Pioneer Hall at the Kachemak Bay Campus, Kenai Peninsula College, University of Alaska Anchoarge, as seen on July 2, 2019, in Homer, Alaska. (Photo by Michael Armstrong/Homer News)

Pioneer Hall at the Kachemak Bay Campus, Kenai Peninsula College, University of Alaska Anchoarge, as seen on July 2, 2019, in Homer, Alaska. (Photo by Michael Armstrong/Homer News)

‘Everything is on the table’

Facing $135M budget cut, university contemplates drastic action

Gov. Mike Dunleavy vetoed $130 million in state funding for the University of Alaska system on Friday. Now, UA President Jim Johnsen said programs, faculty and entire campuses are at risk, and tuition increases are a possibility should an override to the governor’s veto fail.

“We’re doing our damnedest to navigate through this so that it doesn’t impact our students,” Johnsen said. “Everything is on the table, $134 million is huge. This cut cannot be met by ‘oh, let’s close a program here, let’s tighten our belt here.’ It can’t be done like that.”

Dunleavy’s funding cut is on top of a $5 million reduction already authorized by lawmakers.

Johnsen said the veto was a surprise.

“It quite frankly was a surprise when we heard,” Johnsen said. “We met with the governor over the spring and we went over ideas on how to strengthen the university. We didn’t think he would persist in this huge cut to our budget.”

Rep. Gary Knopp, R-Kenai/Soldotna, said the cut to the university would be “financially devastating.”

“How do you take $130 million from the university without an analysis?” Knopp said.

Sen. Gary Stevens, R-Kodiak, also opposed the governor’s veto of the University of Alaska budget. A retired college professor, Stevens’ district includes Homer, Kodiak and Cordova, all cities with community campuses.

“I don’t see it surviving after a cut like that,” Stevens said. “We’re talking about personnel, about a lot of professors being fired … I’m absolutely opposed to that veto of the university.”

When asked where he stands on the governor’s vetoes, Rep. Ben Carpenter, R-Nikiski, said via email that he’s “committed to standing behind necessary reductions in government spending to better the long-term fiscal health of our state.”

Sen. Peter Micciche, R-Kenai/Soldotna, did not immediately respond to requests for comment.

In an email, Lauren Simpson, a legislative aide for Rep. Sarah Vance, R-Homer, sent this statement:

“Representative Vance has consistently stated that she is going to do what her supporters elected her to do: repeal SB91, advocate for a PFD mandated by statute, and strive towards a sustainable budget while retaining essential services. She has not released a statement concerning the vetoes, but is looking closely at each item and researching how they will effect (sic) our community.”

Since Friday’s veto, the university has taken measures to reduce costs in the short term. The system has issued furlough notices across the state to 2,500 employees. Furloughed employees are able to take two weeks of unpaid leave, or use 10 days of unpaid leave within the next six months.

Johnsen said the university has also issued hiring and travel freezes.

The veto is the largest cut the university has faced in their over 100-year history. The veto of $130.35 million is in addition to the $5 million cut the Legislature approved in their budget, resulting in a 41% total reduction in last year’s funding for the university system. The university relies on the state for about 40% of its funding. Other funding sources for the university budget include revenues from fees and tuition, investments and land sales, as well as research grants and contracts.

Excluding UAA, UAF and UAS, closing the 12 community campuses in the university system would only save the university $38 million.

“The 40% (from the state) is definitely core funding,” Johnsen said. “It’s where we hire faculty and staff. You have to use this funding to go get that other money.”

The university has sustained cuts in four of the last five years, with a loss of more than 1,200 staff, he said. Johnsen said this cut has the potential to reduce funding from other resources.

“Given the he extent of this cut, it’s not just limited to state funding,” he said. “If we lose faculty we’re going to lose the research grants they bring in; we’re going to lose the students that those faculty taught because there would be fewer courses, fewer programs, fewer sections — actually the cut is going to be substantially more than the governor’s reduction in our general fund budget.”

With private funding sources, Johnsen said, the university system is advocating for an override of the veto, which will require a three-fourths vote from state legislators by July 12.

He says many legislators support the university, but it’s a close call.

“There’s a small number of legislators on the fence,” Johnsen said.

Many state legislators, and Dunleavy, have attended and received degrees from the University of Alaska, including Micciche.

If the veto is sustained, Johnsen said the university system’s Board of Regents will declare financial exigency at their July 15 meeting, which will enable the board to expedite cuts that need to be made. By July 30, the board will have a plan for cuts, Johnsen said.

“Between July 15 and July 30, tough decisions would need to be made about what campuses are closed, what programs are closed across the University of Alaska,” Johnsen said.

The Kenai Peninsula College, the Kachemak Bay Campus and other regional campuses could find their way on the chopping block. Johnsen said the Kenai Peninsula College costs $6.3 million, and 20 similarly priced campuses would need to shut down to break even with the veto. Community campuses received their own appropriation in the budget, which was not vetoed by Dunleavy. Johnsen said these campuses — which receive university system support for human resources, financial aid, information technology, facility management, university relations — could not sustain themselves solely on the community campus appropriation.

“They could not operate — they don’t have the horsepower to operate with that money,” Johnsen said. “… They cannot operate on their own. We’re looking hard at what those costs are that that appropriation will bear.”

University of Alaska Anchorage Chancellor Cathy Sandeen echoed that point.

“We cannot keep the community campuses harmless, because the main campuses — we provide a number of services they cannot provide themselves,” she said. “We won’t be able to do that under the current budget scenarios unless those campuses pay us for those services, and if they cannot pay us, we will have to stop doing them.”

Sandeen noted that students at community campuses also take classes through distance and online education offered by the main campuses. Support of online courses offered at KPC and KBC also comes through UAA, such as for computer programs and platforms.

Sandeen said UAA could lose about 700 academic jobs, including potential jobs at the community campuses, if the veto stands.

“It’s sad to think about it — 700 people losing their jobs,” she said. “There are no replacement jobs in the state. People are going to leave the state of Alaska — smart, professional, committed people.”

University programs that get federal or non-state support won’t be affected by the veto, except for those grants that require a state match. The Kachemak Bay National Estuarine Research Reserve, for example, is funded through the UAA Alaska Center for Conservation Science, which receives some federal support.

“The extent to which this is funded through federal grants, those will not be affected,” Sandeen said.

Knopp says he doesn’t think the Kenai Peninsula College will be too greatly impacted because of the separate appropriation, but, he said the campus “will have impact.”

There is potential for the university veto to ripple beyond the university. Mouhcine Guettabi is a regional economist at the Institute of Social and Economic Research at UAA. He studies Alaska’s economy and its drivers, produce, forecasts and more, he said. When Dunleavy’s proposed budget was announced, Gutteabi was asked to present his work on the economic impact of various state budget options. After hearing of the vetoes, Gutteabi created a “very basic and quick assessment” on their potential impact to the economy, which he has posted online, he told the Clarion Tuesday.

In his analysis, Gutteabi said the proposed vetoes total about $450 million, which should amount to at least 4,500 of jobs lost in the short run.

“Actual job losses may be much larger if the agencies affected all lay off workers,” he said in the analysis.

Just the cut to the university system “essentially pushes the Alaska economy back into a recession,” he said.

“This tells us that once we account for all the cuts and their indirect and induced effects, there is a very strong likelihood that the economy will dip back into a recession,” Guttaebi posted on Twitter.

Stevens said legislators opposed to the vetoes are counting noses. The first vote will be to override them as a whole, and if that fails, try overriding them one at a time, he said. Stevens said he has been getting public opinion messages all week.

“This morning I had 150 new messages. I thought I dealt with them last night,” he said.

A week ago, many messages urged Stevens to back a $3,000 dividend. Now the message is “For Heaven’s sake, save our university. Save our senior programs,” he said.

Legislators have until July 12 to decide if they will overturn Dunleavy’s veto.

Reach Victoria Petersen at vpetersen@peninsulaclarion.com. Homer News reporter Michael Armstrong contributed to this story. Reach him at marmstrong@homernews.com.

Pioneer Hall at the Kachemak Bay Campus, Kenai Peninsula College, University of Alaska Anchoarge, as seen on July 2, 2019, in Homer, Alaska. (Photo by Michael Armstrong/Homer News)

Pioneer Hall at the Kachemak Bay Campus, Kenai Peninsula College, University of Alaska Anchoarge, as seen on July 2, 2019, in Homer, Alaska. (Photo by Michael Armstrong/Homer News)

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