislature would return in special session sometime this summer, to try again to get the votes needed to access the CBR. However, Governor Walker doesn’t want the legislature to leave Juneau without fully funding the budget.

During a special session called by the governor, the legislature can only work on those items specified by the governor. Those items are the budget; HB 148, relating to Medicaid expansion; and HB 44, relating to sexual abuse and sexual assault prevention programs (commonly known as “Erin’s Law”).

Pending the results of the special session, the following is a summary of legislative action this session.

FY16 Operating Budget

The current fiscal year, FY15, is the third year in row in which the state has run a deficit and had to fund part of the budget by withdrawing money from savings accounts. Until now, the state has been able to use savings accounts that did not require a three-quarters vote, so there was no impasse while enacting the last three budgets.

When the legislature left Juneau in April of last year, it anticipated that the budget for FY15 would result in a $1.4 billion deficit. Then in September, oil prices collapsed. The deficit is now estimated to be $4 billion. As noted above, the estimated deficit for FY16 is $3.2 billion. The significance of these huge deficits is that the state’s savings accounts will only last for so long. A few years ago, it was estimated that the savings would cover deficits until FY23, by which time it was hoped that increased oil production or the building of a natural gas pipeline might result in a revenue increase. Now, the legislature is operating on the assumption that the savings accounts will be drained in less than three years, during FY18.

The FY16 unrestricted general fund budget for all-agency operations that was approved by the House and Senate is about $444 million less than the FY15 budget. The operating budget is contained in two bills, CCS HB 72 and CCS HB 73.

Unfortunately, UA’s operating budget was substantially decreased from the FY15 level. The legislature approved a UA operating budget for FY16 that includes a net reduction in unrestricted general funds from FY15 of $29.88 million, or 8.1 percent. The average agency cut in this budget is 9.9 percent. The cut is unallocated; UA can decide how best to spread it.

The budget bill that passed the legislature also rejected the monetary terms of all state and university collective bargaining agreements, removed funds from the budget that were intended to cover scheduled pay raises for union and nonunion employees, and prohibited agencies from using other money to pay for raises.

We did have success with the legislature in a few areas. The conference committee decided to provide UA with $1.86 million to continue funding the unmanned aircraft systems program at UAF. It also decided to reject House proposals to start the termination of the WWAMI collaborative medical school program at UAA.

The operating budget also included intent language that encourages state agencies to send research to UA, instead of sending it to other contractors:

It is the intent of the legislature that all state agencies and instrumentalities that intend to contract for basic or applied research, including consultation, undertaking a study, performing a needs assessment, or providing an analysis, pursue discussions and negotiations with the University's Vice-President for Academic Affairs and Research to determine if the University can provide that service to the agency, and if so, to obtain that service from the University unless contrary to the best interests of the State or contrary to another provision of law.

The operating budget passed by the legislature has not yet been submitted to the governor for signature or veto. With the start of the special session, the governor has submitted new budget bills to the House and Senate (HB 1001 and SB 1001) that have the practical effect of increasing the budget that already passed. The legislature has already redrafted the governor’s bills to make it easier to see what he wants to add to the already-passed budget. You can review the redraft of HB 1001 here:

Two items are significant for UA. First, the governor wants the legislature to add back $7 million to UA’s budget, to reduce the size of our cut from $29.88 million to $22.88 million. Second, the governor wants the legislature to approve the monetary terms of the collective bargaining agreements for all agencies, and put money in the budget to fund the pay raises that are in those agreements. The governor’s bill does not contain any funds to pay for the scheduled raises of nonunion state or university employees.

The legislature has recessed the special session until Tuesday, May 12, when all members are scheduled to return to Juneau. Next week, the House Finance Committee and the Senate Finance Committee plan to have several meetings on the governor’s new budget proposal. Senate Finance will meet in Juneau, and House Finance will meet in Anchorage.

FY16 Capital Budget

The capital budget (HCS CSSB 26 FIN AM H) that passed the legislature can be found here:

The FY16 capital budget has the smallest general fund component of any capital budget since 2001. Governor Walker’s capital budget proposed spending $158 million in general funds for capital projects, including $16 million for UA. $8 million would have been used for deferred maintenance, and $8 million would have funded additional construction on the new UAF engineering building.

The legislature cut the capital budget to $108 million in general funds, with only $3 million going to UA for deferred maintenance. No funding was provided for the UAF engineering building. Most of the unrestricted general funds in the capital budget were put there because federal matching money is available, and unfortunately UA’s projects have no federal match.

There is no proposal in the special session to add more money to UA’s capital budget.


Many pieces of legislation that would directly or indirectly impact UA were introduced during the session. Any bill or resolution that did not pass prior to adjournment will remain in committee, to be considered next session. None of these bills can be heard during the current special session. Bills that passed the legislature will now be sent to the governor to be signed into law or vetoed. Resolutions are not subject to veto.

Once a bill has passed the legislature and is sent to the governor, he must sign it or veto it within 15 days if the legislature is in session (not counting Sundays) or within 20 days if the legislature is not in session (not counting Sundays). Typically, the legislature does not actually send bills to the governor for signature or veto immediately after passage. Instead, the bills are held for a period of time, sometimes for more than a month. This delay allows agencies extra time to review and recommend items for signature or veto.

These are the noteworthy bills and resolutions that were considered during the 2015 session:

HB 1 – STATE ARCTIC POLICY by Rep. Bob Herron

Status: Passed the House and the Senate/currently waiting for action by Governor Walker

This bill declares the arctic policy of the State of Alaska. The policy includes “build(ing) capacity to conduct science and research and advance innovation and technology in part by providing support to the University of Alaska for Arctic research consistent with state priorities.”


Status: Currently in the House Education Committee

This bill would authorize the university to establish a medical school at UAF and a law school at UAA. The bill was not introduced at the request of the university.

HB 63 – STUDENT LOAN INTEREST REDUCTIONS by Rep. Les Gara, Rep. David Ortiz, and Rep. Adam Wool

Status: Currently in the House Education Committee

Currently, Alaskans pay interest rates of roughly 6.6% for new and outstanding student loans. This bill restructures Alaska student loans by reducing the interest rate charged on student loans for residents by 2.5%. The borrower must establish and maintain residency for one year prior to obtaining the loan, must maintain residency in Alaska while repaying the loan, and cannot be in default. The purpose of this legislation is to help encourage Alaska’s youth to remain in or return to Alaska following completion of their postsecondary studies, while relieving high debt burdens.


Status: Passed the House/currently in the Senate Education Committee

With the passage of HB 278 in 2014, all secondary students were required take the ACT, SAT or Work Keys exam to receive a high school diploma, at state expense. HB 80 removes the mandate for student college and career readiness assessment. Students who wish to be eligible for the Performance Scholarship or college admissions would still be able to take the tests, but would have to pay for the testing themselves.


Status: Currently in the House Finance Committee

Like HB 80, this bill repeals the mandate for student college and career readiness assessment. It also places restrictions on the collection and use of student data.


Status: Passed the House/currently in the Senate Education Committee

This bill changes the current at-large composition of the Board of Regents to a regional composition. Under the bill, the board would be composed of one student regent, four at-large regents, and six regents who are residents of specific regions of the state. This includes one each from the Municipality of Anchorage; the Fairbanks North Star Borough; the City and Borough of Juneau; the Kenai Peninsula Borough; the Matanuska-Susitna Borough; and a community not connected by road or rail to Anchorage or Fairbanks.

HB 176 – REPEAL STATE EMPLOYEE SALARY INCREASES by the House Finance Committee

Status: Passed the House and the Senate/currently waiting for transmittal to the governor.

This bill repeals the statutory salary increase that was scheduled to be granted to non-union state employees in FY16. This bill was companion legislation to the rejection of the union salary increase for state employees and university employees that was made in the operating budget bills (HB 72 and HB 73).


Status: Currently in the House State Affairs Committee

This bill authorizes PERS and TRS employers such as the university to set up a retirement incentive program for members of those retirement systems.


Status: Passed the House/currently in the Senate Rules Committee

This resolution recognizes the need for the Alaska Maritime Workforce Development Plan, the Alaska Workforce Investment Board and Alaska Vocational & Technical Education Center in Seward (AVTEC). It conveys support for the Alaska Maritime Workforce Industry Advisory Committee, whose guidance and leadership will be an integral component of the implementation of the Plan. HCR 10 encourages support and participation by various state agencies already tasked with the mission of workforce development, including the university.


Status: Currently in the Senate Education Committee

SB 81 was introduced at the request of the university. UA is a land grant university, but it never received its land. For various legal reasons, the state will not be able to create, on its own, the type of permanent land endowment that universities in other states have been able to develop into significant revenue generators. SB 81 sets out a new model, Land Equivalency Grant for University Progress (LEG-UP). Patterned to some degree after the Public School Trust Fund, this bill would have an equivalent percentage of state resource development revenues (limited to those revenues flowing from future leases, sales, or other agreements) put into the University Building Fund (created under AS 37.05.555) , all subject to legislative appropriation authority.


Status: Currently in the Senate Education Committee

This resolution encourages the University of Alaska to consider accepting upper division undergraduate credits awarded to members of the military and to veterans toward masters degrees.


Status: Passed the Senate/currently in the House Education Committee

This resolution would put a constitutional amendment on the ballot in 2016. If the voters approve the amendment, it would allow the Alaska Student Loan Corporation to issue general obligation bonds, which would result in lower interest rates for student loans.

A Final Note

Many thanks to all who actively participated in advocating for the University of Alaska during the regular session. Whether you provided public testimony on budget initiatives or bills, wrote letters, sent emails, or met with legislators and staff, the collective actions of all encouraged legislators take actions that benefited the university. Going forward, we will keep you posted on the status of the special session and the final operating budget.


For more information, contact Associate Vice President Chris Christensen at or visit



Click HERE for the archive of 2015 Capitol Reports covering the first session of the 29th Legislature.

This publication is produced and distributed by the State Relations office of the University of Alaska System with assistance from the UA Office of Public Affairs.

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