UA FY11 Budget
The Senate Finance Committee wrapped up its work on the state operating budget. A public hearing was held March 24 in a statewide teleconference. The next step is a full Senate vote on the floor. A conference committee with the House will follow.
Here are some brief highlights and how UA views the budget situation:
- Under the Senate version of the budget, the university would receive a 4.3 percent increase in state general funds over the current fiscal year, for a total $14 million increment. The Senate proposes seven separate appropriations to the university.
- At this level of state funding, $257,400 of compensation and increases in day-to-day expenses (fixed costs) would not be covered. The Senate budget revised the amount appropriated under the so-called “fuel trigger” by increasing the trigger start point and moving some one-time utility funds to base funding ($1.6 million).
- The Senate version would support $950,000 for priority programs for the Alaska Center for Energy and Power and energy outreach through the Cooperative Extension Service (funded last year as one-time funds, ie, not base funding). It also includes program funding for the Alaska Natives in Science and Engineering Program at UAA ($1.2 million); the Alaska Summer Research Academy engineering component at UAF ($75,000) ; technology-based math and summer bridge programs ($150,000); and the Marine Advisory Program, part of UAF SeaGrant ($300,000).
- The House version of the budget would provide an $11.8 million increment, or a 3.6 percent increase, in state funds compared to the current fiscal year. The House proposes a single appropriation (as did the governor.)
- At this level of state funding, $832,400 of compensation and other fixed costs would not be covered. The House budget revised the amount appropriated under the “fuel trigger” by increasing the trigger start point and moving some one-time utility funds to base funding ($1.6 million).
- The House version provided $950,000 in program money for the Alaska Center for Energy Power and energy outreach via the Cooperative Extension Service. Money for ANSEP, at $960,000 was included in the state Department of Education budget.
The next major step in the budget is a conference committee between the House and Senate, where legislators must work out differences. The university prefers the Senate level of funding and a single appropriation as proposed by the House and Gov. Parnell.
UA is in good shape compared to many of our peers in the Lower 48. However, under either budget scenario, the university will have to work on both sides of the balance sheet—the revenue side as well as the expense side----to work within this level of state funding. The university understands the need for sustainable budgeting. Currently, 42 percent of the university budget comes from state coffers; the rest is generated independently. State investment, however, helps leverage other dollars.
- UA will continue to look for cost reductions and efficiencies as we have in the past related to managing personnel (reducing through attrition, delaying new hires, etc), health-care and retirement benefits, travel, contractual services and other matters.
- UA will look for ways to enhance non-state revenue sources, as we have in the past. UA has dramatically increased revenue via tuition, research grants and private donations over the last 10 years. However, those sources all have restrictions. UA will continue to look for ways to enhance income while containing costs.
Ratio-based budget in the Future
Both the House and Senate version of the university operating budgets would put into place, either next year (House) or as a long-term goal (Senate), a ratio of state funding to university generated revenue. This would be achieved through intent language, and the goal is to reduce reliance on state funding. While such a ratio could provide some predictability of the state revenue stream, it also could present artificial constraints that may not benefit students and academic programs. The university is still reviewing this idea and discussing it with legislators.
The governor and House version of the budgets provided a single appropriation to the university, allowing maximum flexibility for the UA administration and regents for putting dollars where they are most needed. The Senate version of the budget separates the university into seven separate appropriations, which requires additional administrative paperwork and time to move money from one MAU to another in response to changing fiscal landscapes or program priorities. The Board of Regents prefers a single appropriation.
The Senate version also allocates 3 percent of funding into a “system-wide appropriation” as part of the overall budget (excluding Small Business Administration), to allow some flexibility to the Regents in dealing with the seven separate appropriations. This is a net zero change in the overall budget.
The attached table shows the original Board of Regents’ request, the proposal by Gov. Sean Parnell, and the House Finance and Senate Finance committee versions of the UA budget. Download PDF.