This publication is produced and distributed by the State Relations office of the University of Alaska System with assistance from the UA Office of Public Affairs. 
P: 907.463.3046; F: 907.450.8002

The Legislature adjourned Sunday, April 19.

The main issue this year was the FY10 operating budget, for which the University of Alaska system received a $12.9 million increase - 4.1 percent over the current fiscal year. The proposed budget is $14.7 million less than the Board of Regents’ request and $2.2 million less than the Governor’s submitted budget. This level of state general fund support represents a $4.7 million shortfall to our fixed costs. The university president, chancellors and ultimately the board will discuss in the days and weeks ahead how best to address this shortfall.

The budget included $922,000 to support UA’s health training programs and $950,000 for energy related programs.

The capital budget included $3.2 million to address maintaining existing facilities, also known as the annual renewal and renovation (R & R) requirement. The board had requested $50 million for this category of maintenance.

A distribution plan for the capital funds received will be discussed in the days ahead. No funds for the board’s top priorities for new construction, including the UAF Life Sciences Innovation and Learning Facility, the UAS Auke Lake Way Campus Entry Improvements and Road Realignment, or funds to complete the under-way UAA Sports Arena were included.

On behalf of the Board of Regents and President Hamilton, I want to take the opportunity to thank all of you for your efforts in supporting the university, our students and programs during the session this year. We’ll continue to work hard to share with legislators, business leaders, prospective students, parents and our K-12 partners about the importance of a strong state university system for Alaska’s future.

Pete Kelly
UA State Relations Director

Wednesday, April 15, 2009

The Legislative Conference Committee finished its work Tuesday, which essentially finalizes the University of Alaska’s FY10 operating budget as it relates to state general funds.

Within the context of what was available for action from this committee, the university did fairly well.  The committee adopted the House funding proposal for health programs, at $922,000, and the Senate funding proposal for energy, at $950,000.

UA got a number in between the House and Senate for operating costs for the new Conoco Phillips Integrated Science Building, at $1.025 million. The new facility on the UAA campus is scheduled to open for the fall 2009 semester.

UA also received the Senate number for employee salary increases, which was $400,000 less than the Board of Regents’ request. The UA administration will evaluate this action; President Hamilton has indicated he’s considering a freeze on most executive salaries as a result.

A number of legislators supported a workable level of state support for the UA system. Conference committee members in particular deserve thanks for their unanimous vote on the budget resolution.
Please take some time (during a break or your lunch hour if you are a university employee) to thank the following members of the conference committee:
Representative_Mike_Hawker@legis.state.ak.us
Representative_Bill_Stoltze@legis.state.ak.us
Representative_Harry_Crawford@legis.state.ak.us
Senator_Lyman_Hoffman@legis.state.ak.us
Senator_Bert_Stedman@legis.state.ak.us
Senator_Joe_Thomas@legis.state.ak.us

Though she was not on the conference committee, Rep. Anna Fairclough contributed much to the process as university subcommittee chair and deserves our thanks as well. Please send her a note at Representative_Anna_Fairclough@legis.state.ak.us. She took time to meet with university representatives before the session, which set a productive tone for budget discussions.

Click HERE for a complete look at the conference committee budget for UA.

Pete Kelly
UA State Relations Director
 

Juneau Update
April 09, 2009

Here is a brief on the capital budget.  The Senate C S was released yesterday and it only included general fund money (actual cash) for deferred maintenance ($3.2 million).  It included non general fund money (authority to receive money from an outside source) for some of the energy research projects as well as some of the climate change projects.  Unfortunately, that authority is not useful without accompanying general fund money.

What was not in the budget was the non general fund money that could actually be used without the state spending cash to get it. Specifically, that is the authority to bond for money to start building the energy research center.  Even if UA uses its own bonding capacity it has to seek permission from the legislature to do it and that is why something like this is in the budget.

The bottom line is that there is only $3.2 million that can actually be spent and it is for deferred maintenance.  Unfortunately, our deferred maintenance backlog is about $800 million, so even this amount does not even scratch the surface.  Fortunately, there will probably be corrections and additions before the bill leaves the Senate, and if not, then changes will be made probably be made in the House.

Juneau Update
March 27, 2009

The Senate Finance Committee passed the university’s budget this morning.  In response to public testimony the committee changed some of the recommendations that had originally come out of the subcommittee.  The changes were very beneficial for the university and they put UA in much better standing as we approach the conference committee.  An explanation on the political nuances of conference committee in a moment, but first, it is important to extend a thank you to the Senate Finance committee members.  Senators Joe Thomas and Johnny Ellis were particularly instrumental in recouping some of the universities fixed costs.  Each of them have been strong advocates for individual degree programs on their campuses, but both of them have pulled a heavy weight for the system as a whole in this most recent round.

Senator Hoffman, the chair of the operating budget, also deserves UA’s gratitude.  Without his help none of these improvements would have happened.  Like the other Senators on the committee he has been a strong advocate for programs in his district, but in his statewide role as chair, he has helped the whole system.

Senator_Joe_Thomas@legis.state.ak.us
Senator_Johnny_Ellis@legis.state.ak.us
Senator_Lyman_Hoffman@legis.state.ak.us
Senator_Bert_Stedman@legis.state.ak.us
Senator_Charlie_Huggins@legis.state.ak.us
Senator_Donald_Olson@legis.state.ak.us

The changes in Senate Finance puts  UA in a much better position as the budget  goes into conference committee, which will probably start meeting late next week.

As conference committee approaches, keep in mind the line items that are the same in both the house and senate versions will automatically go into the final bill.  However, those line items that are different become “conferencable”.  When something is conferencable it means that the members of the conference committee can agree to take either the house, or the senate number, or anything in between.  They cannot add to the line item.  In other words, if the House had put $150K in the budget for program X and the Senate also put $150K in the budget for the same program – it is not conferencable and that is the amount you get unless the governor vetoes it.  However, if the House had $150K and the Senate had $100K the committee could either choose the House number, or the Senate number, or any number in between.  So the worst you could do in this example would be the Senate number of $100K.  By the way this is true in most cases and this article won’t delve into the exceptions.

The health programs and the energy programs are both conferencable.  There is 921K for health in the House and nothing in the Senate version.  Likewise, the Senate has $950K for energy programs and nothing in the House.  The anchorage legislators want the health programs and the Fairbanks people want the energy programs.  They will probably have to negotiate with each other to get what they want.  There will be additional information to follow that will describe the budget in more detail.

Much is still to be decided in the legislature regarding the University.  The capital budget, supplemental and stimulus bills remain undecided.  There are also a number of bills of importance to the university that are working their way through the legislative process.  For information on issues in the legislature that are of importance to UA check the State Relations web-site: http://www.alaska.edu/state/  .

Pete Kelly
Director, State Relations
 

Operating Budget

The Senate Finance Committee will take public testimony on the FY10
operating budget, including the university’s budget request, on
Wednesday, March 25 at your local legislative information office. Here
is the schedule by community:

9:00 am – 10:00  am                           Juneau

10:00 am – 10:45 am                          Kenai, Valdez, Ketchikan,
Kodiak, Mat-Su, Seward, Glennallen, Tok

1:30 pm – 2:30 pm                              Fairbanks

2:30 pm – 3:45 pm                              Anchorage

4:00 pm – 5:00 pm                              Sitka, Petersburg,
Wrangell, Homer, Dillingham, Cordova

5:00 pm – 6:00 pm                              Bethel, Kotzebue,
Barrow, Nome, Delta Junction, offnets



Bills on the Move:

Reported out of the Senate Education Committee on 3/23/09 and now in
Senate Finance:  HB 109 EDUC. LOANS: SUPPLEMENTAL & FAMILY EDUCATION
(This bill would allow the Alaska Commission on Postsecondary
Education to adopt emergency regulations specifying that, for Alaska
Supplemental Education Loans (ASEL) borrowers must have “a credit
history, at the time of application for a loan, that demonstrates an
ability and willingness to pay an extension of credit or loan as it
becomes due”   It also caps the annual interest rate at 8.25 percent.
Those provisions would become effective for loans made for a school
year beginning on or after July 1, 2009.  The Alaska Student Loan
Corporation requested this legislation so that it can continue to use
ASEL loans as collateral in securing bonds.)


Reported out of the House Transportation Committee on 3/19/09 and now
in House Finance: HB 132 BICYCLE PROGRAM, BY SEATON  (This bill would
allow appropriations and grants to be used for establishing and
maintaining bicycle paths, and would establish a grant program within
the Department of Commerce, Community & Economic Development for
encouraging safe bicycle ridership.  The grant program would allow
municipalities and nonprofit organizations to apply for financial
assistance to establish programs for the purchase, maintenance, and
repair of bicycles, bicycle helmets, and bicycle trailers.)


Introduced on 3/23/09 and Referred to the House Finance Committee: HB
199 APPROPS: NON-TRANSPORTATION STIMULUS RLS BY REQUEST OF THE
GOVERNOR  (This bill authorizes the University to receive American
Recovery & Reinvestment Act (ARRA) funding from the National Science
Foundation for a new research vessel.  It also contains language
allowing the University to apply for other ARRA funds.)


Introduced on 3/23/09 and referred to the House Finance Committee: HCR
13 ACCEPT FED. ECONOMIC STIMULUS PAYMENTS, BY  RLS  (Would authorize
receipt of all funding available to the State under the American
Recovery & Reinvestment Act.)


Reported out of the House State Affairs Committee on 3/19/09 and now
in House Rules: HJR 22 URGING US TO RATIFY LAW OF THE SEA TREATY, BY
SEATON (This resolution urges the United States Senate to ratify the
United Nations Convention on the Law of the Sea.  The treaty permits
member nations to claim an exclusive economic zone out to 200 nautical
miles from shore, with an exclusive sovereign right to explore,
manage, and develop all living and nonliving resources, including deep
sea mining, within that exclusive economic zone.  These issues may be
of increasing importance to Alaska as the Arctic Ocean opens up due to
melting of the polar ice cap.)


Introduced on 3/20/09 and referred to the Senate Finance Committee: SB
161 APPROPS: NON-TRANSPORTATION STIMULUS RLS BY REQUEST OF THE
GOVERNOR  (This bill authorizes UA to receive American Recovery &
Reinvestment Act (ARRA) funding from the National Science Foundation
for a new research vessel.  It also contains language allowing the
university to apply for other ARRA funds.)


Introduced on 3/20/09 and referred to the Senate Rules Committee, this
resolution was placed on the Senate Calendar on 3/23/09 and is being
held on the Senate Secretary’s desk, which means the Senate could take
it up and vote on it at any time: SCR 4 ACCEPT FED. ECONOMIC STIMULUS
PAYMENTS, BY STEDMAN  (Would authorize receipt of all funding
available to the State under the American Recovery & Reinvestment
Act.)

Operating and Capital Budget News
The Senate Finance University Subcommittee had its closeout Wednesday, March 18.  The senate and house totals are not radically different, but there are some technical differences between the two, which won’t be delved into in this report.  The legislature continues to grapple with a $2,000,000,000 revenue shortfall, and the university, like other agencies, is struggling to find operating money for next year’s budget.  The subcommittee report will be adopted in the full Finance Committee next week.  Action will be taken on the senate committee substitute later next week, or possibly the week after that.

The capital budget was heard in the senate for the first time on the same day.  UA presented capital projects from the governor’s list and deferred maintenance was the highest priority.  The senate will take public testimony on the capital budget on Thursday beginning at 5:00 p.m.  The capital budget won’t be acted on for some time after that. 


Postsecondary Student Loans
Several pieces of legislation that would shore up the ability of the Alaska Commission on Postsecondary Education to provide student loans are moving through the legislature. 

The Senate Education Committee heard SB 140 on Wednesday, March 18.  SB 140, which is identical to HB 172, would allow the commissioner of the Department of Revenue to invest money in the education loan fund during times the Alaska Student Loan Corporation is unable to finance student loan demand through the issuance of bonds.  Changes in the capital market in the last year resulted in ASLC being unable to issue bonds.  Until passage of this legislation, ASLC will be unable to issue student loans for the 2009-2010 school year. 

On Tuesday, March 17, HB 172 (identical to SB 140) was heard in and moved from the House Finance Committee.  The bill now moves to the House Rules Committee, which schedules bills for floor votes. 

The house passed HB 109 on Friday, March 13.  HB 109 would allow the Alaska Commission on Postsecondary Education to adopt emergency regulations specifying that, for Alaska Supplemental Education Loans (ASEL) borrowers must have “a credit history, at the time of application for a loan, that demonstrates an ability and willingness to pay an extension of credit or loan as it becomes due”   It also caps the annual interest rate at 8.25 percent.  Those provisions would become effective for loans made for a school year beginning on or after July 1, 2009.  The Alaska Student Loan Corporation requested this legislation so that it can continue to use ASEL loans as collateral in securing bonds.  No changes were made to the original bill in the house.  HB 109 was transmitted to the senate and referred to the Senate Education and Finance Committees.


 

Senate Finance Schedules Hearings This Week on the Capital Budget


The Senate Finance Committee will hold hearings every day this week on SB 75 – FY 10 Capital Budget.  They will hear the university’s portion of the capital budget on Wednesday, March 18, 2009 beginning at 9:00 a.m. 

Public testimony will be taken on Thursday, March 19 from 5:00 – 7:00 p.m.  If you would like to testify, please go to your local Legislative Information Office.  You may submit written testimony to Senate Finance Committee Members through the committee secretary at  Louanne_Christian@legis.state.ak.us , with “Backup, SB 75, University” in the subject line. 
 

During House Bill 81 budget deliberations on Monday, March 9, the House Finance Committee allocated an additional $500,000 to help fund maintenance and operation of the Integrated Sciences Building.  That was the only UA funding increase made during the committee amendment process.  HB 81 will be up for a vote in the House of Representatives on Friday, March 13.

On Thursday, March 12, two pieces of legislation were introduced in the House that would assist the University of Alaska in funding maintenance and capital expenses.  HJR 23 proposes a constitutional amendment for a facility maintenance fund.  The facility maintenance fund would be a separate fund in the State treasury.  Income from the fund may be appropriated for maintenance and upgrades of buildings, roads, and other facilities of the State, its agencies, and the University of Alaska.  Appropriations may not be made for construction of new facilities.  Passage of HJR 23 would put this proposal before the voters in the next general election.  Approval of the voters is required in order to establish the type of fund proposed by HJR 23.

HB 184 increases the bond debt service cap for the university from $1,000,000 to $2,500,000 before legislative reporting is required.  The cap of $1,000,000 was set back in 1990.  Since that time, inflation has eroded the value of the cap, and it would be helpful to the university to have the cap increased.  Revenue bonds and the debt service resulting from the bonds are critical components in securing funding for capital projects.  Increasing the cap reduces the administrative burden for both the university and the legislature. 

For a pdf of this update, click here.

The University of Alaska received some discouraging news last week with the House Finance Subcommittee’s recommendations for the FY10 operating budget.  The university subcommittee chair, Rep. Anna Fairclough, has recommended cutting $3.8 million from the governor’s proposed budget numbers. The governor’s budget didn’t fully fund UA’s day-to-day expenses for things like utility increases and new facility operating and maintenance costs. But it did cover a number of UA priorities and fixed costs.

As it stands now, with the House Finance Subcommittee proposal, the university is $7 million below our day-to-day needs, including utilities.  While the governor had proposed $3.6 million toward priority programs such as health training, university-school partnerships and engineering, energy and climate programs, the House Finance Subcommittee proposes spending $922,000 on health programs only.

A critical item left out is adequate funding to open the new ConocoPhillips Integrated Sciences building on the UAA campus. The Board of Regents requested $2.2 million to cover the increased operating expenses anticipated to open a major new building at our largest campus. The governor proposed about $1 million to cover those costs. The House Finance Subcommittee proposal does not take into account the ISB; the university cannot absorb the costs of operating and maintaining a new building without additional funds.

Public testimony on the budget will be taken beginning at 1:30 p.m. Tuesday and Wednesday per the following community schedule. Please go to the Legislative Information Office nearest you, and tell legislators to support, at a minimum, the governor’s budget proposal for the university:
Tuesday, March 3---Juneau, 1:30-3 p.m.;  Bethel, Kotzebue, Barrow, Nome, Delta Junction and Offnets,  3-3:45 p.m; and Fairbanks, 4-5:30 p.m.

Wednesday, March 4--- Anchorage, 1:30-3 p.m.; Sitka, Wrangell, Homer, Petersburg, Dillingham and  Cordova, 3:30-4:15; Kenai, Valdez, Ketchikan, Kodiak, Seward, Mat-Su, Glennallen and Tok, 4:15-5 p.m.

Thanks to the Coalition of Student Leaders, the Staff Alliance, our community campus directors and members of the Board of Regents for all your hard work on behalf of the UA system in Juneau.

The past week, much has been written and discussed about an exchange between Rep. Anna Fairclough and UA President Mark Hamilton. The representative asked the president if there was “a disconnect” between university students and faculty, who often in the representative’s experience, often oppose resource development and yet request money from the state to support the university. As most people know, the lion’s share of the state’s revenue comes from natural resources, particularly oil and gas.

In answering Rep. Fairclough, President Hamilton made an important comment that, unfortunately, has not received a great deal of press attention. He upheld the right of students and faculty to speak their minds freely, in Juneau and anywhere else. His direct quote was: “I’m certainly not going to tell the students to tell you anything but their own beliefs. It’s good to hear those as well from time to time.”

President Hamilton also once said, “I didn’t spend 30 years defending freedom of speech with my life only to turn on it as a university president.”  Unlike most of us, Mark Hamilton hasn’t just availed himself of this freedom – he’s actually protected it.

For anyone concerned about this issue, I think his comments are quite reassuring. There is no litmus test to work or study at the university. Rep. Fairclough was simply inquiring if students understand facts about the state’s income source. She has every right to do that. She even clarified her stance in follow up press reports, which university student newspapers have covered:
http://www.uafsunstar.com/20090210/representatives-question-ua-students-priorities-funding-requests-state

http://media.www.thenorthernlight.org/media/storage/paper960/news/2009/02/10/News/Ua.Accused.Of.AntiDevelopment-3622657.shtml

 I’m very pleased with the overall performance of the Coalition of Students leaders and other student advocates in Juneau. In requesting support for university funding, I’m sure that from time to time, some have shared personal preferences that some legislators disagree with, about resource industries or any number of other topics. It’s always best to stick to the issues. By and large our students do.

For a pdf of this update, click here.

The legislative session is underway.  As usual, the budget will be UA's biggest challenge this year. We've already had some action on that front.  On Jan. 26, representatives from UA met with the chair of House Finance and his staff along with members of the Legislative Finance Division and staff members from the co-chairs of Senate Finance. This is always a first step in the process and allows everyone to introduce themselves and learn what the ground rules and potential schedules will be.

It's too early to draw any conclusions from this meeting, but the legislature is struggling hard with revenue problems as a result of low oil prices. As of this writing the price of a barrel of ANS crude is about $40 per barrel. The governor's budget assumes about $75 per barrel to balance.

In total the legislature has squirreled away nearly $7 billion in accounts from the days of higher prices.  It is the hope that money will last about 10 years and help bridge the gap to times of higher revenue.

On Jan. 23, UA and the Department of Labor and Workforce Development (DOLWD) made a joint presentation on Alaska's workforce before the House Committee on Labor and Commerce.

On Jan. 29, UA and the Department of Health and Social (HSS) services made a presentation on Alaska's healthcare workforce to the House HSS Committee. On Jan. 30, UA and DOLWD made an additional joint presentation to the House Education committee regarding the Alaska Vocational-Technical Center (AVTEC).

Tuesday, Feb. 3, was the first House Subcommittee meeting on the UA budget. Later that day, UA President Mark Hamilton made a joint presentation with the commissioners of Education, as well as DOLWD, to the full Finance Committee.

There are three more formal presentations scheduled to various committees of the legislature.  They are posted on the calendar on http://www.alaska.edu/state/.  Additional events will be published as they are scheduled.
 
In other good news, the governor's proposal on Feb. 3 to reduce current year spending (FY09 supplemental) reflects actual changes in the university's utility bills, and doesn't negatively affect the university.

For a pdf of this update, click here

This publication is produced and distributed by the State Relations office of the University of Alaska System with assistance from the UA Office of Public Affairs.  Please contact Pete Kelly, Director of State Relations, for more information.
P: 907.463.3046 F: 907.450.8002 pete.kelly@alaska.edu