Budget Cuts, Sequestered Scholarships and ‘Strong-Arm’ Politics Put U. of Alaska on Thin Ice

When University of Alaska students arrive on campus at summer’s end, they may discover an institution drastically different than the one they expected. That is, if they’re able to show up at all.

Dramatic state budget cuts pushed primarily by Alaska Governor Michael Dunleavy have slashed the university system’s public support by 41 percent, or more than $130 million. Facing fast-emptying coffers and a worsened credit rating, university regents responded by declaring financial exigency, putting programs and jobs—even for tenured faculty—in jeopardy.

Additionally, state scholarship money that supports thousands of college students has been locked away in a reserve account, possibly putting it off limits for the upcoming school year.

Surveying the turmoil, the university system’s accreditor warned of “material and significant risk to the quality of education” at the state’s colleges, which could soon lose accreditation.

“The house is on fire,” said University of Alaska President Jim Johnsen at a board of regents meeting on Tuesday.

Here’s how the crisis escalated.

Oil rules Alaska’s economy.

Alaska’s economy is tied to the oil and gas industry. The state owns its oil reserves, which represent more than a quarter of its gross domestic product and in the past made up 90 percent of its budget, according to the Wall Street Journal. To share in the drilling profits, Alaska residents receive annual royalty checks, which in recent years have exceeded $1,000 per person.

Oil prices falling from above $100 a barrel in 2014 to below $30 in 2016 created big state budget deficits. Ever since, Alaska’s leaders have been grappling with shortfalls and recession symptoms like high unemployment.

Dunleavy, a Republican who took office in December 2018, has made it a political priority to balance the state budget without levying new taxes or cutting oil royalty payments for residents.

The governor has targeted university spending.

In June, Dunleavy used his line-item veto power to significantly cut the state’s proposed budget for fiscal year 2020.

The University of Alaska was a key target. A memo from the governor’s office explained the governor’s reasoning:

• The institution spends more money per student than many other university systems.
• It has relatively low retention and graduation rates.
• It employs what the governor considers too many high-paid, redundant administrators.
• It runs “duplicative programs,” such as multiple schools of engineering, arts and sciences, business and education.

The university system includes three separately accredited institutions based in Anchorage, Fairbanks and Juneau, each of which is affiliated with community campuses, for a total of 16 locations. The budget cuts are intended to affect primarily the Anchorage and Fairbanks flagships, not the Juneau college or community campuses, which the governor’s memo called “much more cost-effective.”

The Alaska legislature voted July 29 to reverse the governor’s cuts, a move the governor can either approve or veto.

The governor told the university to cut “duplicative programs.”

To deal with the proposed loss of funds, the governor’s office recommended the university system consolidate its “duplicative” programs and house each in either Fairbanks or Anchorage.

But those cities are 355 miles apart.

“Alaska is enormous and a lot of people are place-bound,” Simon Kattenhorn, professor and director of the department of geological sciences at the University of Alaska Anchorage, told EdSurge. “A lot of small communities, including Native villages, are spread across the state and may only be accessible by air or water. It’s just not possible for many people to just relocate to a completely different part of the state, which may be as far away as Wyoming is from California.”

So what should an Anchorage-based engineering student do if her courses are suddenly available only in Fairbanks?

Proposed the governor’s office: “Location disruption for students can be mitigated by live-streaming classes.”

Logistics aside, consolidating departments could mean the loss of specialty programs that “grew organically, responding to the needs of their geography,” says Maria Williams, chair of the University of Alaska Faculty Alliance and an Anchorage professor in the Alaska Native Studies Program and department of music.

Without, for example, the minor in Alaska Native business management available at Anchorage, the business school “ends up being very watered down,” Williams says. “You lose that flavor.”

University leaders declared a state of emergency.

On July 22, the University of Alaska’s Board of Regents voted 10 to 1 to declare financial exigency.

The move allows the board to take drastic steps, such as close programs and lay off staff members, including tenured professors. As many as 1,300 jobs could be cut, according to a presentation made during the gathering.

The extreme measure was taken against the recommendation of the Faculty Alliance, Williams says.

That has put professors on edge.

“It feeds into the anxiety faculty feel. It’s not business as usual,” Kattenhorn explains. “Tenured faculty who are typically protected can lose their positions with only about two months of notice.”

Meanwhile, scholarships are in danger.

Meanwhile, a legislative quirk has thrown off the state scholarship system, leaving students scrambling.

At the end of the 2019 fiscal year, lawmakers failed to prevent financial aid money from getting “swept” into a state reserve account, from which it’s difficult to draw funds. About 12,000 students received emails saying their scholarships may not materialize, the Chronicle of Higher Education reported.

However, Johnsen has said that lawmakers hope to restore the financial aid money.

Regents are considering consolidation and are worried about accreditation.

At a marathon July 30 board meeting, the regents voted to allow Johnsen to come up with a plan to consolidate the university system into a single accredited university with multiple campuses. The change would likely require shrinking the administration and merging subjects with multiple programs into single colleges, reported the Anchorage Daily News.

The regents did not fully consider an alternative proposal from the university chancellors and members of the Faculty Alliance to turn the system into a consortium, Williams said, which would have enabled the colleges to share core services but maintain their unique roles and personalities.

“Faculty voices, student voices and chancellor voices were ignored,” Williams argues.

Also left on the table was a bid from the governor to stretch the budget reductions out over two years instead of one—if the university system agreed to confine the cuts to categories selected by his office. These include research, athletics and a university museum.

This maneuver upset the university system’s accreditor. In a letter to the University of Alaska board of regents, the president of the Northwest Commission on Colleges and Universities warned that the possibly “inappropriate strong-arm ‘guidance’ of the Alaska Governor” further threatened the school’s accreditation status, which was already at risk because of the funding cuts.

Loss of accreditation, the letter reminded the board, would mean the loss of all federal funding.

Uncertainty looms.

Johnsen and the regents have their work cut out for them before the next scheduled board meeting in mid-September. The governor and accreditor are not the only parties they’ll need to reassure.

“There’s a lot of national attention to our situation, and that means prospective faculty may not wish to join the university,” Kattenhorn says. “Even if faculty don’t lose jobs, they may feel uncomfortable about the stability of their programs, and one could imagine that would lead to attrition in the faculty ranks.”

Students, too, might be tempted to defect, worried about the value of their degrees. But in Alaska, “the options for students are extremely miniscule,” Williams says. She worries the changes could disproportionately affect the state’s significant Alaska Native and military student populations.

Ads for online universities are already vying to lure away University of Alaska students. One ad spotted on Facebook this week from the State University of New York read: “Worried about the future of Alaska’s universities? SUNY is accepting students now. You can bring The State University of New York home with you and complete your degree from a name you can trust, 100% online!” Such outreach drew criticism from university leaders.

If the university contracts or loses accreditation, the consequences could reach far past the next few semesters—and well beyond Alaska. With the state’s unique ecosystem, faculty have become important scholars of climate change, Kattenhorn says: “There is a tremendous amount of research that occurs across the entire University of Alaska system that is very specifically focused on our arctic environment and the kind of problems we face here.”