Budget update: Jan. 8, 2020

January 8, 2020

— by Dan White, chancellor

In November, the Board of Regents (BOR) submitted the University of Alaska System’s budget for FY21 to Governor Dunleavy with a decrease of $25M from FY20. The request was consistent with the compact signed last year between the Governor and the Board. The Governor accepted this budget. In addition to the decrease from the state, we will be asked to reallocate at the University level to fund the Board’s strategic priorities and compensation increases. In order to better understand our budgeting and the strategies that are being used for FY20 and those that will be used for FY21, the Board has scheduled additional budget time into their upcoming January meeting.

On January 16 and 17, the BOR will meet in Anchorage. The meeting on January 16 will be broken into two work sessions, the first to discuss roles and responsibilities of the Board, president, chancellors and governance. That session will be followed by a budget workshop. At this point, we have been asked to plan to go into more detail with the Board on the FY20 and FY21 budgets, in addition to providing detail on the budget development process more generally. January 17 will serve as a regular BOR business meeting. The meeting on the 17th will include, but not be limited to a discussion on enrollment, specific actions taken by the universities to address the FY20 budget, and follow-up on the FY21 tuition proposal submitted by President Johnsen to the Board in November 2019. The final meeting schedule will be posted to Board Docs.

In preparation for my January 17 presentation on FY20 budget actions, we prepared a narrative outlining budget actions reported by the Vice Chancellors and unit leaders. In my presentation to the Board, I will summarize the material into a few Powerpoint slides. The narrative is copied below.

In next week’s budget column I will discuss our high-level strategy for bridging what are many one-time budget reductions in effect this year into permanent base reductions in future years. The bridging strategy we use this year will be coupled with a similar FY21 strategy through next year to FY22. More next week. For now, please see the FY20 actions taken or actions in progress in the narrative below.

Thank you for your interest in our budget. Thank you for keeping at the important work you do, recruiting new students, writing research proposals, providing high quality education and research, and connecting with our great community.

There are many positive things to celebrate at ��! Keep up the great work Nooks, and remember, we are all in the enrollment business!

Thanks for choosing ��.

�� Budget Actions to Address FY20 Reductions

��’s reduction target for FY20 totaled $17.0M, inclusive of direct loss of funds from the state as well as funds required for reallocation to fixed costs, Title IX and the Board’s strategic initiatives.

Actions completed:

Reduced (unit) general fund budgets ��-wide (All) $9.5M

Transitioned KUAC to primarily private/corporate funding (Public Service) $0.5M

Facilities maintenance reduction (Administration) >$3.0M

SW HR redesign (Administration) $TBD

Procurement/transition to UA shared service (Administration) $TBD

Reductions to Organized Research units (Research) $0.7M

Consolidated large animals at LARS, relocated reindeer (Research) >$0.1M

Actions in progress:

Academic program & department expedited reviews

Administrative reviews

Reducing campus footprint, details below

Exploring monetization of appropriate campus assets

Use of strategic reserves or one-time capital for bridge

Considering shared services where effective and/or efficient

Focus on growing enrollment and improving retention

Facilities

�� is in the process of reducing the facilities footprint, and exploring options to monetize capital assets using a variety of strategies:

Downsizing Facilities Footprint, Reducing Off Campus Leases & Modernization of Space:
�� is actively examining facilities and has made significant strides in reducing off-campus leases, resulting in savings. This has prompted improved space utilization on campus in various campus locations, and is an ongoing effort. Where facilities can be leased or sold, this allows for monetization of off-campus assets and contributes to modernization of on-campus space to better meet student and employee needs. To date, the Administrative Services Center in Fairbanks has been public noticed for sale, the Fort Yukon Center has been noticed for sale/lease, and other facilities are being explored for monetization.

Demolishing Facilities Beyond Useful Life: �� has demolished several facilities beyond their useful life, resulting in long term maintenance and operations savings and reducing the DM backlog. During 2019, �� demolished six buildings for a total reduction of over 12,000 gross square feet.

Exploring Public Private Partnerships: �� continues to explore opportunities to leverage land and assets in new or shared ways to generate revenue for ��, assist with elimination of DM, and facilitate programmatic growth.

The revenue and maintenance cost savings from the following sale and/or lease actions are being explored or will occur over several fiscal years:

Administrative Services Building >$1M

Westwood Way (Foundation) <$0.5M

Seward facilities and vacant land >$8M

Farmers Loop/College Road (multiple lots) $77K/year

Yukon Flats Center (Fort Yukon) <$1M

Sustainable Village <$1M

Undeveloped or high-value property $TBD

Underutilized facilities in several remote areas $TBD

Specific reduction actions taken to achieve FY20 targets include:

Academic Units and eCampus:

Savings in the academic units are being realized by tightly managing curricula offerings. This includes minimizing very low-enrollment classes, increasing course-caps, and hiring fewer adjunct faculty.

Support staff have been reduced and certain faculty vacancies that occur due to retirement or attrition have not been filled.

One-time savings have been realized through sabbatical and other leaves.

�� is focused on increasing revenue by offering high-quality online courses in areas of emerging demand.

Administrative Services:

Administrative Services participated in several consolidations across the UA System in FY20. �� transferred Human Resources staffing and funding to the System Office as part of the HR Redesign. �� also transitioned Procurement & Contract Services staffing to the System Office. Both transitions are being evaluated as the new structure takes shape. Creating a supportive governance structure including operational level agreements (OLAs) will be useful in framing the service needs and expectations of the universities in collaboration with the System Office to achieve efficiencies.

The Administrative Services Center has been vacated and noticed for sale. Upon sale, this will reduce annual maintenance and operations costs. The administrative offices have been relocated to Lathrop Hall, a residence hall being used as office space, until further plans can be developed to relocate into core campus space.

The VCAS office reduced one position and partnered with the Facilities Services business office for operational support functions. Further shared services options are being explored.

The Fire Department reduced maintenance costs and eliminated a vehicle lease, in addition to managing position vacancy savings.

�� consulted with student government leaders and Fairbanks North Star Borough (FNSB) transportation officials and eliminated a $100K expense for public bus transportation without a change in routes/access to campus.

A Facilities Services reorganization resulted in several layoffs and a reduction in management positions via consolidation under the new organizational structure. Several functions will now primarily be outsourced, where services are needed, e.g. carpentry.

Facilities Services downsized the vehicle pool via decrease of short term rentals.

Facilities maintenance has been reduced by over $3M.

One-time funding is being used as bridge as other organizational decisions are made, or where compliance and safety functions should not be further reduced.

Rural, Community and Native Education:

While other academic and administrative expedited program review efforts are underway, CRCD has generated savings through position elimination including one senior administrative position, non-renewal of term contracts, holding and evaluating all vacancies, and ensuring adjunct contracts and labor that is appropriate is changed to restricted funds on new and existing awards.

Reduced travel, contractual and commodities expenditures.

Research Institutes & Research Administration:

Reduced size of reindeer herd and consolidated remaining animals to Large Animal Research Station.

Relocated Toolik Lake Research Station operations offices from ATCO trailers into Irving Building. Trailers are listed for disposal/sale.

Where allowable, transitioned staff salary to sponsored/restricted funds.

The International Arctic Research Center (IARC) eliminated a position and migrated communications as well as contractual support efforts to appropriate external funding.

The GI has reduced funding to the Alaska Center for UAS Integration (ACUASI), Alaska Earthquake Center (AEC), and Alaska Climate Research Center (ACRC). The GI will reduce online subscriptions at the Mather Library, and suspend computing refresh through Research Computing Systems (RCS).

The Institute of Arctic Biology (IAB) held several staff positions unfilled and held several faculty recruitments (wildlife and microbiologist).

There is a focus on hiring in key strategic research areas (via strategic investment pool) to secure more external funding, including but not limited to: sea ice, permafrost, and atmospheric science, the Center for Alaska Native Health Research (CANHR), and One Health related fields. The hire of several tripartite faculty in the College of Engineering & Mines (CEM) and College of Natural Science & Mathematics (CNSM) are proving to be strong both for the colleges and for research.

Student Affairs:

Reduced Residence Life facility footprint, staffing and operating expenses including closure, lease or repurpose of Stevens, Lathrop, Sustainable Village and Nerland Halls.

Reduced travel, contractual and commodities expenditures.

Vacancies due to retirement or attrition are largely unfilled.

One-time funding is being used as bridge as other organizational decisions are made, or where compliance and safety functions should not be further reduced.

Office of the Chancellor:

Eliminated staff positions in University Relations. Supported �� marketing efforts through strategic reallocation.

Transitioned KUAC personnel from state general funds to private support. The university will continue to support physical space, infrastructure, and other physical assets of public broadcasting through general funds.

Eliminated one position of staff support (student hire) in Chancellor’s office.

Reallocated resources via UA strategic reallocation to the Office of Equity & Compliance for staffing key TIX investigator positions and training support.

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