FY17 Budget development progressing smoothly
The FY17 budget development process is moving ahead smoothly despite a difficult funding environment. The Board of Regents made a first review of a base FY17 budget incorporating the top priorities and needs of the three universities and Statewide during their September meeting. The base budget was developed following a highly productive budget meeting on Aug. 21 in Fairbanks. (See FY17 Budget meeting materials.)
During their September board meeting, the regents were presented with a proposed $378 million state funded operating budget and a $134.8 million state funded capital budget. Following final approval by the Board of Regents in November, the operating and capital budgets containing the critical funding needs of the university will be forwarded to the Governor for consideration.
The modest $27 million state funding increase in the operating budget includes only salary increases, benefit costs, fixed cost increases including new operating expenses, key priorities including Title IX compliance, and investment in the critical economic research being conducted at ISER, energy research at ACEP, distance learning restructuring, new maritime training program and teacher education programs throughout the system.
The capital budget request includes state funding of $50 million for deferred facility maintenance, $50 million for current facility maintenance and $34.8 million needed to complete the engineering building in Fairbanks.
In FY16, the Alaska legislature reduced the UA overall state funded operating budget by $19.8 million, a 5.3 percent reduction. (FY16 Budget reduction impact overview.) It is expected that the state will once again cut agency budgets including the university. The FY17 budget includes an increase that represents the investments and increased costs that the university needs to fund in the next year.
That said, there is little reason to believe the state will be able to fully fund the increment, and more likely will distribute another reduction. Knowing this, President Jim Johnsen, the three chancellors and their budget offices will be working on a contingency budget focusing on ways to further reduce costs and reallocate funding in order to invest in these key priorities, maintain accessibility and affordability for Alaska students, and maintain the quality of programs and services. Finding new sources of revenue, entering new partnerships, increasing private giving and other solutions are all part of the contingency planning process.
The State Office of Management and Budget issued 10-year and FY17 budget development guidance in July 2015 asking that state agencies describe the impacts of flat funding and reduced funding scenarios to use as targets in developing their budget. The draft 10-year fiscal plan for the university was submitted to the OMB August 2015.
In December the Governor will submit the State of Alaska FY17 Budget proposal to the Alaska legislature. It is expected that the governor will make reductions at that stage. The legislature will likely make further reductions during session beginning in January. The amount of the actual University of Alaska FY17 appropriation will not be known until approved by the legislature and signed by the Governor likely in May 2016.