|President Johnsen and Regents Brief the Alaska Congressional Delegation
Last week, Board of Regents Chair Sheri Buretta, Vice Chair Karen Perdue, Regent Gloria
O'Neill and President Jim Johnsen briefed the Alaska Congressional Delegation on the
impacts of the Coronavirus to the university and its students. Chair Buretta discussed
the actions UA has taken to ensure the safety of students, faculty and staff as well
as the continuation of course delivery across all campuses and programs during this
uncertain time. Regents Perdue and O'Neill highlighted student financial hardships,
budget impacts, as well as the efforts that our faculty and staff have made to assist
response efforts. President Johnsen provided an analysis of the financial impact to
students and campuses of the recently passed CARES Act. Additionally, President Johnsen
provided the delegation recommendations for the next COVID-related aid packages to
address the university’s long-term debt as well as internet accessibility and affordability
at our rural campuses.
President Trump Signs Small COVID-Related Aid Package
Earlier today, President Trump signed into law a recovery package providing nearly
$500 billion in additional relief funds. The bill provides $321 billion infusion to
a small business rescue fund, the Paycheck Protection Program. It also funds $60 billion
in economic disaster loans for small businesses, $75 billion in emergency relief for
hospitals and $25 billion for Coronavirus testing. This bill is the fourth legislative
package passed to address COVID-19 impacts, and brings the total of federal aid to
more than $3 trillion.
Governor and Legislators Debate Federal Relief Funding
On Tuesday, Governor Dunleavy announced his plan for distributing federal funds received under the CARES Act. The State of Alaska will receive more than $1.25 billion in federal aid. Through
provisions in the law, the Higher Education Emergency Relief Fund, the University
of Alaska will receive at least $7.8 million. How most of the rest of the funding
will be allocated is a major issue for lawmakers heading into the summer.
The Governor’s proposal would direct more than $562 million to municipal governments, distributed through
a community assistance formula from the Department of Commerce, Community & Economic
Development (DCCED). The department would also receive $400 million to both enhance
loan funds supporting small businesses, and for direct relief to commercial and charter
fisheries. The Department of Health & Social Services (DH&SS) would retain $337 million
of funding in “reserves” to provide for continued response and contingencies related
to the pandemic.
To allocate these funds, the Governor is attempting to use a unique mechanism in state
law called Revised Program Legislative (RPL) process. This process provides the Governor a way to accept additional federal funds for
items previous approved in the current state budget. Under state law, the Governor
must send a letter to the Legislative Budget & Audit (LB&A) Committee requesting approval to accept these funds. However, even if the committee
does not agree with the Governor’s request, they cannot deny but only delay distribution
by 45 days. Since only the Legislature can make appropriations, RPLs are limited to
pre-existing programs and traditional only utilized when the Legislature is not in
RPLs are a nuanced budget mechanism, and the use in this circumstance has raised eyebrows
amongst lawmakers. Doing so has the effect of partially bypassing the Legislature
in decisions on how to allocate incoming federal relief funding. The Governor has
previously suggested federal relief funds could be used to backfill the more than
$210 million he vetoed from the FY21 state budget. Senate President Cathy Giessel
and Senate Finance Co-Chair Natasha von Imhof subsequently sent a letter to U.S. Treasury Secretary Steven Mnuchin asking for clarification how relief funds
can be utilized.
Senate Finance Committee Co-Chair Bert Stedman announced earlier this week that the Legislature will reconvene, and exercise its appropriation
authority on federal relief funds. This may avert the RPL process, which initiates
a 45-day timeline on April 29. This approach is already being discussed by legislators.
The House Finance Committee held two hearings this week reviewing the mechanics and
legality of the Governor’s proposed RPLs action. Legislative Legal Director Megan
Wallace said that the RPLs are only appropriate for funds going to DH&SS, because
the Legislature granted that department specific authority to accept federal dollars
for COVID-19 response. She further suggested any other use of these funds would require
appropriation by the Legislature. These links will allow you to view the House Finance
Committee’s hearing for Wednesday and Friday.
Oil Price Crashes, Fiscal Outlook Worsens
The State of Alaska’s fiscal outlook has taken an unprecedented downturn in recent
weeks. The pandemic and its economic impact have caused drastic changes in the price,
and even potential future production, of oil. On Monday, the price of Alaska North
Slope Crude plunged, and for the first time in history, closed below zero at -$2.68. While prices rebounded the following day, and closed at $11.55 yesterday,
this is a harbinger of very difficult times ahead the state.
Even before this price drop, Alaska faced a combined budget deficit of $1.3 billion
through the remainder of this fiscal year ($527 million) and FY21 ($815 million).
Back in December, the price of oil was expected to average $63.50 per barrel through
the end of the current fiscal year. Today it is trading at less than one-third of
the projected price of $37 per barrel for FY21. This precipitous drop in price creates
a staggering decrease in revenue. At current production levels, a price of $79 per
barrel is needed to balance the state budget.
On Wednesday, Legislative Finance Director Pat Pitney presented an updated fiscal
outlook to the House Finance Committee. The presentation showed that even under an
optimistic price and production forecast, the State of Alaska will likely exhaust
the Constitutional Budget Reserve by June 2021. The continued pandemic crisis has
also had serious implications on the financial markets, which provide Alaska revenue
through Permanent Fund earnings as well as industries such as tourism and resource
development. The takeaway is that lawmakers will have very limited options to balance
the budget during the 32nd Alaska Legislature.
President Johnsen and UA Researchers Brief Lawmakers
On Wednesday, UA President Jim Johnsen addressed a joint hearing of the House and
Senate Education Committees. The President briefed lawmakers on the impacts the Coronavirus
pandemic has had on our university, and actions UA has taken to protect our students
and contribute to response efforts statewide. The meeting also featured testimony
from K-12 School Districts and the Alaska Department of Education & Early Development.
You can watch the full hearing here.
This afternoon, UA researchers briefed the House Labor & Commerce Committee on the
effect Coronavirus has had on Alaska’s economy. The hearing featured presentations
from the Institute of Social & Economic Research (ISER) and UAA’s Business Enterprise Institute. You can watch the full hearing here.
Governor Announces Phased Reopening Plan
On Tuesday, Governor Dunleavy announced his plan to reactivate segments of the Alaskan economy. Beginning today several non-essential
businesses will be able to open under prescribed occupancy, and health and safety
restrictions. Since signing the Public Health Disaster Emergency Declaration on March 11, the Governor has issued 17 Health Mandates forming the state’s response to the pandemic. His announcement signals the first
of a five-stage reopening process, which during the next few weeks will incrementally
revisit those mandates and their restrictions on commerce, travel and community events.
TVEP Reauthorization Bill Signed Into Law
Governor Dunleavy has signed legislation extending the Technical Vocational Education
Program (TVEP). The bill (HB 235) by Representative Adam Wool reauthorizes the current program and funding structure
for one year. TVEP uses a portion of employee unemployment insurance contributions
to fund high-demand career and technical education programs. It brings in more than
$6 million to UA each year and is a vital to for our workforce development programs.
Thank you to Rep. Wool for sponsoring this legislation, and to UA Associate Vice President
for Workforce Development Teri Cothren for helping shepherd the bill through the Legislature.
We will be working with lawmakers again next year to reauthorize this important program.
Remembering Mary Jane Fate
Former UA Regent and native leader Mary Jane Fate passed away earlier this month. She is remembered for her numerous contributions
and tireless service to the people of Alaska. Fate was one of the first Alaska Native
women to attend the University of Alaska, and dedicated her life to advocating for
the health and equity of Alaska Natives. Her impact was felt across Alaska. She advocated
for passage of the Alaska Native Claims Settlement Act, and served as the first female
co-chair of the Alaska Federation of Natives. In addition to being a UA Regent from
1993-2001, Mary Jane Fate served on the U.S. Arctic Research Commission, Alaska Judicial
Council, and was the first woman to serve on the board of directors of Alaska Airlines. Our
thoughts and prayers are with her family.