FY2020 Operating Budget
University of Alaska and Governor Dunleavy Reach Budget Agreement
In the August 14 video message President Johnsen describes the budget agreement signed Aug. 13 with Governor Dunleavy. The agreement announced a multi-year compact that preserves the legislative funding amount for this fiscal year at $302 million [a reduction from the FY19 budget of $25 million] and means that budgets submitted to the governor by the Board of Regents over the next two fiscal years will include further reductions. The compact was signed by UA Board of Regent Chair John Davies and Governor Michael J. Dunleavy.
The press release announcing the compact can be found at: https://gov.alaska.gov/
More information on what this means and how it will impact planning efforts underway will be shared soon.
University of Alaska Stakeholder survey
Data from this survey will serve an important role in the Board of Regents’ consideration of how the university will approach consolidation plans, and continue meeting the state’s needs for higher education in a constrained financial environment. The Board plans to make decisions on university structure and programs in September, so please respond right away. Your participation in the survey is voluntary. All responses will be kept confidential -- only combined results without identifying information will be reported. The survey results will be reported to the Board, along with our plans, at the September meeting.
Here is a link to the survey: https://www.surveygizmo.com/
FY20 budget FAQ
Do you have other questions that we should add to our FAQ? Please use this form to suggest questions. Information in the FAQ will be updated as the situation develops.
What is financial exigency?
As provided in Regents' Policy and University Regulation 04.09, the Board of Regents may declare financial exigency when it determines that a shortfall in projected revenues compared to projected expenditures over the same period, will have a material adverse effect on University operations. The board then may decide to reduce the operation of, modify, or close any component of the University, at any level of the organization.
FINANCIAL EXIGENCY FAQ (HR website)
Going forward, what will the process be for implementing the FY20 budget?
The Governor of Alaska has vetoed the University’s budget by $130 million, resulting in a $136 million funding reduction from FY19. While numerous attempts at providing additional funding for UA are on the table, so far, none have made significant progress.
On a vote of 10-1 during an emergency meeting July 22, the Board of Regents approved a declaration of financial exigency for the university. A vote of financial exigency does not absolve the university of debt, as would be the case in bankruptcy; it is a tool that allows for modification of contracts. Exigency permits the UA system to modify terms of employment, including termination on shortened notice. There is the potential for unit, program and service eliminations. The university will put students first and per our commitment to our accreditation, we will provide options for students to complete their degree programs.
The BOR also discussed three options for a new university structure. They address how the university should respond to unprecedented budget cuts while continuing to serve its mission as the lead provider of higher education for Alaska. Learn more about those options HERE. The BOR asked the president to take a more in-depth look at options two and three along with detailed impacts for each option. President Johnsen will present these scenarios at the next BOR meeting Tuesday, July 30, where we expect they will choose an option to pursue.
Though administrative reductions may proceed more quickly, specific programmatic reductions would be proposed to the regents at their September meeting following a period of input from students, faculty, staff and the public. If approved by the regents during the September regular meeting, notices to affected faculty and staff would be distributed this fall, and work would begin to address the teach-out considerations of affected students.
How will the UA community be involved in that process?
The UA community will have the opportunity to provide public input to the Board of Regents on reductions throughout August, before the board takes action to approve academic restructuring plans at its September meeting.
How does delay affect needed reductions?
Because FY20 spending levels are about $11 million dollars/month less than FY19, each month of delay in implementing reductions in programs, services, and personnel adds an estimated $11 million that will then need to be cut in the remaining months of the fiscal year. For example, if we continue spending at FY19 levels, by January 1 we will need to reduce programs and services by over $22 million dollars a month.
Will students find their programs eliminated when they return to campus in August?
Our goal is to provide a reasonable transition period during the Fall semester, and teach outs for any programs affected. Ultimately whether certain units, programs, or services are eliminated immediately depends on several factors, including further budget actions by the state, and decisions by the Board of Regents. Many programs will continue or be available via distance delivery.
Will these budget cuts increase tuition? If so, when?
Depending on the final budget, regents may consider a tuition increase for the spring semester. This would be in addition to the already approved 5 percent tuition increase for the fall 2019-spring 2020 academic year.
What are the impacts of declaring financial exigency?
An exigency declaration has direct legal, financial, and reputational impacts. Unlike bankruptcy, a declaration of Financial Exigency does not involve discharge of all obligations. While exigency allows rapid downsizing of personnel and programs, doing so abruptly means students who have invested in programs may not be able to finish them at UA; other contracts may go unfulfilled; and litigation is likely. Additional indirect effects may include decreased enrollment, accreditation issues, decreased employee morale and retention, reduction in grant and contract revenue, reduced giving, and long-term damage to the University’s reputation.
What is the impact of state funding being split into two separate appropriations (one for UAF, UAA and SW, and one for UAS and community campuses) on the university's ability to manage budget reductions?
The UA System operates on a shared services model which reflects the fact that we are one legal entity, and avoids duplication of costs. The System provides a variety of services required by each university and the community campuses, including audit, financial, legal, HR, Labor Relations, and certain IT services. UAS and the community campuses would have to fund their share of those services through reallocation of the separate appropriation. The dual appropriation thus reduces the flexibility and authority of the regents to allocate resources as they deem appropriate to achieve the mission of the university. It also creates administrative burden for UA and the state’s Office of Management and Budget (OMB) to process reallocations.
FY2020 Budget Resources
The governor's vetos hit UA hard. We will need to take steps immediately to advocate for a legislative restoration of the vetoed funding, cut unnecessary expenses, and begin planning for the possibility that we will not receive additional funding.
- Information on Financial Exigency (HR website)
- Board of Regents Motion on university organizational structure - July 30, 2019
- University structure options (Includes BOR presentations)
- Letter from NWCCU President Ramaswamy to the University of AK Board of Regents - July 29, 2019
- OMB "Proposal" - July 26, 2019
- Travel restrictions memo
- Hiring Freeze memo
- Procurement restrictions memo
- Declaration of Financial Exigency - motion passed 7.22.19
- Response to OMB white paper - letter to BOR July 14
- Emails for Alaska Legislature
- Key veto messages for legislators
- Letter to Gov. Dunleavy - May 31, 2019
Additional UA Resources
Messages to UA Community
- FY2020 budget information resources - (OPA) July 24, 2019
- Regents declare financial exigency; consider structural options - July 22, 2019
- Exigency and UA structure update - July 19, 2019
- CHRO Message Re Financial Exigency - (HR) July 19, 2019
- Today's Board of Regents Meeting - July 15, 2019
- Update on today's veto override vote - July 10, 2019
- Notice of FY20 Furlough Due to Budget Veto - July 1, 2019
- Update on immediate actions - July 1, 2019
- Update on today's veto announcement - June 28, 2019
Deer Oaks Employee Assistance Program (EAP)
Please remember to take care of yourself during these difficult times. Our employee assistance program provider, Deer Oaks, offers a wide variety of counseling, referral and consultation services. These services are completely confidential and can be easily accessed by calling the toll-free Helpline at (888) 993-7650 or logging on to the Deer Oaks website at deeroakseap.com. For more information download the Deer Oaks EAP fact sheet.