University of Alaska President Mark R. Hamilton has told Alaska's legislators and the Board of Regents that the university has done all it can do in this decade to help itself financially, and needs an infusion of state dollars to get itself back on track. Hamilton's comments to legislators came during his presentation to the members of the joint House and Senate Finance Committees on Friday morning, Feb. 19.
With the beginning of the '90s, Hamilton said, the university responded to legislative calls for budget reductions by trimming its costs and by increasing its income from all other sources, such as tuition, fees, federal and private money and contracts. The university reduced its administrative costs substantially, and then went even further by offering early retirement incentives to both faculty and staff.
"We've hit the point of diminishing returns," Hamilton said. "We've done everything possible to increase the income over which we maintain control, but the cuts have undermined our ability as an institution to contribute to our own financial well-being."
Hamilton told the legislators that $16.3 million more from the state in each of the next three fiscal years would represent 1 percent real growth since 1996, the year the university first noticed significant enrollment declines.
"Alaska cannot save itself into prosperity," Hamilton said. "We must invest in the certainties. I am certain that the most important natural resource for the State of Alaska in the 21st Century will not be crude oil; it will be the educated youth of our state."
The university's tuition rates have been approved for the next two academic years, 2000 and 2001, with no increases except for the Higher Education Price Index (HEPI) inflation adjustment of 3.1 percent for both years. The administration is also authorized to proceed with a redraft of the current tuition policy to provide for earlier approval of tuition rates so campuses can publish approved rates in their catalogs and to enable students to better plan their personal expenditure requirements.
The Coalition of Student Leaders supported the new tuition rates. "The position of the Coalition this year is that although tuition increases put financial strain on students, our goal is academic repair and putting the university back on track," wrote student Regent Annette Nelson-Wright who heads the student coalition.
Regents were briefed on proposed changes to the university health benefits package for implementation next year. In 1997, regents moved the funding of the health care plan to a defined contribution model by capping the maximum amount it will pay on behalf of employees and their dependents toward the cost of the plan. Because of the rising costs of the university's health care plan, dependent charges were instituted several years ago, and this year for the first time employees pay an annual amount of $285 for their own benefits.
Although the university is essentially self-insured, it is required to publicly bid the health care claims administration every five years. The current contract with Blue Cross Blue Shield will expire in December 1999. To guarantee the most cost effective bid responses, President Hamilton must approve the proposed plan changes in advance of bid preparation in late March. The current proposal for implementation in January 2000 would increase dependent charges, and shift more of the first dollar costs of health care services to employees who use the plan while maximizing the savings derived from a network of providers' contracts. Patty Kastelic, executive director of human resources for the university, said her department will continue to explore ways to help control the rate of increase in employee contributions, including ways to offer employees more individual choice. Representatives of employee governance groups questioned the need for any new employee and dependent charges.
Federal funds of more than $10 million will be used to provide substantial upgrades of two of UAF's research facilities under plans approved by the Board of Regents. The Poker Flat Research Range upgrade will involve four projects ($5.4 million), and the Toolik Field Station upgrade will consist of nine projects ($5.5 million).
Regents reallocated funding for UAA's Mat-Su College deferred maintenance projects, and approved the Snodgrass Building and walkway renovation project ($750,000) and the Kerttula Building roof repair/replacement project ($348,000).
University revenue bonds totaling up to $15 million will be sold for the purpose of partial refunding of existing debt. The sale is expected to produce an average annual savings of about $75,000 per year, or a total of $1.4 million over the life of the bonds.
Governor Tony Knowles met briefly with the board to announce the appointment of four new regents: