Budget update: Dec. 18
December 18, 2019
— by Dan White, chancellor
As we head into the holiday closure, I want to share with you some thoughts for the
coming fiscal year. On December 11, 2019, Governor Dunleavy released his fiscal year
2021 capital and operating budget proposal. Given the 3-year budget compact signed
last year between the Governor and the UA Board of Regents, there were not any surprises
in this announcement.
The Governor’s budget reflects the compact reductions to UA in the coming fiscal year
of $25M. In addition to that, the system office has asked that the three Universities
reallocate to a set of strategic initiatives outlined in the President’s budget as
well as the second third of market salary adjustments and a 1% cost of living adjustment.
For UAF, this means that we will need to cover a gap of approximately $18M for FY21.
This gap is in addition to any carryover gap from FY20.
To explain this a little more, the reductions in FY20 were significant and were not
known until midway through the fiscal year. Furthermore, our structure was not known
and universities were limited in budget actions they could take until the October
2019 board meeting when the Board of Regents (BOR) suspended the single accreditation
discussion. That lifted some limitations on university level budget planning, but
not all. In order to manage the reductions in a way that created the least long-term
risk to the university, UAF’s approach was to reduce units by an already planned 10%
(guidance given to vice chancellors in January 2019), some vertical decisions (e.g.,
sales of assets), and some use of strategic budget reserves. The use of strategic
budget reserve and sales of assets to realize the reductions were, of course, one-time
tools that provide time for more thoughtful and strategic reductions.
Now to FY21 funding gaps. My budget direction to vice chancellors earlier this fall
was to plan for a 15% reduction to their budgets. However, the 15% reduction will
not meet all of the budget gap. Along with the anticipated property sales and lease
revenues, we expect to have the ability to bridge roughly one-third of the cut in
FY21 on a one-time basis. The bridging strategy will allow us to complete our academic
and administrative review, grow our shared services model and further monetize assets.
I firmly believe that our path to solid financial footing is to reduce our deferred
maintenance and ongoing operations costs of facilities at the margins of our enterprise.
As I have said before, let’s reduce our footprint and keep people. We are a people
organization.
Expedited academic review is currently underway. Reports provided by programs on November
4 are under review through March 6. In parallel with UAF's expedited academic review
process, we are launching an expedited administrative review process. Units are currently
working on their reports, which will be submitted to the Governance Coordinating Committee
(GCC) in the New Year. The GCC review will be completed by March 26. An open forum
for feedback from the university community and governance groups will occur between
March 26-April 6. Decisions will be made by me by April 10. I encourage you to visit
the expedited administrative review webpage that includes the most up-to-date information on this process.
A bit more on shared service models on campus. In previous budget columns I have discussed
the need to build on the shared service models that have been organically growing
at UAF. The models have been sprouting up between units as a way of providing depth
and breadth of service in a reduced budget environment. In order to expand our use
of shared services on the Troth Yeddha’ campus, and considering the feedback received
to date, this week I will send out a request for proposals (to vice chancellors for
broader distribution) to provide full service business centers comprising travel,
purchasing, financial transaction management, and PPA duties for the Troth Yeddha’
campus. Judging by public input, proximity is important. So at least for the purposes
of planning, an initial strategy may be to have one business center on Core Campus
and one on West Ridge.
Budget planning requires that we have strategic goals that guide our decision-making.
In April of this year, we held a strategic planning forum as a first step in the public
input process. Following the forum, however, the process was paused while UA’s structure
was under review. Following the Board of Regents approval of the FY20 budget distribution
and their decision to maintain three separately accredited universities, we are now
able to re-engage with this critical process. It is vital that our budget process
be informed by strategic goals. The reports from each planning committee are now available
on the strategic planning website, along with a form to submit your feedback. I will be holding a strategic planning
forum on January 23, 2020, as another opportunity to share thoughts and discussion.
We will use this feedback to finalize the strategic plan, with a target completion
date of March 1, 2020.
The upcoming January 16 and 17 Board of Regents’ meeting in Anchorage will consist
of a roles and responsibilities workshop, followed by budget workshop on the afternoon
of January 16. January 17 is a regular BOR business meeting. During the meeting, the
Board will be taking up the 5% tuition increase proposal that was postponed in November.
Once finalized, the agenda will be available on the Board of Regents’ webpage.
Starting in the New Year, we will lay out our remaining FY21 budget planning strategy
and start our planning for FY22. As in previous years, the planning and budget committee
led by the provost and vice chancellor for administrative services included a broad
range of stakeholders. Look for a memo from Provost Prakash on this process after
the holidays.
Thank you for your hard work over this past year and your dedication to UAF. I hope
you have a restful holiday break and look forward to working with you in the coming
New Year.
Thank you for choosing UAF.