UA Foundation employees to continue co-employment relationship with UA under separate budget reporting structure

March 19, 2021

The exploration into separating UA Foundation employees from the University of Alaska budget has concluded, and the result is that UA Foundation staff will retain their current employment status. Outside legal counsel from Stoel Rives, received last week, concludes that current and future UA Foundation employees can continue in a co-employment relationship with the university, and maintain UA benefits, even though their employment starting in FY22 will be reported solely through the UA Foundation. The FY22 budget approved by the Board of Regents includes this proposal. This change in reporting has no bearing on the continued relationship between the Foundation and UA.

Since October 2020, an executive team led by Michelle Rizk has been charged with reviewing the opportunity to transition UA Foundation employees off of the UA System budget and separating the 501(c)(3) organization from the UA System reporting. Dennis McMillian was engaged to work on details necessary to implement this transition with a focus on providing Foundation employees, Board of Directors, and other stakeholders with an outside and neutral contact to raise their concerns and questions. Stoel Rives provided legal guidance on any possible impacts to employee benefit plans and programs. The intent of the transition was to maintain existing Foundation employees without job loss or disruption in benefits.

Two factors drove this review. First is that a major criticism of UA is the size of administration, especially in the system office, and the practice of counting UA Foundation employees as UA System Office employees added to that perception. A second factor is that UA programs are in greater need of philanthropic support, and the UA Foundation actually needs to grow to support increased fundraising capacity across the UA system. The UA Foundation is largely self-funded and provides services on behalf of all parts of the system. As a result of the analyses and discussions over the past four months, both the Foundation and UA are better positioned to work together to enhance the seeking, securing and stewarding of philanthropic support for UAA, UAF and UAS.

The System Office has submitted the FY22 budget to the State which includes removing the Foundation’s budget from the UA budget. The State is reviewing the change and assuming they accept it, this achieves the first objective of the transition proposal. Because UA will no longer include the Foundation’s budget, Foundation employees will no longer be reported under the System Office. Instead their budget, including employee compensation, will be reported through UA Foundation accounting and reporting.