With declaration of financial exigency, the University of Alaska can start planning instead of just hoping

Hooding Ceremony at Wendy Williamson Saturday, May 4, 2013. (Photo by Erin Hooley/University of Alaska Anchorage Office of Advancement/Creative Commons)

The University of Alaska’s Board of Regents voted 10-1 today to issue a declaration of financial exigency, an acknowledgement that the system no longer has the money to cover its bills and must make dramatic cuts essentially overnight to save the university.

The tone of the Monday morning meeting marked a dramatic, sober shift from the hopeful tone many regents struck at the previous meeting a week ago, where they decided to punt on the decision and hope that the Alaska Legislature and a governor with his sights set on dismantling the university would have a change of heart about the university’s funding. Though the Legislature is slowly working toward compromise that compromise is fragile and

“I’ve been troubled over the past week, and I’ve been really troubled because I’ve had to think about the decision we made last week as a body,” said Regent Gloria O’Neill. “The question I had for myself is, ‘Did I fulfill my duty as a regent?’ Under the constitution, our duty as regents is to ensure the existence of a university. … We will not have a university after February if we continue to move forward without making a decision.”

Regent Darroll Hargraves, a Dunleavy appointee, had previously credited Dunleavy for making hard decisions and had been one of the biggest proponents of waiting to see what happened. Much of that optimism was gone on Monday.

“I don’t see anything on the horizon that everything is going to be A-OK. I just don’t see it,” he said, adding that he would reluctantly support the declaration. “So be it.”

The University of Alaska is facing a lightning-fast deadline to make sweeping overhauls to the system because the cuts were delivered on the Friday before the start of the new fiscal year, which meant no one had time to prepare or alter course in response to the vetoes handed down by Gov. Michael J. Dunleavy. At the University of Alaska, the sharp and sudden reduction in the budget means that the system is currently spending $11 million more a month than it can afford.

Any delay in a change of course will mean when the cuts are made, they will need to be that much bigger.

The cuts facing the University of Alaska under the $136 million reduction are also far more than the “hair cut” that many conservatives have discussed. Some of the regents likened it to amputations.

The declaration of financial exigency is somewhat similar to a declaration of bankruptcy. It allows the university to rework labor contracts, fire tenured faculty, eliminate programs, close campuses, raise tuition and have the athletics teams hang up their skates. The precise decisions about what will be cut and what will be spared will be made at later meetings, with the next big nexus being the board’s July 30 meeting next week with much more detailed decisions due by mid-September.

Classes are set to begin in late August.

The regents heard a high-level overview from the administration that essentially boiled down to two realistic options: Portion out the cuts to state funding (41 percent of unrestricted general fund dollars) across the campuses and allow the campuses latitude in making specific cuts or to radically overhaul the entire university, consolidate programs and focus on strengths.

University of Alaska President Jim Johnsen seemed to lean toward the latter option, arguing that it would allow the campuses to focus in on their strengths and pull back on their weaknesses while leaning heavily on distance delivery of classes. The chancellors of each university argued in favor of receiving portioned out cuts, saying they could work together to ensure that their cuts preserve as many options for students as possible.

The regents seemed to be open to both options, requesting that they hear more information on both before they settle into one direction.

After the meeting adjourned, the Legislature rolled out legislation that proposed to restore some of Dunleavy’s vetoes while paying out a roughly $1,605 dividend. It would restore $110 million of the University of Alaska’s funding, leaving it with a $26 million cut. Minority Republican Rep. Kelly Merrick, an Eagle River Republican whose vote would be a must-have to override the veto, asked during the House Finance Committee meeting

The legislation didn’t, as of Monday, have a veto-proof majority of support and without delivering Dunleavy his campaign promise of a $3,000 dividend faced unlikely chances of being wholly signed into law.

Regent John Davies seemed to anticipate this on Monday. He said without the 45 legislators needed to override a governor, anything and everything could still be struck down with a veto. Help, if it ever comes, could be months off for the University of Alaska.

They can keep on hoping, but it’s time to start planning, he said.

“I think we’re unfortunately in the position of planning for the worst and hoping for the best,” he said. “As we move down this planning process, if we get better news then I think we can always make course corrections but if we do it the other way around then we can’t. … This is a devastating schedule, but unfortunately if we go any later than that then it just gets worse.”

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