University of Alaska leaders talk with state officials and consider structuring options amid budget cuts

The University of Alaska Board of Regents is meeting in Anchorage Tuesday to discuss possible restructuring options in the face of a 41% cut to state funding and to hear from the governor’s administration about its latest funding proposal.

The meeting starts at 9 a.m. at the University of Alaska Anchorage’s Lee Gorsuch Commons. Regents voted to extend the meeting until 4 p.m. (Watch it live here.)

We’ll be posting live updates through the day, so be sure to check back.

Update, 3:40 p.m. Regents agree to move toward single-accreditation model

In an 8-3 vote, the UA Board of Regents agreed to move toward planning for a single-accreditation model — the structuring option preferred by UA President Jim Johnsen.

The regents’ motion asks Johnsen to create a plan to merge three separately-accredited institutions into one accredited university with multiple locations.

The board is expected to vote on that plan in September.

“It’s critically important to emphasize multiple locations," Johnsen told regents.

"This would not be in Anchorage, in Fairbanks, in Southeast or in Talkeetna, it would be in all of those places, that would be the idea,” he said. “You’d use technology and people to provide academic programs and other services based on enrollments and based on where those people are, where the demand actually is.”

Regents Cachet Garrett, Darroll Hargraves and Lisa Parker voted against the motion.

Garrett, the student regent, said people are not ready for a single University of Alaska.

Under the motion, the regents authorized Johnsen to implement four steps:

• Reduce administrative costs immediately through consolidation and standardization of processes in the “back-office functional areas” including IT, finance, university relations and procurement.

• Prepare a strategic approach to combining “duplicative academic colleges and schools, consolidating research institutes and enhanced integration of community campuses" for review and approval by the regents at their September meeting.

• Prepare a plan for board approval to transition from three separately-accredited universities (UAA, UAF and UAS) to a single institutional accreditation with multiple locations over the 2019-20 academic year.

• Consult through the above steps with students, faculty and staff.

"This is not the end of the road, this is the beginning of a discussion,” said Board of Regents chairman John Davies.

Davies said regents will vote on the single-accreditation plan in September. He also created a subcommittee to help move forward with the restructuring options.

Whether regents approve the plan will likely depend on whether “there’s any significant bumps in the road such as accreditation or that sort of thing," Davies said, “but right now I think we’re on the path toward single accreditation.”

Update, 3:30 p.m. — It’s back to Regent Hughes’ motion to move toward single accreditation

Regent Lisa Parker’s motion to pursue the consortium model was tabled in an 8-2 vote. Now it’s back to Regent Mary Hughes’ motion tabled earlier this Tuesday.

Hughes’ motion is tweaked just slightly. It now says (under #3 below) that the UA president is authorized to “prepare a plan for board approval” to transition from three separately-accredited universities — UAA, UAF and UAS — to multiple locations under a single accreditation.

Update, 2:45 p.m., A new motion — Consortium model and maybe one university later

Regent Lisa Parker has proposed a new motion: UA officials work on cutting the budget under a consortium model (proposed by university chancellors today). Then consider, “at some point in the future,” a plan to move from three separately accredited universities to multiple campuses with a single accreditation, Parker said.

Parker said it didn’t seem feasible to move to a single accreditation in one year without putting all of the universities’ accreditations at risk.

That consortium model would include three separately accredited institutions — UAA, UAF and UAS — that work together, and a “lean statewide office,” according to the chancellors’ presentation earlier Tuesday.

Regent Karen Perdue said she doesn’t know what a “consortium model” is.

Student regent Cachet Garrett said people are not ready for a single-accreditation model.

“The students and the faculty and staff don’t want it,” she said.

Regent John Bania described Tuesday’s meeting as a “tennis match” with the ball moving back and forth between the proposed consortium model and the proposed single-accreditation model.

“I’m kind of getting tired of the tennis match to tell you the truth,” he said.

Update, 2:30 p.m., Regents return to talking UA system structure

Following a call from Gov. Mike Dunleavy and a presentation from the state Office of Management and Budget, the regents continued with their scheduled discussions about how to structure the university system in the face of a $135 million cut.

The UA system includes three separately accredited universities — UAA, UAF, UAS — and statewide administration.

Here are the two proposals currently being discussed:

• Moving from three separately accredited universities to what’s being called “one new UA" with one accreditation and multiple locations, like the University of Washington.

• Distributing the $135 million cut proportionally between UAA, UAF, UAS and statewide administration. That amounts to a $50 million cut for UAA, $68 million cut for UAF, $10 million cut for UAS and $8 million for statewide.

Some regents also continue to ask questions about what exactly Gov. Mike Dunleavy’s administration is suggesting in its latest two-year funding proposal.

Michelle Rizk, UA’s chief strategy and budget officer, said the administration’s proposal amounts to a a $95 million state funding cut for UA in the current fiscal year and a $38 million cut next year.

Update, 1:30 p.m., OMB’s Mike Barnhill addresses regents

Mike Barnhill, policy director for the state Office of Management and Budget, told regents that the two-year proposal for UA from the governor’s administration is not a “dictate” or take-it-or-leave-it offer, as some have characterized it.

“It was extended to the staff so we could have a discussion,” Barnhill told regents. It was “offered in the spirit of compromise,” he said.

Barnhill said UA’s administrative costs are too high and need to be cut. He said distributing the budget cut proportionally between the universities preserves too much administration and cuts too many academics. That approach also cuts the budgets of the University of Alaska Southeast and community campuses, he said, and the state operating budget is set up so that can’t happen.

(UA currently faces a $135 million budget cut in the fiscal year that started July 1. That’s between the $130 million veto by Gov. Mike Dunleavy and the $5 cut from the state Legislature.)

The agency that accredits UA raised concerns in a letter Monday about the new two-year proposal from the governor’s office, which it described as “perhaps inappropriate strong-arm ‘guidance.’" Barnhill told regents he sees the proposal “in a very different light."

The recent proposal for UA funding from OMB includes a “proviso," which Barnhill said Tuesday should be have been called a “concern.” It says the restoration of $38 million in state funds to UA this year “requires reductions to be confined to identified categories.”

Regent Mary Hughes asked Barnhill: If we develop a plan that addresses “the cost drivers” and in effect does similar things to the proposal, is it possible — “and I’m not negotiating because it’s inappropriate” — that the governor would still agree to add back about $38 million this year?

Barnhill said, “absolutely.” If it gets “to the number” and address the concerns in a “fair and principled way” that’s possible, he said.

"There are an infinite number of ways to get to where we need to go," he said.

UA President Jim Johnsen told Barnhill that he had proposed a step-down approach to the governor earlier this year.

“It’s been pretty quiet on these issues until the last couple weeks," Johnsen said.

UA Board of Regents chairman John Davies told Barnhill that universities and community campuses are an economic engine for the state.

He said he was troubled by the “reckless suggestion” to cut all state funding for research. The governor’s administration suggested replacing state funding for research with federal, private and corporate funds.

Even if that’s possible, Davies said, which he doesn’t think it is, it would take several years.

“We are not going to hold bake sales to operate the Sikuliaq,” he said, referring to a research vessel.

Barnhill told regents that given the state’s fiscal situation, all recipients of state funds, not just UA, need “to look at new ways of doing business.”

Update, 12:30 p.m., Gov. Mike Dunleavy calls into regents meeting

Gov. Mike Dunleavy called into the regents meeting at noon and spoke for about six minutes. He told regents he hopes they accept his administration’s proposal, “and we get working together sooner rather than later.”

(Here’s that proposal. It includes similarly deep cuts but spread over two years and targeted at specific areas. It has been the subject of recent criticism and concern including from UA’s accrediting agency and Vic Fischer, the last surviving delegate to Alaska’s constitutional convention. Here’s how OMB is defining overhead costs.)

Dunleavy told regents he’s a graduate from UA, he’s worked for UA and he has two daughters who take courses at UA.

“I have nothing but the greatest admiration for the university and where it can go,” he told regents.

UA has benefited from state funding over the years, sometimes increased funding “at pretty good levels," Dunleavy told regents. But he said Alaska has a “fiscal problem" necessitating spending cuts. He also told regents that UA needs to improve its outcomes.

“I don’t think there’s going to be any disagreement that some of our outcomes could be a lot better, there’s no doubt about it,” Dunleavy said. “I’ve talked to folks at every level of the university.”

He said his office “has been and will be fully prepared” to work with UA on an approach that “can get the university focused in a direction that lowers its overhead and increases its outcomes."

Bills were passed yesterday, Dunleavy said, that puts the budget issue back into his hands. One of those bills includes adding back $110 million in state money this year for UA, reducing its state funding cut to $25 million.

[Legislature sends bill with $1,600 dividend and reversal of most budget vetoes to Dunleavy’s desk]

Dunleavy said: "I’m hoping that over the next few days, as a result of the discussions that have occurred the last two weeks, that we can come to an understanding of how we can help, again, the university get to the point where it needs to be in order to be one of the best universities in this country, certainly one of the best universities dealing with Arctic issues and issues of the northern latitudes... in areas such as science and engineering.”

Update, 12 p.m., Regents extend meeting to 4 p.m.

Regents voted to extend the meeting until 4 p.m. today. It was originally scheduled to end at 1 p.m.

At noon, regents are scheduled to hear from Gov. Mike Dunleavy and Mike Barnhill, policy director for the state Office of Management and Budget.

Update, 11:15 a.m., Chancellors present a third structuring option

UAA, UAF and UAS chancellors have presented a new, third restructuring option for the university system, describing it as a “consortium” model.

A similar model is followed by the Claremont Colleges in California, UAA Chancellor Cathy Sandeen told regents.

That consortium model would include three separately-accredited institutions — UAA, UAF and UAS — that work together, and a “lean statewide office,” according to the chancellors’ presentation.

The consortium model is the least disruptive to students, Sandeen said. It would maintain the existing, “well-understood system,” of post-secondary education in Alaska, including in rural areas, according to the presentation.

The consortium model, Sandeen said, “retains more of the direct contact in the delivery of services and less bureaucracy because we’re maintaining the three units.”

Sandeen questioned the quality of services statewide administration provides and at what cost and speed.

“I am surprised sometimes that a simple contract is required to be reviewed by general counsel at the statewide office,” Sandeen said.

UA regent Dale Anderson said he was “trying to remain calm” in response to the new proposal. Anderson said regents have tried to get the universities to cooperate for a long time.

“Why is this all of a sudden at the forefront?” he asked. “This must have been a real, excuse the term, come to Jesus meeting that you guys have had.”

UAS Chancellor Rick Caulfield told regents that chancellors believe single accreditation has “significant downsides” so they’re trying to lay out their perspective about how to address the immediate need for cuts.

There’s new people in leadership roles, Sandeen told regents.

Regent Karen Perdue said the problem right now is UA needs to make deep cuts and fast.

“So I don’t think that there’s a regent here that wants to change our model precipitously. It’s very scary,” she said. “The only reason we’re here is that we don’t have enough money.”

The other two structuring options:

• Moving from three separately accredited universities to what’s being called “one new UA" with one accreditation and multiple locations, like the University of Washington.

• Distributing the $135 million cut proportionally between UAA, UAF, UAS and statewide administration.

Regents are expected to select which option to pursue.

Update, 10:30 a.m., Tearful regent presents motion to move to single accreditation

UA regents are considering a motion presented by a tearful regent, Mary Hughes, that would prepare the university system to move to multiple campuses under a single accreditation.

Hughes said the motion includes four points:

• Reduce administrative costs immediately through consolidation and standardization of processes in the “back-office functional areas” including IT, finance, university relations and procurement.

• Prepare a strategic approach to combining “duplicative academic colleges and schools, consolidating research institutes and enhanced integration of community campuses" for review and approval by the regents at their September meeting.

• Prepare to transfer to a single institutional accreditation over the 2019-20 academic year.

• Consult through the above steps with students, faculty and staff.

In a 8-3 votes, regents then voted to table the motion so they could first discuss all of the structuring options more broadly.

Regent Gloria O’Neill described regents’ upcoming decision on UA’s structure as one of the biggest decisions the board has faced in 100 years.

Update, 10:15 a.m., Regents talk “values” before discussing structuring options

UA needs to stay centered on its students as it figures out to cut its budget, regents said Tuesday.

Before deciding on what sort of form the public university system will take under a $135 million state funding cut, the regents discussed their values. Those values were written on large sheets of paper and posted on the wall.

They include:

• Increasing the portion of the funding spent on academics and student services

• Reducing administrative costs

• Integration of teaching and research

• Don’t burden students with more costs

• Student outcomes

“Student outcomes I believe should be included there," said regent John Bania. "In my opinion they need to be improved

UA Board of Regents chairman John Davies said research is “fundamental" and can’t be forgotten.

Regent Mary Hughes also raised concerns about the high degree of uncertainty UA students face right now, including about state funding for their scholarships.

“Not only is our house on fire, but gasoline is being poured on the fire,” she said.

Update, 9:40 a.m., UA’s lawyer talks state constitution and regents’ authority

People are crammed into a UAA meeting room to watch the UA Board of Regents discuss how to deal with budget cuts.

At the meeting’s start, Sen. Gary Stevens, R-Kodiak, and Sen. Tom Begich, D-Anchorage, told regents to follow the state Constitution.

“I know you’ll do your best,” Stevens told regents.

“You are profoundly important to the future of the state of Alaska,” Begich said. “Please craft a university that I’m proud to be an alum of.”

Gov. Mike Dunleavy’s administration has a recent proposed plan for UA that includes deep cuts but spread over two years and targeted at specific areas. The proposal has faced criticism from some who say Dunleavy is attempting to usurp regents’ constitutional authority by prescribing specific cuts. The governor’s office disagrees.

UA’s general counsel, Michael Hostina, told regents Tuesday that the Alaska Constitution requires that the Board of Regents manage UA.

“UA was intentionally excluded from the executive branch to insulate it from politics,” he said.

Hostina told regents that the governor can veto state money for UA, but it’s beyond the governor’s authority “to pressure regents” to allocate funding in a certain way.

UA President Jim Johnsen said the university system faces an “unprecedented fiscal crisis” — it’s unprecedented in its magnitude and its speed, he told regents. Johnsen said the university system’s “house is on fire.”

“If you need to remodel you first need to figure out how many rooms you can afford,” he said.

Johnsen supports moving from three-separately accredited universities to multiple campuses with a single accreditation in the face of a $135 million state funding cut.

Original story, 8:15 a.m., Here’s what we know so far about Tuesday’s regent meeting

The University of Alaska Board of Regents is meeting in Anchorage Tuesday to discuss possible structuring options in the face of a 41% cut to state funding and to hear from the governor’s administration about its latest funding proposal.

The four-hour public meeting starts at 9 a.m. at the University of Alaska Anchorage’s Lee Gorsuch Commons. (Watch it live here.)

We’ll be posting live updates through the day, so be sure to check back.

The regents are expected to first discuss two options for dealing with this year’s $135 million cut to state funding. (That’s $130 million from Gov. Mike Dunleavy’s veto and $5 million from a cut approved by the state Legislature. It’s a 41% cut to UA’s state funding compared to last fiscal year, and amounts to just over 15% of last year’s total operating budget.)

University leaders have described the one-year funding cut as draconian and unprecedented.

UA President Jim Johnsen and university chancellors differ on which structuring option they prefer for the public university system:

• Johnsen wants to move from three separately accredited universities (the University of Alaska Fairbanks, the University of Alaska Anchorage and the University of Alaska Southeast in Juneau) to what’s being called “one new UA" with one accreditation and multiple locations, like the University of Washington.

• Chancellors have said they support distributing the $135 million cut proportionally between UAA, UAF, UAS and statewide administration. That retains the current structure.

[With significant decisions looming for University of Alaska leaders, questions remain about state funding]

The regents will ultimately decide, and the timeline is tight: Each month regents delay cutting expenses, it adds an estimated $11 million that will need to be cut in the remaining months of the fiscal year, UA officials have warned.

Fall classes begin next month, and Alaska is nearly one month into the fiscal year.

(Here’s the presentation regents will hear at the meeting.)

Later Tuesday, the regents are scheduled to hear from Mike Barnhill, policy director for the state Office of Management and Budget.

Barnhill is presenting a two-year proposal for UA funding that still includes deep cuts, but the cuts are spread over two years and directed at certain areas of the budget like research and “overhead.” The plan, described by Dunleavy as a “step-down approach,” also says UA will consolidate next year, including consolidating the schools of engineering to cut about $5.1 million.

The proposal says the restoration of $38 million in state funds to UA this year “requires reductions to be confined to identified categories.”

(Here’s that proposal, and here’s how OMB is defining overhead costs.)

Long-time university leaders and policymakers have said they’ve never seen a proposal like it. Some raised concerns about the governor attempting to usurp the constitutional authority of the regents, though the governor’s office argue that’s not the case. The agency that accredits UA also cautioned in a letter Monday that it requires universities to have an independent governing board, and it raised concerns about Dunleavy’s “perhaps inappropriate strong-arm ‘guidance.’"

[With significant decisions looming for University of Alaska leaders, questions remain about state funding]

Typically lawmakers agree to a state funding amount for UA each year and the regents vote on how to budget that money.

On Monday, a majority of Alaska legislators approved a bill that would reverse most of the $444 million vetoed by Gov. Mike Dunleavy from the state’s operating budget. That included restoring $110 million in state money to UA this year, leaving the university system with a $25 million cut.

The bill now goes to Dunleavy for approval or veto.

Asked in a call with reporters Monday if he supported adding back the money, Dunleavy didn’t answer yes or not, but said he was working with UA on a step-down plan.

In a post on Twitter Monday, he wrote: “While we will consider a limited number of additions to the budget, we consider the vast majority of the FY20 budget final. It’s time to move forward.”

The regents’ meeting Tuesday follows their decision last week to declare “financial exigency,” allowing them to more quickly cut costs in the face of a financial crisis. The week before that, bonding and borrowing money became more difficult and expensive for UA after Moody’s Investors Service downgraded its rating by multiple notches due to “the severity and magnitude” of its financial challenge.

Earlier coverage:

With significant decisions looming for University of Alaska leaders, questions remain about state funding

In two-year proposal, Dunleavy administration targets specific areas of UA budget for cuts

Legislative impasse over college scholarship funds means hard choices, uncertainty for Alaska students

Faced with $135M budget cut, UA regents declare financial exigency

Moody’s downgrades University of Alaska credit rating, citing financial challenges

University of Alaska governing board delays vote on whether to declare financial emergency

Facing $130 million budget cut by Dunleavy, University of Alaska braces for big budget decisions ahead

Budget veto could put University of Alaska at risk of losing accreditation, agency warns

At UAA, governor’s budget cut could lead to loss of about 700 jobs and 40 degree programs

Furlough notices go out to University of Alaska employees in the wake of governor’s veto

UA president: Dunleavy veto unprecedented, ‘devastating’

Dunleavy budget plan would ‘gut’ University of Alaska system and force big cutbacks for public schools, educators say

This is a developing story. Check back for updates.