Budget update: Oct. 16

October 16, 2019

— by Dan White, chancellor

It’s been a great and busy week at ��Ϻ��Ƶ. On Monday, we celebrated Indigenous Peoples’ Day with a blessing at Troth Yeddha’ Park. Elders and Indigenous PhD students led panels on this year’s theme, “Resiliency: Yesterday, Today and Tomorrow.” My thanks to Evon Peter and Sandy Kowalski, and to all who contributed. ��Ϻ��Ƶ celebrated across the state: the Kuskokwim Campus celebrated with a march, sharing of elder wisdom, and performances; the Northwest Campus hosted a film festival honoring the cultures, knowledges, and actions of ��Ϻ��Ƶ’s first peoples; and the Bristol Bay Campus shared the Yugtun language app in a “Talk Yup’ik to Me” event.

This weekend we have more celebrations in store: on Saturday, we’ll be welcoming prospective students to campus for Inside Out and coming together at the We Are CLA open house. We’ll also get to cheer on the Nanooks at Women’s Swimming against Azusa Pacific University and Women’s Volleyball against Simon Fraser University. On Sunday, Rural Student Services will host an open house in the Brooks Building to mark 50 years of creating a sense of belonging here at ��Ϻ��Ƶ and providing a shining example of outstanding student services.

As we celebrate, we are also planning for the future. Last week’s Board of Regents (BoR) meeting suspended the system level academic program reviews, and reset some of the budget discussion. In last week’s column, I wrote broadly about the plan to meet our FY20 budget reduction. This has been and continues to be a fluid discussion as we receive budget guidance from President Johnsen. Prior to last week’s BoR meeting, a portion of budget savings were planned to come from reductions in personnel pursuant to systemwide academic and administrative review and consolidation. The expected savings for ��Ϻ��Ƶ generated by that process was budgeted at $3.8 million. With the BoR’s recent decision to put the system level academic review process on hold, ��Ϻ��Ƶ will be working to identify savings for this year. Also pursuant to the BoR’s direction at the September meeting, yesterday Provost Prakash announced ��Ϻ��Ƶ’s expedited academic program review.

Here’s where we are today: the state general fund reduction for the whole UA system is $25 million. ��Ϻ��Ƶ’s share of that is $12.5 million. Fixed cost increases and strategic reallocations brought our total gap to approximately $20 million. Of that, $10 million has already been identified through across-the-board reductions. To meet the remainder, we are realizing $500k from moving some of KUAC’s expenses to private and corporate support, $2.5 million from reduced facilities maintenance, and $700k from research; the balance will be met through reserves and sales of land and facilities. These one-time actions will not solve our budget for next year, but will give us time to look at larger opportunities. I don’t anticipate asking for additional across-the-board reductions to meet this uncertainty. Identifying vertical reductions will happen through our established processes.

There have been many questions about the budget impact of the market and equity compensation adjustments. When we asked units to plan budgets in April at a 10 percent reduction, we included a 1 percent salary cost increase in that target. The compensation adjustments, at a bottom line level, work out fairly closely to that amount; so at a university level, we have planned for this in our budget. What we don’t know yet is how the market adjustments will impact each unit individually, and whether the impacts will be concentrated in specific areas. We have asked for a report at that level, and will adjust our approach if needed.

Thinking ahead to next year, there are still many unknowns in regards to structure, possible gubernatorial or legislative action, and internal distributions. The ��Ϻ��Ƶ expedited academic reviews just launched will not generate cost savings this year, and the one-time savings outlined above are exactly that: one-time. While we can use them to meet our target this year, we will need to plan for the type of sustained and permanent reductions that will carry us through another two years of expected budget cuts. The following ideas are some that were generated earlier this year, when we were expecting a much greater cut. I would like your feedback as we consider which to implement:

Shift selected public service and outreach functions to alternative funding streams, similar to KUAC. Consider the Mining and Petroleum Training Service (MAPTS), K-12 Outreach, Cooperative Extension Service, Marine Advisory Program, and others. Each of these are very high value to ��Ϻ��Ƶ and the community but we need to determine at what level they can and should be supported by the communities they serve. None are being proposed for elimination.

Increase private support for Athletics, transitioning off of general funds.

Shift full-time employees to 37.5 hour work weeks, with some exclusions.

Implement/expand shared service centers.

Continue the sale and monetization of less well used ��Ϻ��Ƶ property and facilities.

While we weigh our options for budget reductions, I want to acknowledge that everything under discussion is deeply meaningful to the communities who interact with our programs, services, and spaces. There are no easy options left. This makes decisions harder, but it is also a chance to reflect on the great value our people provide to ��Ϻ��Ƶ and beyond, and the connections ��Ϻ��Ƶ has built. Even when times are challenging, that is something for us all to celebrate.

Thank you for your ongoing commitment to ��Ϻ��Ƶ.

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