Dunleavy guts the University of Alaska among $400 million in line-item vetoes

OMB Director Donna Arduin explains the vetoes made by Gov. Michael J. Dunleavy as he listens on June 28, 2019. (Screenshot from Gavel Alaska)

It’s a nightmare scenario for the University of Alaska today after Gov. Michael J. Dunleavy announced his line-item vetoes to the state operating budget, delivering a whopping $130 million cut in state funding to the university system.

The cuts were among about $400 million made through the line-item veto power. The cuts also include $50 million to Medicaid, $50 million from municipal bond debt reimbursement (a 50% cut) and a complete elimination of the Senior Benefits Program and the Ocean Ranger Program (even though the Legislature rejected his attempts to actually repeal the programs). The Legislature’s proposal to lock $11.2 billion away into the Alaska Permanent Fund’s constitutionally protected corpus was reduced to $5 billion.

The Alaska Marine Highway, which was slated to be closed in Dunleavy’s proposed budget, was spared after the Legislature provided its own deep cuts to the service.

Dunleavy had originally proposed a $134 million cut to the system, which the Legislature reduced to a $5 million cut in its final budget. The total cuts now come to about $135 million. The cuts come on top of a $195 million in “cumulative budget reductions” since 2014, University of Alaska President Jim Johnsen told the university community in a letter ahead of the announcement.

The University of Alaska Board of Regents convened a meeting at the same time Dunleavy rolled out his cuts to begin responding to the budget and listened to the governor’s announcement as it happened.

After the conclusion of the news conference, the meeting sat in silence.

Johnsen told the regents that the veto was far larger than anticipated.

“This is twice the most extreme cut we expected,” Johnsen told the regents of a presentation he had prepared anticipating a $60 million worst-case scenario. He said his preparations for a response for the budget were out the window after the governor’s announcement.

“It assumes rationality and the news that we just heard puts that assumption, upon which we built this presentation, into serious question,” he said. “This is much more than a substantial reduction.”

The cuts handed down by Dunleavy today along with the cuts made by the Legislature amounts to a roughly 41 percent cut to state funding for the University of Alaska. Johnsen warned earlier this year that cuts of such magnitude would devastate the university and possibly force the immediate closure of campuses.

He said he will push hard for a legislative override of the veto, which would require a tough 45 votes of the entire Legislature when it returns to a special session in July, but said the university will have to take actions immediately.

The Board of Regents approved an immediate hiring freeze, a travel freeze, a freeze on contracts and furlough notices will go out to all employees. Johsnen said it won’t immediately affect employees but would allow the university to begin furloughing people in 60 days.

A failure of the Legislature to override the veto for the university would force the university into a “Declaration of Financial Exigency,” Johnsen said, which essentially amounts to a declaration that the university can no longer cover its bills. It would allow the university to quickly eliminate programs, lay off tenured faculty and potentially shutter campuses.

He said the rough estimates of layoffs if the budget cuts stand would be about 1,300 people. Office of Management and Budget Director Donna Arduin told reporters that about 80 jobs would be eliminated by the budget.

“Further cuts will negatively impact both the university and the state,” Johnsen said in a letter to the university earlier in the day. “If the governor vetoes a substantial amount from UA’s budget, I will need your help. Contact your legislator and advocate for a veto override. Please convey the message that a substantial veto will disrupt students’ training and education and jeopardize the economic well-being of Alaska.”

Regents didn’t talk much about the impacts the nearly 27,000 students in the University of Alaska system would see, but Regent Karen Perdue said they would be serious.

“If we have to live with this kind of cut we will absolutely impact students,” she said.

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