Summary: Rep. Sara Hannan, D-Juneau, stressed the damage the state budget cuts would cause but encouraged constituents not to lose hope. She laid out the options available, namely HB 2001, set to be discussed on Wednesday, July 17.
Member of the audience thanked Hannan for representing them, and received applause. Hannan thanked everyone for coming and encouraged people to make contact.
5:50 p.m. – Question Time
So the opportunity to override is over?
Hannan: That’s correct, the first five days after the vetoes are the last opportunity. We can pass HB 2001 but that too is subject to veto.
Is there a way the legislature can call a session to Juneau?
Hannan: We don’t have the votes. We need 40, we have 39. Legislators are feeling the pressure. Are they willing to follow the governor off a cliff?
Wouldn’t it be better to just go to Wasilla?
Hannan: This is unprecedented, so if you go to Wasilla you set the precedent. The law that says the governor can set a location for a special session has never been tested. People have said in sessions, “The day you go to Wasilla, is the day your Capitol moves.”
Recall movement just kicked the can down the road?
If the governor were recalled, then the Lt. Gov would be the governor.
Hannan said that the groups organizing recall vote had met in Anchorage but had not yet finalized their petition language.
Legal question about HB 2001, minority members, Wasilla members, questioned whether that was allowed under special session? This may turn into a fight over semantics.
Well we have lawyers and courts who are able to determine that, but the call for the special session was related to appropriations and that’s what the legislature is trying to do.
Was the sweep known?
Hannan: We started hearing murmurs of it, so Stedman, R-Sitka, and Foster, D-Nome, started asking, ‘what funds are you looking at sweeping?’ but they didn’t receive an answer.
No other state gives so much executive power, no other state gives the governor line-item veto power, she said. The constitution would need to be changed in order to alter that, but that’s not a fight I would want to have in this current political climate.
Is the reverse sweep going to help us see when the Alaska Performance Scholarship is available? What are we to look for so we can know when there’s money?
The reverse sweep does need a three-quarters vote, so there is that same thresh-hold. I don’t think the money’s going to be there by the time you’re going to need it in August, that’s my cynical view.
We are getting some movement on PFD versus cuts issue, but even where some of my Republican colleagues agree that these cuts are too drastic but that’s generally where the agreement ends.
Every time I met with an oil company representative I would ask “what does your company feel about a change to our tax system” and would receive vague answers.
Our biggest tool with the governor is the PFD, how much of a PFD do you want?
(Crowd suggests nothing, stonewalling on PFD)
What’s the status of House Bill 2001?
I imagine it will be 38 for, 22 against. It’s will mostly likely be vetoed.
I’ve heard that the 22 in Wasilla are very upset at the amount of political pressure they are getting, so keep it up. But don’t show up on their doorstep or call their cellphones.
Investment in large data centers that can handle the computing needs of public/private clients (Dept. of Defense, for example)? Consideration of publicly funded corporation of data centers.
Noah (who asked the question) is always thinking about the future, and locally, but I cannot fathom any sort of investment under this administration.
There’s no political will to pursue alternative revenue streams?
There were those of us who had the political will, there was no political momentum.
Way to restructure UA to make it more cost effective?
Board of Regents is set up to make those decisions. I don’t want to micromanage the regents but I think the administration has made it clear that cuts need to be made.
What I don’t like is the ‘we don’t need all that research that no one’s paying for’ talk. Is there room for more efficiency? Yes. The more we cut public education and then say, well kids still can’t read, it’s a self-fulfilling prophecy.
Motor fuel tax?
We don’t have a lot of state taxes unless you’re industry. There’s a lot of small taxes that could be enacted. The fuel tax seems less popular because everyone is a consumer of that tax. It get addressed from time to time but no real dialogue.
Where are we at on the increase on Pioneer Home rates?
Administration opportunity has closed as of July 1, “I believe that the public testimony was universally in opposition” but I don’t think that’s going to affect the current administration.
Hannan: I want us to talk about revenue. I think there’s a critical mass of people in this state that are willing to talk about oil and gas tax reform.
I’m in favor of a progressive state income tax, I think it taps into our migratory, seasonal workers. Many of those people make their living in Alaska but they’re not paying Alaska.
Hannan: I introduced a vaping tax (nicotine) – “You don’t know how many lobbyists there are until you introduce a bill to tax vaping.” Juul flew a representative all the way from San Francisco to stress how “different” vaping was, she said.
Oil prices have been declining but the Permanent Fund Corporation has other investments and generating revenue from those sources.
Originally, PFC was only allowed to invest in bonds, which have a smaller return.
But now we have more diverse funds, Hannan said, and the stock market has been doing very well, that money could be used to bolster state budget.
How do we spend our money?
PFD is the third largest cost every year.
The largest cost is the constitutionally mandated obligation to provide education. (That does not include kindergarten or pre-K.)
Second largest cost is Health and Human Services.
We don’t have a fiscal problem, Hannan said, we have a revenue problem. Alaska’s funds have been too tied to oil money. Several other options remain open, income tax, ending tax credits, nicotine vaping tax.
We have not had a discussion about taxes for several years.
Hannan has been going over what the effects of Gov. Mike Dunleavy’s vetoes have been and will be.
Currently talking about the Alaska Performance Scholarship, which gave money to students in Alaska to attend university in Alaska.
Money has been “swept” or automatically moved into the state reserves at the end of the fiscal year, June 30. Normally this money would’ve been replaced by the legislature but deadlock at the Capitol has prevented that from happening.
Summary: You can read our full story here.With much still yet to be determined, no declaration of financial exigency was made today. As emphasized by University of Alaska General Counsel Mike Hostina, financial exigency is a tool which allows the university to make drastic changes that might not be available under normal circumstances. However, with the legislature still in session, and much yet to be determined, the board felt that declaring financial exigency today would be premature. A meeting was scheduled for July 30 at which time financial exigency may be declared.
Johnsen: Good discussion today, an uncomfortable issue, and very difficult. I want to thank the regents and the staff and students. Never in my association with the university have I seen the support we’ve seen recently. From many legislators on the floor session last week, we were held up as an example of what Alaska can do.
Davies: One of the early on conclusions that came out of an earlier discussion focused on what was strong at each university which could be a framework that we can work from in examining our strengths.
Perdue: We want to train the future of Alaskans and we want to maintain vigorous research, which is a major industry, but we need to remain a university. Yes we are going to downsize, but that doesn’t mean we have to destroy.
Parker: We need a glide path, there was a note in one of the reports reviewed in the past week that said that this was an opportunity to focus on the quality of the core programs that the university is going to offer.
Hargraves: There are things that are going to happen on the state level that we are going to be in conflict with. We should not provide too much of a solid plan of what we are going to do because what happens at the state level may force us to change.
Hopefully some money will be put back in this budget.
Anderson: We cannot afford to be all things for all people, we cannot afford to be the university of yesterday, there’s another round of cuts coming next year as well.
O’Neill: Public Private Partnerships? Selling assets? I hate to say it but I think athletics are a luxury at this time.
Education is necessary for the modern world and we should use this as an opportunity to modernize the university as a whole.
Vote on motion for President Johnsen to hold an additional meeting on July, 22 to further discuss plans before July 30 meeting.
Motion passes, 8 in favor, 2 opposed
Johnsen: In a situation of contracting resources there will not be unanimity, it’s important that we recognize that.
Andy Johnson: Which direction is President Johnson leaning towards? I know we just approved a motion to delay the decision but I think it would give the regents a good idea of what’s being considered.
Motion for President Johnson to hold a meeting on the 22nd to discuss what actions need to be taken.
Johnsen: I want to thank everyone for their willingness to be uncomfortable and we need to remain focused on what is most precious and our mission for Alaska.
These are things that need to be considered at least enough to the point where we can make a decision about how to build out a new system.
A “new” UA may be more adaptable and could be designed to fit enrollment and draw down administrative costs.
Johnsen: regents need to consider all options on the table, you don’t need to make a decision today but you need to think about the three options:
Fewer universities and campuses
Current UA, Lead Campus
The legislature has the opportunity to give us back the money that we lost, so that needs to be the message over the next two weeks. The people of Alaska need to show their support by enrolling and are alumni need to step up there support.
Faculty need to tell their students not to leave the state. We have an obligation to provide you the education you signed up for.
Hargraves: President should go to the governor with the message that the university is ready to make extensive cuts but he should ask for at least three years to implement these drastic cuts.
10 in favor, 1 opposed
Motion to delay declaration of financial exigency until July 30th:
Mary Hughes: I don’t necessarily oppose a delay, but I want the president to have every tool available to be able to come out with a budget that we can live. Financial exigency would give him those tools.
Dale Anderson: We need to be leaders in the state of Alaska. We are simply spending too much and I respect the governor’s efforts to bring spending under control. The governor has taken the bull by the horns in order to get spending under control. Many ideas are on the table that need to be considered
There are many support systems, outreach programs, that even when cut altogether, are not enough.
Even eliminating duplicate programs (e.g. same programs, different campuses) will not achieve the level of cuts needed.
Because of the huge size of the cuts, if you hand out money in a lump sum you may not be able to sustain the system. It may be necessary to close one or more campuses.
Johnsen: There will not be agreement among the various campuses about what is a priority. Priorities at one campus may not reflect a statewide need.
O’Neill: What is our burn rate?
About $2 million a day
What is our sense that the governor is supportive of supplemental funding?
Johnsen: He was feeling pretty strong. He vetoed $136 million and he won. He comes from a position of strength but he has said he was willing to work with us.
Bania: We need to be a touch more patient, it’s time we vote on the motion on the floor (to delay until July 30th)
Gloria O’Neill: The accreditation of our university is on the line. The correct thing to do is to wait and invite the students and faculty in determining what needs to be done.
What were facing is too difficult to tackle. I believe that the “sleeping members of the legislature” will wake up and we need to hear from the students of Alaska.
Darroll Hargraves: What if we delay and extra money came in? What if something we’re to happen to provide us more money?
I think the board should wait until we know if there’s some extra appropriation in the next ten to 15 days.
Karen Perdue: We have to respect the authority that the constitution gives our governor. No one knows whats going to happen, we have committed people who are willing to help.
We should take the current resolution currently on the table (to declare financial exigency) and if news changes we can revoke it on July 30.
Discussion of the motion.
Sheri Buretta: We need to be thoughtful of our consideration of the direction we’re going in. Governor and legislature and forcing a certain direction that needs to be carefully considered.
Lisa Parker: It’s important that we have a plan, simply declaring financial exigency and not having a plan scares me. Faculty and staff at campuses can give us a better idea of what we have to deal with. We haven’t engaged our stakeholders. We need to take a thoughtful analytical approach.
Motion to postpone declaration of financial exigency until regents meet together on July 30th.
Regent Bania: Are we rushing this a little bit, it’s understood that there is an issue with compounding costs?
Are there meetings with the legislature or the governor?
There was a meeting Friday afternoon and a meeting scheduled for Wednesday. Conversations have been taking place over the weekend.
After the legislature provides a number for the budget we can have a better idea of what programs and services will be cut, but at this point we can’t examine that aspect.
Campus administration are already making cuts?
That is correct in terms of restricted hiring, travel, and procurement. Faculty have been notified of furloughs, but there has been no consideration of academic programs and services, which are the largest areas of expenditure.
Anticipating a number from the legislature or the governor is “looking into a crystal ball,” but we’re not seeing a number north of $100 million.
We anticipate negative secondary and tertiary effects on the budget e.g. loss of tuition and grants.
Accrediting commission understands the gravity of the situation and are working with us to ensure a strong University of Alaska in years to come.
What is the situation with accreditation?
Accrediting institutions emphasize commitment to students, whether it’s at a particular university or other institutions or campuses.
Money is available but there is not much to apply to the reduction.
The university has no slush funds, we do have some unrestricted funds but there are some funds available for one time use.
There are things we can do more effectively and more promptly by declaring financial exigency.
“With a delay of six months you effectively double the reduction in programs and services that will need to be made.”
Each day that we delay reducing spending affects the number of programs that will need to be cut later.
Our reduction will be more than the $146 million in budget cuts. Reduced income from attendance, ended contracts, and ending of support from federal sources.
This situation requires a massive reduction in services, largest expenditure is personnel.
Achieving budget reductions is very difficult.
Board of regents must declare that a bona fide declaration of financial exigency – when expenditures exceed revenues.
It’s not bankruptcy, it doesn’t get rid of debts. It’s a tool that allows for considerations of contracts. It is not a decision regarding the future of the university or what programs will be cut, the board will make those decisions later.
Mike Hostina, General Counsel for UA, to explain what “financial exigency” is and isn’t.
1: 22 p.m.
After the discussion of the current fiscal situation, I would like discussion with the board of our strategy for the future.
Our core mission must be and will be preserved. To do that in this environment we will need to shed what is less precious, as difficult as that may be.
We have a governor who has shown his willingness to make deep cuts and to withstand an override.
Faculty, staff and students would live under continuous uncertainty. Unfortunately, we will never know enough to be perfectly correct.
Despite the cuts we are already consuming money at an unsustainable level. We cannot wait for a number from the legislature or the governor.
Said he has had conversations with newspapers like the NY Times and Wall Street Journal, conversations he would’ve liked not to have under these circumstances.
Even though in the overwhelming view of the majority of Alaska, the legislature should have overridden the vetoes.
The level of support is staggering and unprecedented.
We ought to be able to solve this problem but the problem is not solvable through the normal processes.
Everyday we delay making reductions only compounds the cuts we need to make later in the year.
“The least worst option at that time, as I believe it is now, is to declare financial exigency.”
UA president Jim Johnsen begins budget discussion. Recalls meeting from 1986 when the university was facing a similar situation.
Board of Regents chair John Davies officially begins the meeting, “I too want to apologize that we’re having this conversation.” Said majority of Alaskans support university system and what is happening is unprecedented.
We shouldn’t lose sight of goals to provide the best education for students.
“People are working hard both inside and outside the university.”
Representative Andy Josephson, (D-Anchorage) speaking from Anchorage, “we do not have a fiscal crisis, we have a political crisis…you have a vast cohort of supporters in the legislature.”
Anchorage Chancellor, Cathy Sandeen urges board to wait until the legislative session is over before declaring financial exigency. Financial exigency may be premature at this point.
Faculty and students must be included in the discussion of the final situation. University has robust and complex system which must be carefully considered.
“Do not raise the white flag yet.”
“I’m sorry, this never should have happened…Our children are our most valuable asset…we’re not done, and I’m going to turn this around,” first speaker said, becoming tearful and receiving a standing ovation.
After failing to get the 45 votes necessary to override Gov. Mike Dunleavy’s line item vetoes to the states budget, the university system is facing major cuts.
In a press release put out Thursday, July 11, the university’s Office of Public affairs said that the UA system would have to:
“Create a leaner UA by assigning each university a prorated share of the budget reduction.”
“Eliminate one or more universities and/or community campuses.”
“Consolidate the university within a single accreditation with shared courses and services.”
• Contact reporter Peter Segall at (907)528-2228 or firstname.lastname@example.org.