Will Cuts Give Way to ‘Systemwide Changes’ at University of Alaska?

The University of Alaska system has for years struggled with declining enrollment and state funding. Forced into a corner, the system's Board of Regents approved massive academic and administrative cuts, but experts say it's not enough to survive long term.

June 10, 2020
 
istock.com/chamey
The Geophysical Institute Building at the University of Alaska Fairbanks. The University of Alaska system is in the midst of deep budget cuts.

A batch of academic and administrative cuts that the University of Alaska Board of Regents approved Friday will save the university system tens of millions of dollars.

Regent Karen Perdue, vice chair of the board, called the cuts the largest program reductions at the university system in recent memory. “It reflects the tough financial times we are in,” she said in a press release.

Tough, indeed. For years, the University of Alaska system has teetered on the edge of a financial cliff. The system has faced falling enrollment for nearly a decade, and year after year, state funding diminishes. A merger between UA Fairbanks and UA Southeast is on the table and will be decided on in October.

Jim Johnsen, UA system president, made a deal with Alaska’s Republican governor, Mike Dunleavy, in August 2019 to cut $70 million in state funding from the system’s budget over three years after Dunleavy used a veto to slash $130 million from the system months earlier. Now, Johnsen is likely departing to head the University of Wisconsin system, leaving UA with leadership uncertainty.

On top of everything, the pandemic has severely damaged Alaska’s economy.

The recent academic and administrative cuts are the latest step by regents to repair the cash-strapped system and comprise a portion of the cuts Johnsen promised to the state.

“The university cut $25 million this fiscal year, and will cut another $25 million in FY21. In FY22, UA will need to reduce by another $20 million,” Roberta Graham, a university system spokesperson, said in an email. “The pandemic certainly added substantially to the financial impact.”

The board voted to cut or scale back more than 40 academic programs spread across all three campuses, including bachelor of arts and bachelor of science degrees in sociology at UA Anchorage and UA Fairbanks -- eliminating the system’s sociology degree programs. Several other programs related to geography and environmental science will disappear, along with master's programs in chemistry and physics at UA Fairbanks, among many others.

All discontinued programs will have individual teach-out plans so that affected students can finish their respective courses and degree programs, Graham said.

The academic program reductions will impact 700 students and 30 faculty and staff members. In addition, the system will implement several administrative cost-cutting measures, including suspension of a planned $6.5 million in pay raises, pay cuts for 166 executives through mandatory furloughs and other unspecified cuts to systemwide administrative costs.

The new cost-cutting measures, while necessary, will not solve the system’s long-term financial issues, said Aims McGuinness, senior fellow at the National Center for Higher Education Management Systems. NCHEMS is a nonprofit higher education consulting group that has consulted for the system.

“The depth of the change that they’re going to need over the next few years, the savings that they need to achieve, cannot be achieved solely campus by campus. They’re going to require systemwide changes,” McGuinness said.

Before working out a deal with Dunleavy, the board moved to declare financial exigency in July 2019, and Johnsen presented a slate of system reforms to the board. It included a plan that would have consolidated accreditation for the three universities into one. Ultimately, none were approved.

Enrollments across all three university campuses have steadily declined in recent years. Between 2014 and 2018, the university system experienced a 15.5 percent drop in total enrollment, from 31,522 students in 2014 to 26,641 in 2018. In 2019, enrollments dropped by another 4.8 percent.

Graham said that, as at most universities, the pandemic has impacted enrollment prospects for fall 2020.

“However, each university in the UA system has launched creative marketing campaigns, and the efforts are yielding results,” she said. “But for the fiscal year that begins July 1, the projected decline is estimated to be about 10 percent across the UA system.”

With the decline in enrollment comes a decline in net tuition revenue. In fiscal 2019, the university system brought in just over $130 million in net tuition revenue. By fiscal 2022, that number will look more like $101 million, according to a report for the Board of Regents.

The most recent State Higher Education Executive Officers association State Higher Education Finance Report showed that in fiscal year 2019, Alaska had the second-lowest public college enrollment in the country after Washington, D.C. Per full-time-equivalent student, it received the second-highest amount of state appropriations.

Despite the compromise between Johnsen and Dunleavy, the university system may continue to suffer blows to state funding. The coronavirus pandemic has wrecked several important Alaskan industries, including oil and tourism.

Oil revenue had already been on decline. Revenue fell from $8.9 billion in 2012 to $2 billion in fiscal year 2019, according to the Associated Press. The state projects oil revenue will plunge to $720 million next year.

The drop in oil money threatens the state’s oil checks, an annual payment from the state to Alaskans as a dividend from oil revenue. Alaskans are adamantly in favor of protecting the checks, and Dunleavy cited the program when he originally moved to cut $136 million from the UA system.

The cost of living in Alaska is extremely high, said Sally Johnstone, president of NCHEMS. She has worked closely with the UA Board of Regents.

“There’s sense among the population that live in Alaska that they should be getting money from the government as opposed to services,” Johnstone said. This attitude plays into the strong support for the annual checks as opposed to funding for higher education.

Graham said that so far, the response to the proposed budget cuts has been positive.

“Alaskans support the university and the importance of higher education, and will continue to be supportive,” she said. “I expect the residents of Southeast Alaska to be very engaged in the coming months as the discussions about University of Alaska Southeast gets underway.”

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