With budget cuts a reality, added fees likely in UA system
Officials at the University of Alaska are trying to cope with nearly $17 million in budget cuts.
The university system’s budget struggle is a casualty of the state’s larger budget problems.
On the surface, the $924.8 million system-wide total budget for the 2015 fiscal year is $12.5 million more than last fiscal year. However, with a budget that is generated from four major sources of revenue, the story is more complicated than that.
The Alaska Legislature appropriated $375.8 million to the system for the current year in the form of general funds, vocational program allocations and state Mental Health Trust funds — overall a 0.2 percent cut from the $376.6 million fiscal 2014 appropriation.
The remaining $549 million in the budget comes from the system’s receipt authority, derived mainly from federal receipts, tuition and student fees.
While the overall state portion of the system budget is virtually flat, UA Associate Vice President for Budget and Planning Michelle Rizk said a chunk of that money is tied to new expenses.
Cuts of $15.9 million to the system’s unallocated general fund appropriation and about $1 million to the travel budget are being pro-rated to the Anchorage, Fairbanks and Southeast campuses, Rizk said.
“President (Pat Gamble) left it up to each chancellor to work within their university about what they would do to meet that budget reduction,” she said.
The hit to unallocated funds at the University of Alaska Fairbanks was the largest of the three at more than $7.5 million. At the University of Alaska Anchorage the cut was $5.8 million, and the University of Alaska Southeast absorbed a $1.2 million cut.
State operating budget funds declined from fiscal year 2014 from between 1.6 percent at UAA to 2.7 percent at UAF.
Those processes are ongoing at the three schools and each has or is conducting a program review to determine where to prioritize funding during the state’s lean budget years that are forecasted for the foreseeable future.
Last November, the board of regents approved a budget request for $393.9 million, which if granted would have been a 4.6 percent increase over fiscal year 2014. The request included $13.2 million for fixed cost increases, Rizk said, which the Legislature put $8.3 million toward.
With new labor contracts, compensation increases of $5.1 million needed to be funded, and were. The board estimated new facilities operations at $3.2 million — including for the UAA’s new $109 million Alaska Airlines Center — and got $2.1 million.
Increased utility costs projected at $3.4 million were left unfunded by the Legislature, but a “fuel trigger mechanism” in House Bill 266, the state’s operating budget legislation, authorizes the governor to move up to $4.9 million from the general fund to pay for the universities’ higher heat and electric bills.
The fuel trigger is how the state pays for utility increases at many of its facilities, but is not included in the fixed cost requirements after the fact.
The Legislature dedicated $7 million to pay for debt service for the first work on UAF’s $245 million, 17-megawatt combined heat and power plant — just now under construction. The $7 million is another chunk of cash that adds to the $375.8 million overall appropriation, but cannot be used for anything else. That means the $7 million was sacrificed in other places, Rizk said.
UAF was given $24.5 million in the capital budget to replace its 50-year old heat and power plant and the Legislature committed the state to bonding for another $157.5 million. New, more fuel-efficient coal-fired boilers will allow UAF to finance the remaining $50 million of the project through fuel cost savings, according to university officials.
A plan to meet a broad legislative directive to the board of regents to add a fee or increase tuition to generate $2 million annually for servicing the plant’s bond debt was recently approved by UA President Gamble.
An Aug. 7 memo from Gamble to the Coalition of Student Leaders, a system-wide student government group, details a facilities fee that will be phased in over three semesters to ultimately generate more than $3.6 million per year for the UA system.
“After careful consideration, and following legislative intent put forward in the (fiscal year 2015) budget, I have endorsed a proposal from the three chancellors to implement a $2 per credit UA Facilities Fee starting in spring 2015. In fall 2015 this fee will increase to $4 per credit, and in spring 2016 the fee will increase to $6 per credit,” Gamble wrote.
An average full-time student taking 15 credits would pay a $90 fee per semester at $6 per credit. Revenue generated from the fee will stay at the university where it was collected, according to Gamble.
“For UAF, this revenue will be used to assist with bond payments for the new heat and power plant, per the intent language specified by the 2014 Alaska Legislature. For UAS and UAA, the fee revenue will assist in reinvestments for classrooms, laboratories, residence halls and other buildings and academic equipment specific to those main campuses and their associated community campuses,” he wrote.
The fee, and a 4 percent tuition increase proposal, will likely be taken up at the November board of regents meeting in Fairbanks.
Tuition makes up about 15 percent of the overall system budget. System spokeswoman Kate Ripley said tuition increases are “a part of the complex mix when it comes to budgeting.”
At between about $2,500 and $3,200 for per semester tuition, the University of Alaska campuses have some of the lowest in-state tuition rates among public institutions in the country.
Elwood Brehmer can be reached at [email protected].