Briefing Paper

In response to previous budget cuts there have been times UA was forced to take drastic actions just to keep the institution’s doors open.  At one point, the University was forced to layoff over 200 people. That is not well known, but UA’s responses to tough times are worth considering, even now, as they consist of structural changes to the base funding that produce yearly savings but do not show up in budget documents.

•    Reduced employees’ supplemental pension (State refers to this as SBS).  The University pays a percentage up to a maximum of $42,000 while the State pays up to $98,000.  

•    Elimination of the geographic differential for Fairbanks employees.  

•    The pension and geographic differential actions save the state $12 million a year in base funding.

•    Maintain per diem for University employees at $44/day while the State and Legislative per diem have grown to $66 and $150 respectively.

•    Instituted a defined contribution retirement system years before the State resulting in more than $100 million in avoided retirement liabilities.

•    Operate on a 40 hour work week instead of the 37.5 hour week used by the rest of state government, - saving $400K per year.

UA funding has not kept up with inflation.  In fact, UA’s budget requests have not been fully honored in decades and only three times in the last twenty years has the University received a legislative appropriation in excess of fixed costs.  This situation has been particularly challenging in light of high cost drivers like PERS/TRS, utilities, fuel and healthcare.

In spite of this, the University has been successful.  Enrollment has skyrocketed; college-bound Alaskans are attending the University like never before; and Alaska’s businesses are literally in a University-graduate hiring frenzy.  Unfortunately, almost all of the progress has been achieved with money generated by UA through private donations, expanded research dollars and tuition – not money from the State.  The nursing expansion is a good example.  It was started with eight different sources of money, only one of which came from the State.

It is appropriate to seek outside funds for new programs, but the problem is this: in response to industry and student demand, the University started over 100 high-demand degrees and certifications with money from sources that are nearly impossible to duplicate. Consequently, these funds are not available for the engineering, nursing and technical programs, all of which the State is still demanding.  

The University has already received $40 million from private industry and additional millions from the Rasmuson Foundation, Denali Commission, and Mental Health Trust. However, those monies are being used to support the programs those groups started.  It is not reasonable to think these donors will provide an additional $50 million or that the University can redouble tuition or research dollars in the near future.  UA needs additional investment.

Click here for a pdf of this document

For Information Contact:
Pete Kelly, Director, State Relations
450-8006/465-2382