The University of Alaska expects to need $27 million more next year from the Alaska Legislature to fund operations. The state’s Office of Management and Budget says it should expect $15.8 million less.
The $43 million difference between those figures sets up a collision expected to result in job losses, program cuts and possibly even campus closures, the University of Alaska Board of Regents was told Thursday, the first day of its two-day Juneau meeting.
“I think the university will see cuts this year, and I think the OMB cut will be the minimum that we see,” said Michelle Rizk, the University of Alaska’s chief strategy, planning and budget officer.
The Board of Regents, the appointed governing body of the state’s public universities, used Thursday’s meeting to discuss the university’s budget state as UA begins planning in earnest for the 2017 fiscal year, which starts July 1.
UA budget documents list revenue in two categories: state and non-state. The non-state funding category includes federal money and formula-funded cash that comes in regardless of the Alaska Legislature’s annual budget-setting process. The state category is affected by that annual process.
In the 2016 fiscal year, which began July 1 this year, the Alaska Legislature slashed its appropriation to the university system by $19.8 million. With the state facing a multibillion-dollar gap between revenue and expenses due to plunging oil prices, more cuts are expected for FY2017.
Before planning for those reductions, UA president Jim Johnsen said, the university needs to conclude how much is needed to keep existing programs going.
For FY2017, according to budget documents, UA administrators say they need $45.1 million more — $27 million more from the Legislature and $18.1 million from the “non-state” category.
“This is what we believe the state really needs to fund the university at, and I think it’s important that we make that statement,” said regent John Davies of Fairbanks.
Much of that increase, $25.8 million, is caused by scheduled increases in pay and benefits to union employees. Another $15.6 million is attributed to the rising cost of utilities, maintenance and other consumables, including the rising price of academic journals.
In November, Rizk said, the UA system will have firmer estimates for FY2017 and be in a better position to start developing a “contingency” budget to address what happens if the Legislature cuts different amounts.
“People are aware that times are tough, … exactly (how tough) they are is part of this contingency budget planning. That cannot happen in 24 hours or even by November,” Board of Regents chairwoman Jo Heckman said.
Johnsen said he’s inclined to take a “vertical” rather than “horizontal” approach to budget cuts. Rather than cut a set percentage from each program (the horizontal method), the vertical approach involves eliminating some programs while leaving others untouched.
A decision on those reductions would take place in June 2016, after the Legislature finalizes its budget, Johnsen and Rizk said.
To offset at least a portion of the Legislature’s expected cuts, the regents have begun discussions on proposals that would raise tuition across the UA system.
Johnsen said UA is considering two main proposals. One would raise tuition for all types of classes by a set percentage. The second would raise tuition for upper-level and graduate classes and keep lower-level classes cheaper.
University of Alaska Southeast student government president Callie Conorton told regents that students at UAS are worried about rate hikes but believe that if any come, they should be shared equally.
“When you consider tuition, please consider raising across the board because students want to take on the burden together,” she said.
Matt Ostrander, vice president of student government at UAA, asked the regents to keep any increase to 5 percent. According to UA figures, the average tuition for a full-time student at a UA system school has risen 23.4 percent in the past five years, and Ostrander asked that future increases be moderate. “We wouldn’t want it to be too burdensome, but at the same time we recognize there’s an additional need,” he said.
Several regents spoke of the need to equalize tuition and fees across the UA system. Some UA campuses charge less for the same courses, creating competition among those campuses for students who take online classes.
No final decision on tuition increases is expected before November, and if the regents are inclined to vary the increase between upper-level and lower-level classes, that will require even more time to plan, Rizk said.
For students and parents concerned about cost increases, Johnsen said it’s important to keep one thing in mind: “We’re not talking about raising tuition simply because. We’re doing it because it’s important,” he said. “Tuition needs to be talked about in the context of the budget.”
The Cost of Higher Learning (2015-16)
Undergraduate tuition/fees (100-200 level courses)
Undergraduate (300-400 level courses)
Graduate tuition/fees (600+ level courses)
Note: Figures are for full-time resident tuition, which requires a minimum of 12 credit hours per semester for undergraduates, and nine credit hours per semester for graduate students.