Dunleavy’s budget cuts from schools, seniors and pretty much everyone else: ‘I think they expected a budget like this’

Gov. Mike Dunleavy. (Photo by Matt Buxton/TMS)

TMS writer TJ Presley contributed to this report.

The wait is over and the cuts are here.

Gov. Michael J. Dunleavy finally introduced his budget to the Alaska Legislature today, the final day allowed under state law and a third of the way into the legislative session. It’s going to take a while to completely unpack the impact of these cuts as some bits of the budget are, well, less-than-clear on just what they’ll do.

The budget also comes in tandem with a series of budget directives, bills and administrative orders. There are some monumental legislative changes like the repeal of the Senior Benefits Program in 2019 (it was set to sunset in 2024) and the repeal of municipalities’ ability to tax oil and gas properties.

The Legislature and the public will begin to unpack the changes in the budget and–hopefully–their economic impact on the state in the coming days and weeks.

The biggest cuts will hit: The University of Alaska, which saw 41 percent of its current budget funding erased; Health and Social Services, which saw 30 percent of its budget cut; K-12 schools, which saw about a 25 percent of its budget cut; and the Department of Transportation, which saw 38 percent of its budget cut.

Dunleavy’s state budget director Donna Arduin claimed that the budget represents a loss of about 700 full-time and part-time employees from state employment. Dunleavy said he had not looked into its economic impacts, which ISER estimates would exceed 16,000 jobs lost in the economy.

When asked if people who lose their jobs as a result of the budget should look into moving Outside, Dunleavy said, “That would be their choice.”

When asked if his changes to health care might boot someone off cancer treatment, Dunleavy said there was no specific policy to that end.

When asked if he thought voters would have expected such deep cuts, Dunleavy, who never once mentioned making such deep cuts on the campaign trail, said, “I think they expected a budget like this.”

Editor’s note: This is a developing story and will be updated with additional departments as we churn through them. Unless otherwise specified, all numbers below represent changes to unrestricted general fund spending.

Department of Education and Early Development

Gov. Michael J. Dunleavy has proposed an overall cut of $325 million from state funding for K-12 schools, a roughly 25 percent reduction in overall UGF funding for the budget. The biggest cut is a $333 million cut directed at the state’s direct support to schools while also eliminating a one-time increase of $30 million that had been agreed to by the Legislature last year. It also takes axes to other school programs by ending the state’s pre-kindergarten grants and nearly eliminating some early learning funding.

  • $300 million cut to foundation funding, which will need a change in law the FY 20 Foundation Program estimate includes a base student allocation of $5,930.
  • $30 million cut in additional funds already promised by repealing the FY 20 one-time, outside-the-formula funding in Sec4 Ch6 SLA2018 P5 L1.
  • This all amounts to a $333.65 million  cut to direct classroom funding for FY 20
  • Interesting: 50 percent of the donations received under the education raffle program, estimated to be $300,000, are appropriated to the Department of Education and Early Development to be distributed as grants to school districts according to the average daily membership for each district adjusted under the funding formula for the fiscal year ending June 30, 2020.
  • A $3.2 million cut to pre-kindergarten grants, eliminating the program.
  • About $8 million in cuts to the Department’s administrative services
  • $693,500 cut from the State Council on the Arts, eliminating the funding completely
  • $4.3 million fund change to Mt. Edgecumbe Boarding School, changing the fund source from its trust fund to general fund money.
  • $300,000 cut to Mt. Edgecumbe maintenance (more kids, less maintenance)
  • Small bump, about $1.4 million, to library operations but a small cut to Museum operations of $25,000.
  • $670,000 zeroed out from the Alaska Online With Libraries program
  • $5.1 million increase in Alaska Postsecondary Education Commission (A funding source change within the Program Administration and Operations component from the Alaska Higher Education Investment Fund (AHEIF) to the General Fund is requested to remove obligation from the AHEIF.)
  • $11.75 million increase in AK performance scholarship (A funding source change within the Alaska Performance Scholarship Awards component from the Alaska Higher Education Investment Fund (AHEIF) to the General Fund is requested to remove obligation from the AHEIF.)

Department of Administration

The Department of Administration serves as a catch-all for plenty of other programs. Here, Dunleavy has taken the knife to public broadcasting. He’s proposed flat funding for programs related to public safety.

  • $2.036 million in Public Broadcasting Radio funding zeroed out
  • $46,700 for the Public Broadcasting Commission is zeroed out
  • $633,000 Public Broadcasting TV is also zeroed out
  • A proposed $2.1 million increase for the Office of Public Advocacy under Walker’s FY 20 budget has been removed
  • A proposed $4.1 million increase for the Public Defender Agency under Walker’s FY 20 budget has also been removed
  • No significant change for the Alaska Public Offices Commission

The University of Alaska System

In a call with reporters, University of Alaska President Jim Johnsen said the university has three months to figure out how to handle the proposed cuts. He said the proposed $155 million cut would translate directly to 1,300 jobs lost. Balancing the cut with a tuition increase would require the university to double its tuition.

  • $155 million overall cut that will be decided by the Board of Regents
  • Splitting the university into multiple budget items
  • Transferring satellite campuses (like Mat Su College, Prince William Sound College, etc) into their own University of Alaska Community Colleges line items

Governor

The governor has conveniently found some additional money or made transfers to coalesce budget other powers in his administration.

  • Removed proposed $1 million increase for the redistricting board from Walker’s FY 20 budget.
  • Found $1.154 million laying around and reappropd it to “costs associated with state government efficiency efforts and to pursue economic development opportunities for consideration at the state and federal levels for the fiscal years ending June 30, 2018, and June 30, 2019.”
  • $398,000 increase–in addition to transferring the Administrative Services Directors– OMB has added two management positions, a Deputy Director and a Budget Director. Two full time positions (PCN’s 11-0400 and 11-6001) and their personal services cost are transferred from the Department of Fish and Game to the Office of Management and Budget to support the cost of these changes.
  • Transfer certain economic development activities from the Department of Commerce, Community and Economic Development to the Office of the Governor. This realignment will allow cabinet-level focus on engaging the business community and outreach, as well as direct coordination with the Governor’s Office and the Governor on the economic impact of policies across departments
    • PCNs transferred: 08-0505 Business Development Officer, Anchorage, Range 23 08-1274 Economic Development Advisor, Juneau, Range 21 08-T007 Development Manager, Anchorage, Range 24
    • $767,000 was allocated for Economic Development in DCCED prior.
    • This new team in the Governor’s office siphons off about $106,000 in Vehicle Rentals Taxes to create a new team paid a total of $820k,000 with $91,000 in travel benefits

Department of Commerce, Community and Economic Development

There are some big changes in store for the Department of Commerce, Community and Economic Development. One that’s likely to catch the most headlines is the proposal to fully repeal the Alcohol and Marijuana control boards and require the Alaska Marijuana Control Office to cover its costs with increased fees.

  • There’s a $1.4 million cut to Community and Regional Affairs
  • $767,000 cut to Economic Development, in conjunction with the move transfer of economic development functions to the governor’s office.
  • The $3.75 million proposed increase by Walker for the Alaska Seafood Marketing institute has been removed
  • In the FY19 budget, Walker transferred $32.355 million to the Power Cost Equalization Endowment Fund (7% of the PCE Endowment Fund’s three-year monthly average market value may be appropriated to the PCE Rural Electric Capitalization Fund for annual PCE program costs). In the FY20 budget, Dunleavy proposes to pay PCE grants from UGF “In FY2020, Power Cost Equalization payments and associated program management will be funded by general funds.”
  • According to the administration, marijuana licensing fees will now cover all of the activities for the marijuana control office and all GF has been removed.
  • $450k grant to Alaska Legal Services zeroed out

Health and Social Services

The Department of Health and Social Services will see cuts throughout its services with big hits targeting Medicaid and senior programs like the Alaska Pioneer Homes and the elimination of the Senior Benefits Payment Program. In some cases, the administration is cutting or reducing programs and in others, like the Alaska Pioneer Homes, are requiring users to pay more.

  • A $271 million cut (39.7 percent) to Medicaid Services from the implementation of a “combination of cost savings and containment measures to achieve this decrement” that includes a long list of proposals, but the most important one is a “review of eligibility determinations,” which translates to kicking people off.
  • Hikes fees to residents of the Alaska Pioneer Homes in order to “fully close the gap between the actual cost of providing services and current rates” while also creating a $15 million assistance fund to help people currently living in the homes to stay.
  • Cuts $3.2 million from the Alaska Psychiatric Institute
  • Cuts $1 million from substance abuse and treatment grants
  • Cuts $1 million from front-line social workers
  • Cuts $3.4 million from Juvenile Justice facilities and programs
  • Cuts $35.4 million from public assistance: $14.7 million from adult public assistance, $16.9 million from tribal assistance programs and $3 million from public assistance field services
  • Cuts $24.4 million from the senior benefits payment program, which Dunleavy is seeking to repeal wholesale
  • Cuts $2.5 million out of the nursing budget contained in Public Health
  • Cuts $1.38 million from human services community matching grants

Department of Corrections

Public safety, corrections and rolling back criminal justice reform are one of the few places in the budget that Dunleavy has said he’s fine with seeing growth during his administration. The overall corrections budget will be slightly smaller under this proposal, which doesn’t account for an estimated $41 million increase to prison budgets expected under his sentencing rollback that would put more people behind bars for longer.

  • A proposal to move 500 prisoners to private out-of-state correctional facilities. The new contract would send $17.7 million Outside for the housing of these inmates while seeing reductions at other facilities, primarily the Palmer Correctional Center (a $7.5 million cut) and the Wildwood Correctional Center (a $6 million cut). Overall, the population management budget would grow by $2.2 million or 1 percent.
  • A $455,000 cut to health and rehabilitation services.
  • It has an unallocated reduction of $30.5 million, which is apparently due to the contractual savings of moving prisoners Outside.

Department of Public Safety

For all his talk about getting tough on crime, Dunleavy is proposing an overall cut to the Department of Public Safety (home to the Alaska State Troopers and the Village Public Safety Officers program) of about $3 million from the current year, but it’ll be $26.5 million smaller than what was proposed in Gov. Bill Walker’s FY20 budget. Here’s how it would break down:

  • Alaska State Troopers won’t see the proposed $21 million budget increase proposed by Gov. Bill Walker. Instead, the budget will stay essentially flat from the current year to the proposed year.
  • A $3 million cut to the Village Public Safety Officer program that the administration says will match the funding to the current expenditures.
  • Flat funding for the Council on Domestic Violence and Sexual Assault as well as most other programs. Walker had proposed a $13,900 increase for the council.

Department of Transportation

The Department of Transportation saw a huge chunk of its UGF budget erased in Dunleavy’s proposal. After privatizing the Alaska Psychiatric Institute, Dunleavy is setting his sights on the Alaska Marine Highway System, which OMB Director Arduin criticized for not being competitive with traditional roads. “The cost of transporting a vehicle on state highway is about two cents per mile, where it’s about $4.58 per mile on a ferry,” she said.

  • $48.2 million cut from Marine Highway Vessel Operations (Official explanation: This transaction is a result of a reduction in weeks of service. The department will enlist the assistance of a qualified marine consultant to identify potential reductions of the State’s financial obligation and/or liability as they relate to the Alaska Marine Highway System (AMHS). The project will include an analysis of options available for reshaping the system, such as through a public/private partnership, and a determination of the various options’ feasibility, with targeted implementation by July 1, 2020. The ongoing trend of a less than 35 percent fare box recovery rate coupled with low passenger and vehicle ridership has contributed to making the AMHS an increasingly expensive system to operate. AMHS will move towards other service options to realize short and long-term cost savings for state government and to promote economic growth in affected regions of the state.)
  • $15.7 million cut in marine fuel for the marine highway system
  • Taking all funds into account, the Marine Highway System is looking at a $97 million cut, of which $64 million is UGF.
  • Rural Airport Receipt (fund 1244) Authority is $8,546.8 versus Projected Revenue of $6,561.3. Revenue Shortfall is estimated to be $(1,985.5) causing slight increase to Central and Northern Highways and Aviations Administration line items

Department of Law

The Department of Law budget will be about $5 million smaller than the one proposed by Gov. Bill Walker and about $2 million smaller than the current fiscal year’s budget.

  • The Civil Division’s Child Protection Unit won’t see a $1 million increase proposed by Walker.
  • There’s a reduction of about $2 million from the current year’s budget for the Civil Division’s natural resources unit. Walker had proposed reducing it by about $1.2 million. Both of the proposals are a function of dwindling funds that were part of an unusual multi-year operating budget appropriation for the litigation relating to the Flint Hills refinery in North Pole.

Courts

While Walker had kept courts funding flat in his budget, Dunleavy is proposing a $3 million increase for the budget largely due to his promise to keep courts open through Friday.

  • $2.6 million is the cost of opening up courts on Fridays
  • $393,000 increase for building and lease maintenance

Department of Fish and Game

The Department of Fish and Game didn’t see many significant changes compared to the current budget year. Instead, some areas of growth propose by Walker have been eliminated.

  • Walker proposed an almost $2.4 million increase in funding for fisheries management around the state. The increase was rejected by Dunleavy
  • There’s a $280,000 cut in UGF to the Wildlife Conservation budget, which taken with other changes in the agency’s budget results in the loss of about $400,000 in federal funds. The state budget documents say the state “will no longer manage ‘Special Areas'” that include wildlife refuges, sanctuaries and habitat areas, including freshwater and coastal wetlands, marine environments, boreal forests, alpine and maritime tundra.

Department of Labor and Workforce Development

Not a lot of changes for the already-small Department of Labor and Workforce Development.

  • Increased Technical Vocational Education Program funding replaces $261,000 of UGF funds

Department of Revenue

  • The Department of Revenue will form a centralized Economic Research Group in the Office of the Commissioner that will provide statewide economic analysis at the cost of $1.153 million from Tax Division to Commissioner’s office.

The Legislature

As usual, the governor doesn’t propose a ton of changes for the Legislature.

  • $1 million increase to Legislative Finance (Add additional employees for the expanded Senate Finance Committee)
  • $628,000 in Office of Victim’s Rights is now funded by PFD criminal garnishments

Department of Military and Veterans’ Affairs

Again, much of the changes for the Department of Military and Veterans’ Affairs are in comparison to the budget proposed by Walker.

  • Big ticket item: Walker proposed a $2.2 million increase in Military Youth Academy. Dunleavy rejected that and maintained flat funding but proposed a $100,000 cut to be filled in with increased fees.
  • Walker proposed $210,900 for the volunteer State Defense Force. Dunleavy rejected this increase

Oil and tax credits

Dunleavy is proposing to appropriations forto the Oil and Gas Tax Credit fund, of $170 million and $84 million, paid out of AIDEA receipts.

Department of Natural Resources

  • $1.184 million zeroed out from Agricultural Development
  • While Dunleavy reversed many of the increases proposed by Walker, he did maintain some increases for the state’s fire-fighting budgets, an increase from $5.2 million to $13.6 million for the upcoming year
  • $2.4 million increase to Parks Management and Access (a result of dumping DGF vehicle rental tax fees into UGF so not a real increase, but a good example of how it makes it harder to see where money is coming from)

Department of Environmental Conservation

  • A statutory change is being proposed to repeal the program and the associated $4 per berth fee and accompany this budgetary change.
  • There is currently only one operating cow dairy in Alaska. The Department proposes to eliminate the State’s dairy program. This will result in the deletion of one Environmental Health Officer III, saving the state about $179,000.

Other takeaways

  • 50 percent travel reduction across the board
  • $27 million appropriation to Oil and Gas Tax Credit Fund is zeroed out

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3 Comments on "Dunleavy’s budget cuts from schools, seniors and pretty much everyone else: ‘I think they expected a budget like this’"

  1. I Art Laughing | February 13, 2019 at 2:39 pm | Reply

    The Community Colleges would become subject to a line item deletion by the Governor with this it looks like.

  2. Russ Lee Newell | February 15, 2019 at 11:32 am | Reply

    The State of Alaska’s Constitution lists public education both K-12 and state college to be funded by the State. UAF, UAA, and UAS are the state colleges. State colleges were set up to offer a lower cost tuition so that students of a state could get a education without having to pay high tuition from out of state schools. You can read this on p 123 and p. 126 of the Constitution listed below. Public education and higher education are stated as public goods that need funding.

    I am of the opinion that the proposed budget is NOT legal per the State’s Constitution. When you have to shut down campuses, you are not talking about a bare bones budget. You are talking about a destroy public education budget. I would suggest that the outside person who created this budget has committed fraud because the budget goes against the Constitution. And since Dunleavy has brought this person into our state, how is Dunleavy free from charges of criminal conspiracy against the State’s Constitution?

    We are required to fund public education. If people want a PFD and thus we need a 40% sales tax, then that is what we need. We are required by our Constitution of fund public education.

    http://w3.legis.state.ak.us/docs/pdf/citizens_guide.pdf

  3. The University of Alaska is a private corporation and needs ro be treated as such. I exlect the cuts to remain as tough as they are to swallow. In my 20 years living in Fairbanks I’ve seen the so called public institutions develop into a Godzilla sized monster that has literally eaten the food off of people tables. While always crying that they’re, “lacking funding”. Where I live I have a unique perspective when it comes to being a witness to the absolutely psychopathic greed of these so called public institutions that resulted in 3 of 5 vehicles operating on my road to go from private cars tgat normal people drive to state or federal vehicles that parasites drive. We need to know that there has to be a private base, NOT a fake one like UAF or other fake private institutions that are actually vampiric entities. In order to provide any funding for anything in the state. This will require actual Alaskans to create businesses that create actual profits. This will require these fake private institutions like UAF that parasitize on the backs of Alaskans to stop, “providing services” that real Alaskans should be providing for a profit. It’s truly insane to think that it was even possible fornit to go this far so fast but it’s time these fake public institutions get the cuts they deserve.

    The only thing we need worry about now is that the Pebble Catastrophe is still stopped.

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