University of Alaska Regents Delay Vote on Financial Exigency

The University of Alaska’s Board of Regents on Monday put off a vote on financial exigency until July 30, when its members hope to have a clearer picture of whether state lawmakers might restore at least a portion of the cuts made by Gov. Michael J. Dunleavy’s budget vetoes.

The decision followed emotional testimony about the potential impact of cuts, which university officials say could end up exceeding $200 million. Because lawmakers were unable to override Dunleavy’s vetoes, the reductions will have to be completed by the end of the 2020 fiscal year, which began on July 1.

Michael Hostina, the system’s general counsel, said financial exigency is “not only justified but necessary” to respond to a 41-percent reduction in state funding in one fiscal year. Financial exigency is not the same as bankruptcy, he pointed out. It doesn’t discharge the university’s debts. What it does is allow for “rapid downsizing of programs, services, and personnel,” including tenured faculty members.

The budget reductions will total far more than the $136 million cut this fiscal year. Federal grants and contracts will shrink as researchers are laid off and federal agencies lose confidence that those who remain can deliver the work, the university system’s president, James R. Johnsen, has said.

Meanwhile, tuition dollars will shrink if, as expected, enrollments decline. Foundations will delay donating while they wait to see if the system, which includes three separately accredited universities and 13 community campuses, remains viable.

Eliminating duplication of large academic programs, like offering a single College of Business or College of Engineering systemwide, would generate only a little more than $20 million, Johnsen said. Shuttering all 13 community campuses would likewise save just over $30 million. Doing both would barely make a dent in the $200 million the system would need to eliminate, he said.

Alaska’s University System Faces Its Fate

How a governor’s vetoes fostered a financial crisis on the campuses of the Last Frontier.

• U. of Alaska President Acknowledges Contributing to a ‘Fractured’ System
• Alaska Board Suspends Consideration of Controversial Merger
• Former Alaska Chancellors Express Alarm Over Accreditation Letter

Based on his most recent conversation with Dunleavy, Johnsen said he isn’t optimistic that the governor would support any legislative efforts to restore money to the university. If he disapproves, he can once again pull out his veto pen.

Maria Williams, chair of the university’s Faculty Alliance, was among those who urged the regents to delay declaring financial exigency, to avoid “rushed and chaotic decision making” that could jeopardize accreditation. She also appealed for meaningful faculty participation, which she said so far had been lacking.

The university won’t make significant cuts in academic programs during the fall semester, because that would be unfair to students who arrive in about a month, university officials said. But the longer they wait to cut, they more they’ll have to slash. If they do nothing, the president said, the university will run out of state money by February.

Katherine Mangan writes about community colleges, completion efforts, and job training, as well as other topics in daily news. Follow her on Twitter @KatherineMangan, or email her at katherine.mangan@chronicle.com.