Legislature(2019 - 2020)ADAMS ROOM 519
03/14/2019 09:00 AM House FINANCE
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| Audio | Topic |
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| Start | |
| Fy 20 Department Budget Overview: University of Alaska | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 14, 2019
9:04 a.m.
9:04:50 AM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 9:04 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Tammie Wilson, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
None
ALSO PRESENT
Mike Barnhill, Policy Director, Office of Management and
Budget; Representative Tiffany Zulkosky.
PRESENT VIA TELECONFERENCE
None
SUMMARY
FY 20 DEPARTMENT BUDGET OVERVIEW: UNIVERSITY OF ALASKA
Co-Chair Foster reviewed the agenda for the meeting. He
invited the testifiers to the table.
^FY 20 DEPARTMENT BUDGET OVERVIEW: UNIVERSITY OF ALASKA
9:05:54 AM
MIKE BARNHILL, POLICY DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET, introduced himself and announced that as policy
director of the Office of Management and Budget (OMB) he
confined his role to policy regarding budget development
and did not provide policy directives to the University of
Alaska (UA). He began with the University of Alaska portion
of the OMB PowerPoint presentation: "FY2020 Governor's
Amended Budget." He appreciated President James Johnsen,
[President, University of Alaska]and his professionalism
throughout the discussion.
Mr. Barnhill started with slide 8 titled "FY2020 Budget:
University of Alaska" that contained bar charts
illustrating the revenue sources for the university. The
bar charts showed the combined Unrestricted General Fund
(UGF) and Designated General Fund (DGF). The other chart
provided a breakdown of the budget and UGF and DGF funding
sources. He reported that in the FY 19 management plan the
legislature appropriated a total of $888.547.8 million, the
majority was comprised of UGF and DGF. He offered that the
FY 20 budget increased slightly to $901.4 million with the
budgeted positions remaining at 3,993 for both years.
9:08:16 AM
Mr. Barnhill continued to slide 9: "FY2020 Budget:
University of Alaska: Funding Comparison." The bar chart
illustrated a decrease of $134 million UGF coupled with an
increase of $154 million in DGF. The purpose of the
increase was simply to allow the university to seek other
fund sources and to help offset the decrease of $134
million. The administration did not offer the university
policy directives or expectations. He relayed President
Johnsens statement that the cut was the equivalent to
doubling tuition.
Co-Chair Wilson asked what the administration's expectation
of how the cut could be offset was. She thought that
doubling tuition would be devastating for students. She
wondered what alternative funding OMB had identified that
the university had not taken advantage of. Mr. Barnhill
responded that all universities had a variety of funding
sources available to them. He discerned that it would be
difficult for the university to make up for the lack of
funding with other revenue sources in short order. The
cut could be addressed in a variety of ways; i.e.,
increasing tuition, additional revenue from other sources,
and implementing reductions. Co-Chair Wilson asked what
other resources were available other than a tuition
increase. She thought that the administration was aware of
other funding the university could tap into. Mr. Barnhill
was not aware of any specific additional funding. He
elaborated that universities typically employed a variety
of funding sources that included alumni contributions,
leveraging federal funding, private sector fundraising, and
tuition. He added that UA could also employ consolidation
and cost reductions.
9:11:21 AM
Co-Chair Wilson maintained that additional cuts could be
made. She relayed that President Johnsen had brought up the
notion of leveraging funds. She asked whether the proposed
cut would make it more difficult to leverage other funds.
Mr. Barnhill was not familiar with the types of federal
funding UA leveraged. He offered that universities matched
funds differently than Medicaid that typically had a 50
percent match. He reported that UA leveraged federal
funding on a 6 to 1 ratio and the University of Michigans
research program matched on a 29 to 1 ratio. He
acknowledged that leveraging other federal funds would not
happen quickly. Co-Chair Wilson wished that Mr. Barnhill
could identify the other funds accessible to the
university.
Vice-Chair Ortiz understood that Mr. Barnhill could not
direct UA policy. He wondered whether it was fair to say
that the administration no longer valued continued state
support of the UA System.
Mr. Barnhill replied in the negative. He communicated that
the administrations position regarding the university
recognized its importance in the state. The state
demonstrated its support in the current budget by
appropriating $190 million. He stated that publicly funded
universities not only survived but thrive with less
funding. The administration believed that UA could grow
and achieve a high quality of education on the proposed
level of funding.
9:14:52 AM
Representative Josephson noted that he had listened to the
university hearings held in the other body on February 19,
2019. He referenced a question directed to the president
about the effects of a 40 percent UGF reduction. He
interpreted President Johnsens answer to mean that the
amount of DGF was insufficient to sustain the federal
grants and other sources of revenue. He believed in the
Presidents credibility and related that the administration
did not offer any evidence to support their proposal. He
wondered why he should doubt the presidents conclusions
that the loss in UGF meant the collapse of other funding.
Mr. Barnhill replied that the answer lied in the path
that the state chose going forward. He admitted that the
cut would be disruptive to the university. He conveyed
that the question was how to implement the cut in the
least destructive way. He believed there was a way forward
for UA because other universities travelled this path.
Representative Josephson wanted to hear about where there
was a 41 percent cut to another university and its success
story.
9:17:22 AM
Mr. Barnhill advanced to the chart on slide 10: "FY2020
Budget: University of Alaska Snapshot ($ Thousands)"
Reduce the State Contribution for University of
Alaska System-wide Campuses (-$154,339.1 UGF)
Increase State Contribution for University of Alaska
Community Campuses (+$20,410.6 UGF)
Mr. Barnhill explained that previously UA had multiple
appropriation lines and several years prior requested a
single line appropriation. The proposal by the governor was
to divide the university appropriation into two components:
the university component and the community campus
component. The slide showed that the result was a net
reduction of $134 million.
Mr. Barnhill continued to slide 11: "FY2020 Budget:
University of Alaska Snapshot."
Budget Development
Compare revenues and expenditures of the University
of Alaska
With other publicly funded universities
With other land grant universities
Amongst the various UA campuses
Vice-Chair Ortiz referenced slide 10. He asked Mr. Barnhill
to define a community campus. He wondered whether
University of Alaska Southeast Ketchikan campus was an
example. Mr. Barnhill responded in the affirmative. He
identified 13 community campuses that were listed on slides
13, 14, and 15. Vice-Chair Ortiz asked whether specific
communication had occurred with the university to request
the shift in funding. Mr. Barnhill responded in the
negative. The reduction was proposed by OMB born out of the
budget analysis. He relayed that President Johnsens
testimony contained several comments supporting the idea of
providing additional resources to the community campuses.
Vice-Chair Ortiz thought it was safe to say that lacking
communication between UA and the administration, the
administration was directing the shift in UA policy. Mr.
Barnhill responded in the affirmative with the caveat that
the action was a proposal and he had the burden of proof.
He believed in the merit of the proposal.
9:22:40 AM
Mr. Barnhill moved to slide 12 titled "FY2020 Budget:
Compare University of Alaska to other publicly funded
universities." He indicated that the universitys campus
college system was UAs most cost-effective system, even
though the community campuses did not bear its full costs.
He relayed a concern stated by President Johnsen that
Alaska had the lowest percentage (67 percent) of high
school students that undertook higher education. He offered
that the community campus was a solution; hence, the reason
for increasing the budget for the community campuses.
Decreased tuition would act as a further incentive for
students to pursue higher education. President Johnsen
mentioned that the community campuses had a high percentage
of students attending part-time. He indicated that the
standard measure of university success was a six-year
graduation rate. The university had a relatively low six-
year graduation rate; 39 percent for the University of
Alaska Fairbanks (UAF), 24 percent for University of Alaska
Anchorage (UAA), and 19 percent for the University of
Alaska Southeast (UAS). Over time, the 8, 9, and 10-year
graduation rates increased. He suggested that students were
better served by the community campus model. He reported
that a high percentage of high school graduates were less
prepared and needed remedial instruction. The community
campus offered a cost-effective way to deliver remedial
education rather than a high cost 4-year campus structure.
He suggested initially channeling the students in need of
remedial instruction into the community campus for a year
or two. President Johnsen spoke about the opportunity for
career and technical training within the community college
system. He hoped that he effectively communicated that the
two-component system was appealing and worth consideration.
9:27:02 AM
Representative Merrick referred to President Johnsen's
testimony that the cost savings from closing the community
campuses was $38 million. She asked if the net loss to
community campuses was $18 million after the $20 million
increase. Mr. Barnhill interpreted President Johnsens
answer to imply that closing all the community campuses
would result in a savings of only $38 million.
Mr. Barnhill jumped to slide 17 titled "FY2020 Budget:
Compare University of Alaska amongst the various UA
campuses." He highlighted the spreadsheet authored by UA
that illustrated the relative costs between the university
and community campuses. The spreadsheet was divided into
three parts: UAA, UAF, and UAS main campuses and the
community campuses associated with them. He pointed to the
bottom of the spreadsheet that contained the totals of the
main campus and the community campuses. The total for the
community campuses was approximately $37 million, which
illustrated President Johnsens point. He asserted that
community campuses were a solution that had a cost-
effective structure and provided low cost, high quality
education to a higher percentage of younger Alaskans.
Representative Merrick asked whether the total budget for
community campuses was $58 million. Mr. Barnhill responded
in the affirmative.
9:30:10 AM
Representative Sullivan-Leonard asked to return to slide
11. She pointed to the land grant universities and asked
for further clarification. She shared a discussion with
President Johnsen regarding the issues UA had in selling
land. Mr. Barnhill provided a brief history of the land
grant universities. He related that the universities were
established by congress in the 1860s to enable higher
education to be self-supporting. The university was
established when Alaska became a territory and
approximately 100 million acres were targeted for UA. The
Alaskan constitution prohibited dedicated funds and when UA
attempted land selection the governor at the time barred
the university due to the dedicated fund prohibition. The
issue existed since statehood and the most recent case
before the Alaska Supreme Court regarding the issue in 2009
upheld the dedicated fund prohibition. He understood that
UA was working with the federal delegation to deliver the
land grant through a change in federal law. The issue of
land grants had been with the state since statehood. The
percentage of revenue that other land grant state
universities derived from investments was relatively small
in the amount of 1 percent to 3 percent. The revenue mix of
any university tuition included tuition, state, federal,
and private sources.
9:34:14 AM
Representative Josephson referred to slide 12 and slide 17.
He referenced Mr. Barnhills remark that the community
campuses did not bear the full cost of their expenses
without further elaboration yet concluded that they were
the most cost-effective campuses in the system. He asked
how Mr. Barnhills claim was supported. Mr. Barnhill
elaborated that varying levels of subsidization occurred
within the university system and pointed to slide 17. He
reiterated that the community campuses had the lowest cost
per student. The administrative costs were located on the
bottom right of the spreadsheet showing roughly $53 million
in costs through statewide expenditures that included
administration. He continued that the $53 million was not
allocated among the various campuses but was roughly $1000
per student. He commented that if he appeared dismissive it
was because the allocation of the administrative costs did
not impact materially the cost drivers illustrated in the
spreadsheet. Representative Josephson reported that the
president had commented in subcommittee that the community
campus tuition was overcharged relative to the typical
norm and the regents were exploring a tuition reduction of
25 percent. He wondered if the administration wanted
students to move to rural Alaska to attend a community
campus rather than a recent high school graduate from
Anchorage attending UAA. Mr. Barnhill responded that one of
the difficulties of the spreadsheet was that it combined
all colleges associated with its main campus. He noted that
the UAA main campus line included the UAA Community and
Technical College that had 1,147 students. He voiced that
the Anchorage student was not required to move to attend a
community campus.
9:40:24 AM
Mr. Barnhill returned to slide 12 which provided a
comparison. He acknowledged that comparing Alaska
institutions to other states was not a fair comparison.
However, he believed that the comparisons provided
context. The graphs were created by the State Higher
Education Officers Association and was posted on its
website. The two charts compared all government
appropriations for publicly funded colleges nationwide. The
chart on the right portrayed Alaska. He noted that the blue
bars reflected government appropriations, the green bar
reflected tuition and the red line depicted enrollment. The
numbers reflected inflation adjusted for 2017 dollars. The
national average state appropriation was $7,642 per
student. Alaska's figure was more than twice the national
average at $16,391.
Representative Josephson wondered how the comparison was
helpful. He referenced a document written by Susan Hendrix,
a former UA provost [not distributed] that pointed out that
the comparison was flawed, although mathematically
accurate. He emphasized that the state lacked a community
college system and lacked local contributions to the
college system. He relayed that the president reported that
an estimated $50 million was the equivalent amount of what
Alaska would receive with such a system. The report
indicated that money and fees raised from residential halls
and other similar elements were lacking in Alaska. In
addition, he mentioned the cost of living differential and
geographic spread. Mr. Barnhill relayed that comparisons
were never perfect and merely provided context. He
informed the committee that he was given Ms. Hendrixs
report. He took the per student state support number of
$7,642 and supplied a multiplier of 40 percent. He noted
that Ms. Hendrix recommended a 30 percent multiplier. He
maintained that the state appropriated twice as much as
other states.
9:45:44 AM
Mr. Barnhill discussed slide 13 titled "FY2020 Budget:
Compare University of Alaska to other land grant
universities: Five universities with highest percentage of
revenues from state":
State University of Puerto Rico-Mayaguez 70.8%
University of the District of Columbia 48.7%
Fond du Lac Tribal and Community College 44.0%
Kentucky State University 43.4%
University of Alaska Fairbanks 43.0%
Source: National Center for Education Statistics,
IPEDS database
Mr. Barnhill cited the sources website that provided data
and welcomed anyone to make comparisons. He highlighted
that the data only included the University of Alaska
Fairbanks and did not included UAA or UAS. He was unclear
for the reason of the exclusion. He cited a UA statistic
that state support totaled 36 percent in FY 19. He thought
that the percentage was relatively high.
9:48:32 AM
Mr. Barnhill reviewed slide 14: "FY2020 Budget: Compare
University of Alaska with other land grant universities:
Possible to thrive with lower state support":
Oregon State University 18.0%
University of California-Berkeley 17.7%
Clemson University 17.6%
Purdue University-Main Campus 15.9%
University of Rhode Island 15.6%
University of Wisconsin-Madison 14.5%
University of Arizona 13.8%
University of California-Davis 12.0%
University of Kentucky 11.9%
Leech Lake Tribal College 10.2%
University of Missouri-Columbia 10.1%
Michigan State University 9.8%
University of New Hampshire-Main Campus 9.7%
Colorado State University-Fort Collins 9.4%
Ohio State University-Main Campus 7.8%
University of Illinois at Urbana-Champaign 7.4%
University of Vermont 6.2%
Mr. Barnhill noted that the slide listed land grant
universities on the lower end of state support. He urged
the committee to recognize the possibility that land-grant
universities could exist with lower state support. He felt
that UA had its own unique features that would enable it
to survive with decreased state revenue.
9:49:52 AM
Vice-Chair Johnston loved looking at data. She wondered
what points Mr. Barnhill was attempting to suggest. She
referred to slide 14 and commented that the list did not
include community college systems or differentials related
to locations. She noted that she was familiar with the
University of Vermont system. She noted that Vermont had a
smaller population than Alaska, was primarily rural, and
had a small economy. The state had a community system, a
state system, and a university system. The in-state tuition
at Vermont state colleges was roughly $11,000 and its
universities in-state tuition was $17,000 versus out-of-
state at $40,000. She reiterated that Vermont had a very
small economy or no economic base. However, the university
was able to market its schools to neighboring states large
metro areas. She did not think that UA could market to
other states at the same level. She highlighted that
California had a robust university, state, and community
college system that feed into each other. She illuminated
that in Oregon, students from other states could enroll in
the community college system to qualify for in-state
tuition at the universities. She believed that each state
had its own story and that OMB had pushed the boarders
of your stories. She deduced that OMBs point was the
state had a community college system and university system.
However, Alaska was lacking the element that other states
had; a community college system that fed into a state
college system that fed into a university system. Mr.
Barnhill replied that first, he was setting the context for
public funding for UA. He thought the stories spoke to
possibilities for ways state universities leverage things
unique to them in order to diversify their funding sources.
There were examples and lessons learned from all the
universities listed on the slide that could be tapped into
to develop a path forward for Alaska. He was trying to
provide a context on slide 14 for the revenue and expense
numbers on slide 17. Vice-Chair Johnston inquired about the
inclusion of Kentucky State University on slide 13 and
University of Kentucky on slide 14 and asked if he was
trying to make a specific point. Mr. Barnhill responded in
the negative. He added that Kentucky University happened to
be on the slide. He offered to provide the entire
spreadsheets from all the slides.
9:56:48 AM
Co-Chair Foster recognized Representative Zulkosky was in
the audience.
Co-Chair Wilson inquired whether he examined statistics
comparing the land granted to each land grant university.
Mr. Barnhill replied in the negative. He assumed that the
revenue information included revenue from land investments
for the land grant universities. He reiterated that the
land investments typically accounted for a small amount of
revenue. Co-Chair Wilson asked about the additional $20
million appropriated to additional community campuses. She
wondered how he thought the funding would be allocated. Mr.
Barnhill emphasized that OMB wanted to illuminate the
tremendous opportunities in the community campus system.
How UA implemented the funding was the university's
discretion. He emphasized the opportunities and cost-
effective structure in the community campus system.
10:00:57 AM
Co-Chair Wilson declared that she was not picking a
fight. She thought a behavior change was ultimately being
discussed. However, the state had some responsibility for
the size of the universitys budget by granting large
appropriations to the university in the past. She was
trying to figure out what was really being suggested with
the dual appropriation. Mr. Barnhill did not perceive
anything she was saying a picking a fight. He described the
appropriation as a nudge.
Representative Josephson wanted to hear more about current
unmet needs as related to the community campuses. Mr.
Barnhill replied that roughly only 30 percent of Alaska's
high school students go on to higher education. He
associated the percentage of students who do not seek
higher education as the unmet need. He thought that a large
subset of the students would attend a community campus
program if it was tailored to their needs. He reported
that one of the largest challenges the UAF faced was a
shocking reduction in enrollment; a loss of 20 percent
since 2012.
10:05:05 AM
Representative Josephson referred to slide 13. He suggested
that if UGF was considered as a percentage of UAs total
$881 million state support was under 37 percent. The
University of Alaska would probably be found on the top
third of the list but not in the top 5 schools. Mr.
Barnhill was unsure and would provide the entire chart. He
referred to university budget data that provided the same
percentage as slide 13; 43 percent. He relayed percentages
since 2014 that varied from 42 to 47 percent. His point was
that the number was accurate and on the high end.
Representative Josephson remarked that he was looking at
OMBs FY 19 management plan data and calculated state
support at 37 percent. Mr. Barnhill responded that it made
a difference on how things were counted.
10:08:09 AM
Vice-Chair Ortiz spoke about land grant universities. He
understood that UA had only received 25 percent of its
allotted land and was still owed 360 thousand acres. He
wondered if the administration had investigated the issue.
Mr. Barnhill responded that the data base showed that in
terms of overall revenue investment income for land grant
universities was relatively low. Vice-Chair Ortiz asked
whether the land grant status of the universities listed
was compared to UA. He guessed that the comparison was not
made. Mr. Barnhill answered that he included the total
revenue data from all the land grant universities.
Co-Chair Wilson interjected that the bottom line was that
UA could not make money on land it was not granted, and the
issue was not reflected in the data.
10:10:28 AM
Representative Sullivan-Leonard favored the $20 million in
community campuses. She believed that it would benefit the
state in the areas of nursing assistants, health care
aides, dental assistants, etc.
Co-Chair Wilson recognized the arrival of Representative
LeBon.
10:11:45 AM
Mr. Barnhill scrolled to slide 15 titled "FY2020 Budget:
Compare University of Alaska with other land grant
universities: University of Alaska Fairbanks (UAF) is
relatively expensive per full time equivalent (FTE)." The
slide listed 14 universities total expenses, number of
full-time equivalent students, and cost per FTE. He noted
that data was based on total expenses times the number of
students. He highlighted that the expenses for the
University of Alaska Fairbanks research group was combined
in the number but typically, UA did not include it their
data because it was different from the three core services:
education, research, and public service. He concurred with
the universitys practice of excluding the research
expenses. He reported that if you pulled the research
number out of data the FTE cost was approximately $59
thousand and corresponded to UAs data. He believed that it
was still on the higher end.
10:13:07 AM
Mr. Barnhill continued to slide 16 titled "FY2020 Budget:
Compare University of Alaska with other land grant
universities: 96 land grant universities; per student
costs:"
25 are $50k and higher per student
61 are between $25k and $50k
10 are less than $25k
Mr. Barnhill noted that the slide reflected the median per-
student cost. He turned to slide 17 titled "FY2020 Budget:
Compare University of Alaska amongst the various UA
campuses." He noted that the spreadsheet was supplied by
the university and solely reflected the cost to provide the
core service of education. The statistic did not include
revenue and expenses related to research ($37 million UGF),
public service ($30 million UGF), and auxiliary services.
He furthered that each of the main campuses and the
community campuses were listed. He listed the column
designations. He relayed that the community campuses were
combined in the main university numbers. The university had
other spreadsheets that pulled the community campuses out
displaying them separately [not distributed]. Mr. Barnhill
drew attention to the numbers highlighted in yellow. He
commented that the prior slides had created context. He
suggested that slide 16 seemed to suggest that median
costs at lower 48 land grant universities ranged between
$24 thousand to $50 thousand. He noted that UAAs FTE was
$24,007 [highlighted number]. He contended that over the
previous hour, the committee had discussed the apples to
oranges comparisons with the lower 48 schools and how
Alaska was a more expensive state. However, UAAs cost
structure was competitive with the lower 48. He considered
the cost structure a success. The FTE number for the
University of Alaska Fairbanks was much higher [$59,341
highlighted number] than UAA and other land grant
universities. He elucidated that the high number was
attributed not to higher costs but fewer students, which
was reflective of declining enrollment. He suggested UAF
had a scale problem that informed the administrations
budget reduction and call for consolidation. The
administration thought there was an opportunity to correct
the scale. He believed that the numbers showed that the
community campus system was providing education in a cost-
effective way in most locations and could be achieved in
any location. Consolidation was important not only for cost
efficiency, it was also important for quality purposes. He
thought the same program offered at multiple campuses
blurred the focus on quality and multiplied its
facilities cost. He viewed it as an opportunity to scale
through consolidation into cost structures that currently
exist.
10:20:42 AM
Co-Chair Wilson remarked that the statewide programs were
included in the UAF numbers that made them appear higher.
Representative Sullivan-Leonard asked if the Mat-Su campus
received federal funding. Mr. Barnhill did not know the
answer.
Co-Chair Wilson commented that the frustration from the
committee was not knowing where the numbers came from and
choosing comparisons that helped illustrate a particular
point of view. Mr. Barnhill related that he was attempting
to make his thinking and analysis as transparent as
possible.
Mr. Barnhill explained slide 18 titled "FY2020 Budget:
Compare University of Alaska amongst the various UA
campuses (continued)." He pointed to the last column on the
right that contained his calculation regarding GF per
student (GF/FTE) for each of the main campuses. He relayed
the numbers for the university main campuses was $10,883
for UAA, $31,894 for UAF, and $21,137 for UAS. He reported
that the community campus total was $8,434 and the
university campus total was $17,374. He understood that the
administrative costs were separate and included at the
bottom of the spreadsheet [$1,031 GF/FTE]. Including the
administrative costs would increase the other totals by the
same amount. He emphasized that the community campus number
was half of the university number without local
contributions. He maintained that community campuses were a
cost-effective structure that could be used to meet the
unmet needs of younger Alaskans.
10:24:49 AM
Mr. Barnhill turned to slide 19 titled "FY2020 Budget:
Compare University of Alaska amongst the various UA
campuses(continued)." He pointed to the second column he
had added on the right side of the spreadsheet titled GF
Savings. The numbers reflected a hypothetical scenario
that assumed the two other main campuses had a cost
structure like UAA that demonstrated a savings of over $91
million.
Representative Josephson suggested that one of the things
that had not been evaluated was the extra costs associated
with UAF. When he toured the campus, he was impressed with
the sophistication of the programs that were not mirrored
at UAA. He recognized the effective cost structure at UAA.
He elaborated that in general, it was cheaper to do
business in Anchorage. He thought that there was more
going on than meets the eye with regards to OMBs
analysis. He wondered why UAF was more expensive. He
perceived that the same economic model could not be applied
to both UAA and UAF. Mr. Barnhill believed that the issue
was scale. The reason costs were high at UAF was because
the scale was down. He suggested that the scale at the
community campus level was high because it included the
campuses where the scale was centrally located, which
drove that aggregate average cost down. The decline in
enrollment at UAF contributed to the high cost. The issue
was not cost but scaling.
10:29:19 AM
Co-Chair Wilson acknowledged that Representative Carpenter
joined the committee.
10:29:28 AM
Mr. Barnhill moved to slide 20 titled "FY2020 Budget:
University of Alaska Budget Development:
University does an excellent job of managing costs at
UAA and in the Community Campus system
UAA expenses/student: approx. $25k. Very competitive
nationally.
Community campus expenses/student: approx. $18k
UGF contribution: $11k or less (~40% higher than the
national average)
Mr. Barnhill highlighted slide 21 titled "FY2020 Budget:
University of Alaska Budget Development [Con't]":
Tuition is equalized between campuses
University campus tuition is lower than national
average
Community campus tuition is higher than national
average
The University may be deterring access to low cost
community campuses while subsidizing higher cost
campuses, particularly UAF.
Attendance at UAF is declining
Overall UA attendance has declined 19% since FY2012
Mr. Barnhill reviewed slide 22 titled "FY2020 Budget:
University of Alaska Core Services":
Education
Focus on cost-effective delivery of high quality
Education
University is succeeding with costs at UAA and
Community Campuses
Too many similar programs in multiple locations may
be impairing quality
Research
University is doing a good job of leveraging external
fund sources, in particular federal dollars; 6:1 is a
good start
Opportunities exist. Example: Michigan State
University has approx. 29:1 ratio of external to
state fund sources for its research program
Public Service
Focus on becoming self-supporting
$30mm in UGF to distribute 190,000 publications and
provide service to small business seems like high
cost
10:32:32 AM
Mr. Barnhill explained slide 23: "FY2020 Budget: University
of Alaska Budget Calculations:"
Average state contribution to higher education:
$7,642/student
Multiplier: 44%
$7,642 * 1.44 = $11,000
Current UAA GF/FTE: approx. $11,000
Community Campus Component
5,611 students * $11,000 = $61.721million
University Component
11,944 students * $11,000 = $131.384million
Total UGF appropriation
17,555 * $11,000 = $193.105mm
Mr. Barnhill explained that OMB calculated that $11,000 FTE
was an achievable university wide target.
Representative Sullivan-Leonard asked about the total UGF
appropriation. She wondered if the administration
considered the PFD contribution as a resource for students
to help support their statistics. Mr. Barnhill answered in
the negative. He explained that the PFD was factored into
each students personal resources that contributed towards
tuition.
10:35:21 AM
Mr. Barnhill moved to slide 24: "FY2020 Budget: University
of Alaska Summary: Over-reliance on state funding is a
concern." He elucidated that the universitys over-reliance
on state funding had been a concern. The university had
been downgraded twice since 2015 by Moody's for over-
reliance on state funding. He pointed out that the state
constitution lacked language requiring funding UA, so
funding was not constitutionally driven. The university was
identified as a core function, but the constitution did not
mandate funding.
Representative Josephson stressed that constitutional
mandates to provide funding was not the proper purview of
constitutions.
Co-Chair Wilson wanted to avoid a constitutional debate.
10:37:35 AM
Mr. Barnhill continued to slide 25: "FY2020 Budget:
University of Alaska Summary: State universities are rising
to the challenge:"
Other state universities are scenario planning for
elimination of all state funding. Example: University
of Pittsburgh
Mr. Barnhill reported that the slide provided examples of
other universities that had funding difficulties. He
provided an example from the University of Pittsburgh. He
did not know about other universities experiencing the same
level of proposed reduction in a single year. He had tried
to do some research regarding the cut in state support in
Pennsylvania. He pointed to the bar chart on the slide that
showed the gradual decrease in state funding for the
University of Pittsburgh from 1985 at 24.3 percent to 15
percent in 2015. He noted that the schools chancellor
engaged in proactive thinking to find a solution. He
invited UA to be forward thinking. He pointed to Moodys
bond downgrade for UA. He thought there was a legitimate
concern regarding policy.
10:40:13 AM
Representative Josephson indicated that the three
universities that were provided as examples in the slides;
University of California Berkeley, University of Oregon,
and Clemson were all crying for additional state funding.
In addition, he believed that there was a correlation
between the states bond downgrade by Moodys and the
universitys downgrade. Mr. Barnhill stated that there
just isnt funds and that all stakeholders were seeking
revenues. He indicated that the states bond downgrade was
due to overreliance on oil revenue and the university's
downgrade was due to overreliance on state funding.
Representative Josephson stated that the entire state
budget relied on oil funding.
Co-Chair Wilson interjected that she appreciated slide 22
and slide 26. She thought what the governor was emphasizing
the need to for UA to be more competitive.
10:43:14 AM
Mr. Barnhill advanced to the last slide in the
presentation, slide 26: "FY2020 Budget: University of
Alaska Summary: Path forward for University."
Path forward for University
State funding for higher education has declined
Nationally
In response universities have:
sharpened their focus on their core educational
product
aggressively competed for tuition dollars
sought fundraising dollars from the entire spectrum
of funding sources
Private, corporate, alumni, federal
Focus on strengths
community campus/UAA cost structure
enhance leverage for research dollars
Mr. Barnhill concluded that UA had strengths by operating
mostly in a cost-effective structure and stated that they
had the model that just needed to be implemented. He
believed that the budget cut was difficult but thought the
UA could operate a world-class university with less
funding.
Representative Carpenter asked if the university had the
right talent in the right place from an entrepreneurial
focus to adjust its course. Mr. Barnhill responded
affirmatively.
10:46:32 AM
Representative LeBon commented on the declining enrollment
at UAF. He deduced that the challenge was to increase
enrollment. He referred to slide 25 that illustrated the
reduction in state support over a period of 30 years. He
characterized it as a soft landing versus the crash and
burn approach proposed by the administration. He asked how
enrollment played out at the University of Pittsburgh
during the 30-year period. Mr. Barnhill would provide more
information regarding the University of Pittsburgh. He
reiterated that cut was drastic but believed that a path
forward existed for UA.
10:48:16 AM
Representative LeBon stated that his point was that
Pennsylvania began a program of reducing state support with
a plan to retain and attract students and growing
enrollment. He suspected UA's approach was done in such a
way as to maintain enrollment. He expressed concern with
chasing off students. He believed a cut of the proposed
magnitude would lead to a decline in enrollment.
Co-Chair Wilson suggested that the subcommittee examine why
UAF enrollment declined.
Co-Chair Wilson reviewed the agenda for the afternoon.
ADJOURNMENT
10:49:45 AM
The meeting was adjourned at 10:49 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| FY2020 Gov Amend Budget to HFC 3.13.19 DMVA UA.pdf |
HFIN 3/14/2019 9:00:00 AM |
HFIN Budget Overview UA |
| Land Grant All Revenue Sources.xlsx |
HFIN 3/14/2019 9:00:00 AM |
Responses to Q's UA Overview |
| SHEF_State_by_State_Wave_Charts_FY17.pdf |
HFIN 3/14/2019 9:00:00 AM |
Responses to Q's UA Overview |
| Univ Ranked by Exp FTE.pdf |
HFIN 3/14/2019 9:00:00 AM |
Responses to Q's UA Overview |
| University Alaska Data.pdf |
HFIN 3/14/2019 9:00:00 AM |
Responses to Q's UA Overview |