Legislature(2017 - 2018)SENATE FINANCE 532

02/16/2017 09:30 AM FINANCE

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Audio Topic
09:35:44 AM Start
09:39:45 AM Fy 18 Budget Overview: University of Alaska
11:05:17 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ University of Alaska TELECONFERENCED
FY18 Operating Budget Overview
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                     February 16, 2017                                                                                          
                         9:35 a.m.                                                                                              
                                                                                                                                
9:35:44 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Hoffman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 9:35 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Anna MacKinnon, Co-Chair                                                                                                
Senator Click Bishop, Vice-Chair                                                                                                
Senator Mike Dunleavy                                                                                                           
Senator Peter Micciche                                                                                                          
Senator Donny Olson                                                                                                             
Senator Natasha von Imhof                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
James  Johnsen,  President,  University of  Alaska;  Senator                                                                    
Berta Gardner; Senator Gary Stevens.                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
FY 18 BUDGET OVERVIEW:                                                                                                          
                                                                                                                                
     UNIVERSITY OF ALASKA                                                                                                       
                                                                                                                                
Co-Chair Hoffman  stated that the  committee would  be going                                                                    
through  a  different  process  in  handling  the  operating                                                                    
budget and not  doing business as usual. He  shared that the                                                                    
Senate had  come up  with a  plan to try  to address  the $3                                                                    
billion budget  shortfall, and had found  an additional $300                                                                    
million in cuts to the  operating budget. He referred to the                                                                    
governor's  proposed  plans  to raise  revenue  including  a                                                                    
motor fuel tax  and revision of the  Permanent Fund Dividend                                                                    
(PFD) plan. He  thought that if all three  of the governor's                                                                    
revenue measures  were to be implemented,  there would still                                                                    
be a $674 million deficit the following year.                                                                                   
                                                                                                                                
Co-Chair Hoffman continued, stating  that even if the Senate                                                                    
accomplished its  proposed $300  million in  reductions, the                                                                    
state would  still be  operating at a  deficit of  well over                                                                    
$500   million.  He   thought  the   legislature  had   made                                                                    
substantial  reductions over  the  course  of the  preceding                                                                    
years, and mentioned the  departments that represented large                                                                    
components of  the budget:   the University of  Alaska (UA),                                                                    
the Department of Transportation  and Public Facilities, and                                                                    
the   Department  of   Health   and   Social  Services.   He                                                                    
communicated  that he  planned  on having  overviews of  the                                                                    
state's  four  major  cost  drivers  to  enable  members  to                                                                    
understand how each component was  providing services to the                                                                    
people  of Alaska.  In prior  years, the  committee had  not                                                                    
focused on specific departments,  but rather heard overviews                                                                    
of each agency.                                                                                                                 
                                                                                                                                
Co-Chair  Hoffman  informed  that  the  subcommittee  chairs                                                                    
would  continue  to  operate and  would  come  forward  with                                                                    
recommendations.  Because   the  Senate  had  taken   a  new                                                                    
approach, there would be  additional hearings, starting with                                                                    
today's  meetings.  He  expressed  that the  intent  of  the                                                                    
presentation   was  to   have   as   detailed  as   possible                                                                    
understanding  of  the  services  that UA  provided  to  the                                                                    
people of Alaska.                                                                                                               
                                                                                                                                
^FY 18 BUDGET OVERVIEW: UNIVERSITY OF ALASKA                                                                                  
                                                                                                                                
9:39:45 AM                                                                                                                    
                                                                                                                                
JAMES  JOHNSEN, PRESIDENT,  UNIVERSITY OF  ALASKA, expressed                                                                    
appreciation for Co-Chair Hoffman's  remarks, and echoed the                                                                    
sentiment that  it was  not possible  to move  forward doing                                                                    
business  as usual.  He  commented that  UA  was not  moving                                                                    
forward  in a  business-as-usual manner.  He hoped  that the                                                                    
committee would recognize  that in addition to  being one of                                                                    
the four  major cost drivers in  the state, UA was  also one                                                                    
of  the  major  drivers  of   the  economy  and  future.  He                                                                    
acknowledged  the Senate's  plan and  fiscal focus,  and its                                                                    
attention to  making sure that  government was  operating in                                                                    
the  most cost-effective  manner.  He stated  that he  would                                                                    
address the values  that UA provided the  state, including a                                                                    
commitment to cost effectiveness.                                                                                               
                                                                                                                                
President Johnsen discussed  the presentation "University of                                                                    
Alaska - FY18 Budget Overview" (copy on file).                                                                                  
                                                                                                                                
President  Johnsen  turned  to   slide  2,  "Constitution  &                                                                    
Statutes":                                                                                                                      
                                                                                                                                
     AK Const. Art. 7, § 2 State University                                                                                     
     University  of  Alaska  is hereby  established  as  the                                                                    
     state university  and constituted a body  corporate. It                                                                    
     shall have title to all  real and personal property now                                                                    
     or  hereafter set  aside  for or  conveyed  to it.  Its                                                                    
     property   shall  be   administered  and   disposed  of                                                                    
     according to law.                                                                                                          
                                                                                                                                
     AK Const. Art. 7, § 3 Board of Regents                                                                                     
     The University of  Alaska shall be governed  by a board                                                                    
     of  regents.  The regents  shall  be  appointed by  the                                                                    
     governor, subject to confirmation  by a majority of the                                                                    
     members of the legislature  in joint session. The board                                                                    
     shall,  in accordance  with law,  formulate policy  and                                                                    
     appoint the  president of the  university. He  shall be                                                                    
     the executive officer of the board.                                                                                        
                                                                                                                                
     Alaska Statutes Title 14 Chapter 40                                                                                        
     AS  14.40.10 -  AS 14.40.817  govern the  University of                                                                    
     Alaska                                                                                                                     
                                                                                                                                
President  Johnsen  noted  that   the  University  would  be                                                                    
celebrating  its  100-year  anniversary of  the  territorial                                                                    
legislature establishing  the foundation of the  college. He                                                                    
reminded  that  UA    had   its  roots  and  origin  in  the                                                                    
constitution itself.                                                                                                            
                                                                                                                                
President Johnsen discussed slide 3, "University Mission":                                                                      
                                                                                                                                
     "The  University  of   Alaska  inspires  learning,  and                                                                    
     advances and  disseminates knowledge  through teaching,                                                                    
     research,  and public  service,  emphasizing the  North                                                                    
     and its diverse peoples."                                                                                                  
                                                                                                                                
     Regents' Policy 01.01.01                                                                                                   
                                                                                                                                
President  Johnsen   stated  that  the   University  mission                                                                    
statement   was  similar   to  that   of  other   land-grant                                                                    
universities, but it was also unique.                                                                                           
                                                                                                                                
Co-Chair  Hoffman  acknowledged  Senator Berta  Gardner  and                                                                    
Senator Gary Stevens.                                                                                                           
                                                                                                                                
President Johnsen viewed slide 4, "University Mission":                                                                         
                                                                                                                                
     Education                                                                                                                  
          Academic and vocational instruction                                                                                   
                                                                                                                                
     Research                                                                                                                   
          Scientific and academic research, advancing                                                                           
          knowledge basic and applied                                                                                           
                                                                                                                                
     Service                                                                                                                    
          Sharing knowledge to address Alaska's community                                                                       
          needs                                                                                                                 
                                                                                                                                
President  Johnsen mentioned  the UA  Cooperative Extension,                                                                    
and  the fact  that almost  every  UA faculty  member had  a                                                                    
service responsibility that was beneficial to communities.                                                                      
                                                                                                                                
President Johnsen spoke to slide 5, "100 Years of Service":                                                                     
                                                                                                                                
   Established in 1917 as the Alaska Agricultural College                                                                       
   and School of Mines, today:                                                                                                  
    · One campus in 1922 - 15 statewide campuses today                                                                          
     · One graduate in 1923 - 4,800 graduates in 2016                                                                           
     · Alaska's #1 higher education institution - in                                                                            
      education, research, and workforce preparation                                                                            
     · America's #1 higher education institution -                                                                              
        affordability                                                                                                           
     · World's #1 research university on the Arctic                                                                             
                                                                                                                                
President Johnsen  noted that Alaska  led the nation  in the                                                                    
percentage of Alaskans  with some college and  no degree. He                                                                    
asserted that UA  was the most affordable  university in the                                                                    
United  States if  its tuition  was  divided into  household                                                                    
income.                                                                                                                         
                                                                                                                                
9:44:55 AM                                                                                                                    
                                                                                                                                
President Johnsen reviewed slide  6, "Serving All Alaskans,"                                                                    
which showed a  state map and a list of  all the campuses of                                                                    
UA.  He noted  that  the university  served  the state,  and                                                                    
remarked on the size of the  state. He noted that there were                                                                    
three  university  campuses  and twelve  community  campuses                                                                    
across  the  state,  in addition  to  outreach  centers  and                                                                    
distance delivery.                                                                                                              
                                                                                                                                
President   Johnsen  displayed   slide   7,  "Alaska   Sized                                                                    
Benefits":                                                                                                                      
                                                                                                                                
   A major economic engine in Alaska generating direct and                                                                      
   indirect benefits:                                                                                                           
     · 15,740 jobs result from University activities                                                                            
     · $1.1 billion in annual economic/employment impacts                                                                       
        statewide                                                                                                               
     · $43.7 million in economic impacts to rural Alaska                                                                        
        alone                                                                                                                   
     · $1 of investment generates $3 in economic activity                                                                       
     · $1 of state research investment generates $4.1 in                                                                        
        research dollars                                                                                                        
                                                                                                                                
President  Johnson  relayed  that   UA  had  contracted  the                                                                    
McDowell  Group   to  study  the  economic   impact  of  the                                                                    
university  on the  state.  He noted  that  there were  some                                                                    
prominent UA research programs that  generated over $6 to $7                                                                    
in return for each dollar of state investment.                                                                                  
                                                                                                                                
President  Johnsen showed  slide  8,  "Research Diversity  &                                                                    
Service":                                                                                                                       
                                                                                                                                
     The university is home to more than 60 research                                                                            
     centers addressing critical issues important to                                                                            
     Alaskans, our lifestyle and our economy                                                                                    
                                                                                                                                
          Geophysical Institute                                                                                                 
         Institute of Social and Economic Research                                                                              
          Institute of Arctic Biology                                                                                           
          Arctic Domain Awareness Center                                                                                        
          Alaska Center for Energy and Power                                                                                    
         Institute for Circumpolar Health Studies                                                                               
          Alaska Volcano Observatory                                                                                            
          Ocean Acidification Research Center                                                                                   
          Center for Behavioral Health Research and                                                                             
          Services                                                                                                              
          Alaska Coastal Rainforest Center                                                                                      
         Center for Alaska Native Health Research                                                                               
                                                                                                                                
President  Johnsen spoke  to the  variety  of research  work                                                                    
done  by  the  university. He  highlighted  the  Geophysical                                                                    
Institute;  and   the  Institute  of  Social   and  Economic                                                                    
Research (ISER),  which did relevant public  policy research                                                                    
that was of value to  the state. The Arctic Domain Awareness                                                                    
Center  was   doing  work  for  the   United  States  (U.S.)                                                                    
Department  of Homeland  Security;  and had  the U.S.  Coast                                                                    
Guard as  its primary  client. He  discussed the  close ties                                                                    
that  the university  had with  the military  in Alaska.  He                                                                    
spoke to  the breadth  of issues  addressed by  the research                                                                    
centers listed  on the slide.  He added that the  Center for                                                                    
Alaska Native Health Research had  the top quality rating of                                                                    
the  National  Institutes of  Health,  and  that it  was  an                                                                    
American Recovery and Reinvestment Act (ARRA) program.                                                                          
                                                                                                                                
9:48:06 AM                                                                                                                    
                                                                                                                                
President Johnsen turned to slide 9, "Challenges":                                                                              
                                                                                                                                
        · Geography - location, size, regionalism                                                                               
        · Students - low high school graduation rate, low                                                                       
          college going rate, low college completion rate,                                                                      
          half require developmental education                                                                                  
        · Economy - high in natural resources - low in "new                                                                     
          economy", historically high wage to education                                                                         
          ratio, industry workforce gaps                                                                                        
        · Structure - 4 administrative structures, 3                                                                            
          institutional accreditations, geographic spread                                                                       
        · Budget - heavy reliance on resource-dependent                                                                         
          state funding, 3rd year of budget reductions                                                                          
        · Revenue - private giving, comparatively low                                                                           
          tuitions, land grant deficit                                                                                          
                                                                                                                                
President Johnsen considered that UA  was a microcosm of the                                                                    
state,  and he  was  thereby addressing  the state's  fiscal                                                                    
challenges within  the university. He relayed  that prior to                                                                    
the   committee  meeting   he   had  a   meeting  with   the                                                                    
commissioner   of   Department   of  Education   and   Early                                                                    
Development (DEED) to work on  alignment with K-12 education                                                                    
and  the  university. He  discussed  the  commitment of  the                                                                    
department to  provide college and work-ready  graduates for                                                                    
the economy and the  university system, while the commitment                                                                    
of  UA was  to be  aligned and  to produce  more top-quality                                                                    
teachers for the state.                                                                                                         
                                                                                                                                
President  Johnsen  informed  that  UA  had  relatively  low                                                                    
private  contribution  rates.  He discussed  the  historical                                                                    
legacy of  the land grant,  which the university  was trying                                                                    
to address.  He thought part  of the UA's heavy  reliance on                                                                    
the  state was  due to  a land  grant deficit.  He explained                                                                    
that UA  did not get  the close  the 500,000 acres  that was                                                                    
due  under various  federal acts;  but had  received 110,000                                                                    
acres.                                                                                                                          
                                                                                                                                
Co-Chair Hoffman asked President  Johnsen to provide a brief                                                                    
snapshot of what  had happened with tuition  in the previous                                                                    
5 years.                                                                                                                        
                                                                                                                                
President Johnsen  relayed that  tuition had increased  at a                                                                    
rate of  about 5  percent each  year. Currently,  UA tuition                                                                    
was  84 percent  of  the Western  Interstate Commission  for                                                                    
Higher Education  (WICHE) states' average. He  informed that                                                                    
the WICHE states received 90 percent of Alaskan students.                                                                       
                                                                                                                                
Co-Chair  Hoffman  asked  when  the last  time  tuition  was                                                                    
raised.                                                                                                                         
                                                                                                                                
President Johnsen  relayed that the tuition  had been raised                                                                    
in  the current  year.  He discussed  a  proposed 9  percent                                                                    
tuition  increase,  at  which time  the  students  (and  the                                                                    
University of  Alaska Anchorage (UAA) debate  team) had made                                                                    
a counter-proposal of a 5 percent increase.                                                                                     
                                                                                                                                
9:52:04 AM                                                                                                                    
                                                                                                                                
Vice-Chair Bishop referred to the  second bullet on slide 9,                                                                    
and requested to  meet later with President  Johnson and the                                                                    
Commissioner of Education.                                                                                                      
                                                                                                                                
Senator Olson referred to  President Johnsen's comment about                                                                    
a low  amount of  private sector contributions.  He wondered                                                                    
about the reason  for the low contribution  rate. He thought                                                                    
there  were sizable  corporations  in the  state that  could                                                                    
contribute.                                                                                                                     
                                                                                                                                
President   Johnsen    acknowledged   he   was    making   a                                                                    
generalization, but did not believe  there had been a strong                                                                    
culture  of  philanthropy  in Alaska  after  having  heavily                                                                    
relied on state funding for  many years. He offered to bring                                                                    
additional  data  to  the committee,  with  a  breakdown  of                                                                    
sources  of  revenue  to  the  UA  Foundation  (the  private                                                                    
fundraising arm  of UA). He discussed  the different funding                                                                    
sources at  the university, and  made note of  a significant                                                                    
decline in the  rate of corporate giving  from 2015 forward.                                                                    
He  cited  relatively low  alumni  giving  rates, and  noted                                                                    
there  was  new  leadership  in   the  foundation  that  had                                                                    
emphasized private giving and  alumni outreach. He commented                                                                    
that many leading institutions ran multi-year campaigns.                                                                        
                                                                                                                                
Senator  Olson disagreed  with  President Johnsen's  comment                                                                    
about Alaska  not being a  philanthropic state.  He referred                                                                    
to the Pick.Click.Give program,  under which state residents                                                                    
could donate money  to a variety of  organizations. He asked                                                                    
President Johnsen to contextualize his comment.                                                                                 
                                                                                                                                
President Johnsen  noted that he personally  participated in                                                                    
the Pick.Click.Give program, and  thought that the Rasmussen                                                                    
Foundation  had  stepped  up   to  lead  the  program  after                                                                    
recognizing  the need  to build  a philanthropic  culture in                                                                    
the state.                                                                                                                      
                                                                                                                                
9:56:00 AM                                                                                                                    
                                                                                                                                
President   Johnsen  discussed   slide  10,   "State  Budget                                                                    
Reductions":                                                                                                                    
                                                                                                                                
     The university's budget has been reduced $53 M (14                                                                         
     percent) over the past three years.                                                                                        
                                                                                                                                
     The overall institutional impacts are greater than                                                                         
     just the reduction of programs and personnel.                                                                              
                                                                                                                                
The  slide  also  showed  a bar  graph  entitled  'UA  State                                                                    
General Funds FY 15 - FY  18.' He made note of the cascading                                                                    
reductions, and  noted that  the governor's  proposed budget                                                                    
included  a  continuation of  funding  at  the $325  million                                                                    
level.                                                                                                                          
                                                                                                                                
Senator Micciche thought  it would have been  helpful to see                                                                    
the  state support  for  the university  system  for FY  14,                                                                    
which he assumed was the peak of state support.                                                                                 
                                                                                                                                
President  Johnsen stated  that the  FY 14  amount was  $377                                                                    
million.                                                                                                                        
                                                                                                                                
Senator Micciche asked if FY 14  was the peak of funding for                                                                    
UA.                                                                                                                             
                                                                                                                                
President Johnsen affirmed  that FY 14 was  the peak General                                                                    
Fund (GF) contribution by the state.                                                                                            
                                                                                                                                
Co-Chair  MacKinnon asked  if the  funding reflected  on the                                                                    
slide was  all operating funds,  or if it  included deferred                                                                    
maintenance funds that the state also provided.                                                                                 
                                                                                                                                
President Johnson specified that  the graph showed operating                                                                    
money for FY 15 and FY  16, and did not recall that deferred                                                                    
maintenance  had come  out  in  those years.  In  FY 17  the                                                                    
regents had  reallocated some  operating funds  for deferred                                                                    
maintenance,   because  the   capital  budget   request  for                                                                    
deferred  maintenance was  not  provided.  He recalled  that                                                                    
there had been approximately $10.5 million reallocated.                                                                         
                                                                                                                                
Co-Chair   Hoffman  believed   that  the   legislature  also                                                                    
appropriated  a   substantial  amount  in  capital   to  the                                                                    
infrastructure of the university.                                                                                               
                                                                                                                                
President  Johnsen  stated  that the  legislature  had  very                                                                    
large  capital  budgets over  the  years  that had  provided                                                                    
tremendous  facilities  for  UA.  Additionally,  there  were                                                                    
years with  generous contributions to  deferred maintenance.                                                                    
He commented  on the  university's continued  large deferred                                                                    
maintenance  backlog,  which ran  from  $800  million to  $1                                                                    
billion. He would discuss steps  to address the backlog in a                                                                    
later  slide. He  reminded that  new facilities  brought new                                                                    
operating expenses, which were often not provided.                                                                              
                                                                                                                                
Co-Chair  Hoffman clarified  that he  had been  referring to                                                                    
the  power plant.  He asked  if the  president recalled  the                                                                    
total  amount   of  funding  that   was  committed   to  the                                                                    
university for the important piece of infrastructure.                                                                           
                                                                                                                                
President Johnsen  agreed that  the power  plant was  a very                                                                    
important piece  of infrastructure.  He estimated  that $245                                                                    
million  in capital  investment  had been  committed by  the                                                                    
state, and the university also utilized some bonds.                                                                             
                                                                                                                                
Co-Chair Hoffman  stated that  although that  although there                                                                    
had been some reductions, the  university was viewed as very                                                                    
important  asset   of  the   state,  ergo   the  substantial                                                                    
investment in the power source.                                                                                                 
                                                                                                                                
10:00:21 AM                                                                                                                   
                                                                                                                                
President  Johnsen   viewed  slide  11,   "Budget  Reduction                                                                    
Impacts":                                                                                                                       
                                                                                                                                
        · Jobs impacted                                                                                                         
             o Cumulative FY15-FY17 headcount reduction:                                                                        
               over 900                                                                                                         
             o More than 250 reduced assignments or                                                                             
               increased workload                                                                                               
        · Academic program reductions                                                                                           
             o Since January 2016, 50 academic programs                                                                         
               eliminated or suspended                                                                                          
             o Fewer sections and larger class sizes                                                                            
             o Increases in faculty instructional workloads                                                                     
        · Administrative function consolidation and service                                                                     
          reductions                                                                                                            
        · Closed Galena, McGrath, & Shishmaref Learning                                                                         
          Centers                                                                                                               
        · Reduction of faculty travel and professional                                                                          
          development funding                                                                                                   
        · Reduced     research     faculty     start-up/seed                                                                    
          availability                                                                                                          
       · Telecommunications contract cost reduction                                                                             
        · Reduced owned & leased space; defeased &                                                                              
          refinanced debt                                                                                                       
                                                                                                                                
President Johnsen relayed that  work was ongoing to complete                                                                    
the  engineering  building  on   the  University  of  Alaska                                                                    
Fairbanks (UAF) campus, which would  be done in one year and                                                                    
would  provide   state-of-the-art  space  for   faculty  and                                                                    
students  to work.  He discussed  the ongoing  collaboration                                                                    
between the two Schools of Engineering at UAA and UAF.                                                                          
                                                                                                                                
President  Johnsen  specified  that the  precise  number  of                                                                    
position reductions at UA was  923. He continued that UA had                                                                    
reduced assignments  and had made  part-time jobs  from some                                                                    
full-time positions. He noted that  some faculty might get a                                                                    
reduced service, creative  activity, or research assignment.                                                                    
He discussed  the inverse trend  of economic upswing  in the                                                                    
Lower  48, and  noted  that other  universities were  seeing                                                                    
more support to be  competitive in faculty research rivalry.                                                                    
He discussed  the increasing prominence  of the Arctic  as a                                                                    
subject  of study,  and  noted that  the  area was  becoming                                                                    
competitive.  He  discussed  the over  $1  million  per-year                                                                    
reduction in wide-area network costs;  and noted that UA was                                                                    
selling  facilities  and  reducing  expenses  through  other                                                                    
space changes.                                                                                                                  
                                                                                                                                
10:03:22 AM                                                                                                                   
                                                                                                                                
Senator Micciche  asked if there  was an active  revenue arm                                                                    
that pursued  opportunities for UA  to provide  research for                                                                    
the  private   sector.  He  did  not   feel  strongly  about                                                                    
competing  with  the  private  sector,  but  wondered  about                                                                    
research  that  was  not available  through  private  sector                                                                    
firms.                                                                                                                          
                                                                                                                                
Mr. Johnsen  communicated that  by far,  UA was  the leading                                                                    
research  entity   in  the  state.  He   furthered  that  UA                                                                    
partnered with  and provided the  majority of  the workforce                                                                    
for  many private  research organizations  in the  state. He                                                                    
stated that  UA worked  with industry, and  he had  met with                                                                    
individuals  in the  oil and  gas  sector as  well as  other                                                                    
sectors,  who were  interested  in doing  more  work in  the                                                                    
state. He  discussed the cycle  at UA by which  alumni ended                                                                    
up  in  positions  in  industry and  then  returned  to  the                                                                    
university to work on a project.                                                                                                
                                                                                                                                
Senator Micciche followed up to  inquire about Mr. Johnsen's                                                                    
assertion that UA was the  number one research institute for                                                                    
Arctic research  issues. He asked about  global outreach for                                                                    
potential   revenue-enhancing  research   to  offset   state                                                                    
funding reductions.                                                                                                             
                                                                                                                                
President Johnsen could  not identify specific organizations                                                                    
that UA  had pursued, but  asserted that the  university was                                                                    
recognized  by  all  other  universities  and  organizations                                                                    
operating in the North as  the leader in Arctic research. He                                                                    
agreed  that  global outreach  was  the  right direction  to                                                                    
pursue. He  thought it  was important  to recognize  that it                                                                    
was crucial  to conduct  research that  was relevant  to the                                                                    
North, and  to Alaska in  particular. He thought the  mix of                                                                    
research at UA  had global implications, and  wanted to make                                                                    
sure the research was highly  relevant to what was happening                                                                    
in the state.  He used the example of the  Alaska Center for                                                                    
Energy and  Power, which did world-class  research on micro-                                                                    
grids. He  stated that Alaska  led the world in  research on                                                                    
micro-grids, and other countries were interested.                                                                               
                                                                                                                                
President Johnson  continued discussing Arctic  research. He                                                                    
thought it  was important to  recognize that UA  faculty and                                                                    
researchers   were  not   allowed   (under  their   research                                                                    
contracts)  to apply  for additional  research opportunities                                                                    
under the contracts;  which was why the GF  component of the                                                                    
research body was so important.                                                                                                 
                                                                                                                                
10:07:05 AM                                                                                                                   
                                                                                                                                
Vice-Chair Bishop  relayed that had worked  closely with the                                                                    
university  for the  past 10  years,  specifically with  the                                                                    
Mining  and Engineering  Department. He  referred to  cross-                                                                    
border collaboration with the  Yukon Territory. He discussed                                                                    
sharing  mine training  knowledge, as  well as  working with                                                                    
countries  such  as Mongolia.  He  mentioned  the notion  of                                                                    
exporting knowledge to bring in revenue.                                                                                        
                                                                                                                                
Senator Micciche  referenced the 14 percent  reduction in GF                                                                    
funding to  UA since FY  14, and  queried if UA  was putting                                                                    
more  effort  towards  opportunities to  bring  in  research                                                                    
revenue.                                                                                                                        
                                                                                                                                
President Johnsen  pointed to the regent's  reallocation for                                                                    
deferred maintenance,  and stated  that funds had  also been                                                                    
reallocated for research. He  had identified four high-level                                                                    
goals   for   the   institution:   work-force   development,                                                                    
research,  economic  development  and  diversification,  and                                                                    
building a culture  of education in the  state. He re-stated                                                                    
that research was a top  priority of the institution, and UA                                                                    
was reallocating funds towards it.                                                                                              
                                                                                                                                
Senator Micciche  stated that  Alaska was  largely dependent                                                                    
upon revenue  from one commodity,  and thought  there should                                                                    
be as  much emphasis as  possible on exporting  knowledge of                                                                    
the  Arctic  as  a  revenue  base  and  as  a  move  towards                                                                    
diversification.                                                                                                                
                                                                                                                                
10:10:33 AM                                                                                                                   
                                                                                                                                
President  Johnsen spoke  to slide  12, "10-Year  Glide Path                                                                    
Framework":                                                                                                                     
                                                                                                                                
     The  University's  10-year framework  uses  benchmarked                                                                    
     goals  to incorporate  gradual, sustainable  reductions                                                                    
     in state  general fund appropriations  while increasing                                                                    
     university revenues through  enrollment and diversified                                                                    
     revenue                                                                                                                    
                                                                                                                                
President Johnsen spoke  to the graph on  slide 12, entitled                                                                    
'Moderating State  General Fund  Support.' He noted  that UA                                                                    
had thought  deeply about  the budget  and was  beginning to                                                                    
look forward.  He shared  that the glide  path on  the graph                                                                    
represented an approach to thinking  about the UA budget. He                                                                    
explained that  in 2025  it was projected  that it  would be                                                                    
necessary for 65 percent of  Alaska's workforce to have some                                                                    
postsecondary  education   (25  percent   baccalaureate;  40                                                                    
percent  career   and  technical  certificate,   license  or                                                                    
degree).                                                                                                                        
                                                                                                                                
President Johnsen expressed that  UA had contemplated how to                                                                    
moderate  state's GF  support and  still meet  the essential                                                                    
workforce  goals  for the  state.  He  pondered what  was  a                                                                    
reasonable GF  request from  the state.  He stated  that the                                                                    
graph identified 1.3 times  the national average per-student                                                                    
GF appropriation,  which equated to $312  million. He stated                                                                    
that  the goal  would  be  to gradually  bring  down the  GF                                                                    
request over the period of  time on the graph, acknowledging                                                                    
the  state's  fiscal condition.  He  thought  that UA  could                                                                    
serve the  state's needs more effectively  over time through                                                                    
a gradual reduction in dependence in state funding.                                                                             
                                                                                                                                
President  Johnsen  noted that  the  slide  did not  reflect                                                                    
tuition, and  noted that UA  had a  goal of moving  from the                                                                    
current level of  84 percent of WICHE states'  average up to                                                                    
equate to  the WICHE states'  average. He added that  UA had                                                                    
goals  in   philanthropy  and   research.  He   stated  that                                                                    
enrollment was  a key factor  in making the vision  work. He                                                                    
discussed the  importance of  working with  the commissioner                                                                    
of  DEED,  for  the  purpose   of  achieving  the  goals  of                                                                    
increasing   high  school   graduation  rates   and  college                                                                    
attendance   rates.   Additionally,   he   considered   that                                                                    
outreach to  the 115,000 Alaskans  with some college  and no                                                                    
degree would  be essential in  achieving the  workforce goal                                                                    
and making the financial model work.                                                                                            
                                                                                                                                
Senator von  Imhof referenced diversified revenue  and asked                                                                    
if UA  had done an analysis  of how it could  benefit if the                                                                    
U-Med  road [a  proposed  extension of  Elmore Road  through                                                                    
Anchorage's University-Medical District]  was completed. She                                                                    
wondered  how  much  land  UA   owned  around  the  proposed                                                                    
corridor,  and if  it could  be leveraged  to create  income                                                                    
opportunities for the university.                                                                                               
                                                                                                                                
President Johnsen was certain  the UA owned substantial land                                                                    
in the area, and strongly  supported increased access to the                                                                    
U-Med  area  from the  north.  He  noted  that there  was  a                                                                    
superhighway  that bisected  the campus  through UAA  Drive,                                                                    
which  was   extremely  unsafe.  He  mentioned   that  other                                                                    
stakeholders  in  the  area   were  strongly  supportive  of                                                                    
improving  access   to  the  area.  He   thought  there  was                                                                    
tremendous commercial  opportunity for  growth in  the area,                                                                    
and  mentioned  the  idea of  research  parks  and  business                                                                    
incubators. He  discussed work being  done at Auke  Bay with                                                                    
commercial benefits.                                                                                                            
                                                                                                                                
10:15:39 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman  wanted to address  the 10-year  glide path                                                                    
depicted on slide 12. He  asked about the designation of the                                                                    
University of Alaska  Southeast (UAS) campus and  how it fit                                                                    
into the glide path framework.                                                                                                  
                                                                                                                                
President Johnsen referenced the  UA Board of Regents recent                                                                    
decision  to assign  UAS the  administrative leadership  for                                                                    
teacher education programs. He  stated that the decision was                                                                    
tied  to the  workforce goal.  He noted  that currently  the                                                                    
state imported  70 percent of  its teachers,  which resulted                                                                    
in a  high turnover  rate as  compared to  teachers prepared                                                                    
within  the  state.  He  stated  that  there  was  a  strong                                                                    
interest   in  increased   accountability  in   the  teacher                                                                    
education programs, to drive the  numbers up. He discussed a                                                                    
degree  program   at  UAS   in  which   a  student   with  a                                                                    
baccalaureate degree could  come to campus for  six weeks in                                                                    
the summer, be teaching and  taking courses during the year,                                                                    
and receive a  Master of Arts in Teaching degree  at the end                                                                    
of the first year.                                                                                                              
                                                                                                                                
President  Johnsen continued,  relaying that  UA had  worked                                                                    
with  DEED and  school districts  across the  state to  have                                                                    
provisional  certification so  that  the  students could  be                                                                    
paid  while teaching.  He thought  that UAS  would make  the                                                                    
designation  a  top  priority,  while  the  other  two  main                                                                    
campuses had competing priorities.                                                                                              
                                                                                                                                
10:18:20 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman asked President  Johnsen about the ten-year                                                                    
glide  path  represented on  the  slide,  and mentioned  the                                                                    
Senate's  5/4/3   plan.  He   referred  to   the  governor's                                                                    
assertion the  previous year that  the budget  was critical,                                                                    
and  the  current  budget  was in  a  crisis  situation.  He                                                                    
thought the Senate  was of the same mindset.  He referred to                                                                    
structural   changes  to   mental  health   and  corrections                                                                    
programs the  previous year (through  SB 74 and SB  91); and                                                                    
to the revenue sharing program.                                                                                                 
                                                                                                                                
Co-Chair   Hoffman  discussed   changes  to   the  Community                                                                    
Assistance Program,  in which municipalities had  been asked                                                                    
to take  a reduction of 50  cents on the dollar.  He relayed                                                                    
that  he  discussed  education and  other  topics  with  his                                                                    
constituents, and  discussed the deficit. He  suggested that                                                                    
if agencies  were in crisis  mode, its budget be  reduced by                                                                    
ten  percent. He  thought the  problem with  the major  four                                                                    
cost drivers  in the state  was that given the  immense size                                                                    
of the budgets,  even a five percent cut  would translate to                                                                    
a sizable amount.  He knew the governor had  worked with the                                                                    
Board of Regents  and other departments to come  up with his                                                                    
proposed budget. He thought it  was important to acknowledge                                                                    
the deficit and attempt to adjust spending.                                                                                     
                                                                                                                                
10:22:37 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman  relayed  that  he made  a  special  order                                                                    
presentation  on the  Senate floor,  and  lauded the  budget                                                                    
reduction efforts of the Chief  Justice of the Supreme Court                                                                    
of Alaska. He wondered if  the UA finance subcommittee would                                                                    
work   with   President   Johnsen's  office   to   look   at                                                                    
prioritizing the 5 percent reduction  target that the Senate                                                                    
had adopted.  He reiterated that  the Senate was  taking the                                                                    
lead  in tightening  the state's  budget. He  emphasized the                                                                    
need  for the  legislature  to work  with  all agencies.  He                                                                    
asked  Mr.  Johnsen to  address  how  he would  endeavor  to                                                                    
reduce expenses.                                                                                                                
                                                                                                                                
President Johnsen recognized the  need to reduce expenses in                                                                    
the  state. He  noted that  the  University had  taken a  14                                                                    
percent  budget reduction  over the  previous few  years. He                                                                    
continued  that  UA  was engaged  in  a  contingency  budget                                                                    
planning  process, as  it  had been  the  previous year.  He                                                                    
thought the current challenge was  to identify what UA could                                                                    
stop doing  in response to  the budget cuts. He  referred to                                                                    
the  Strategic  Pathways  process,   through  which  UA  had                                                                    
identified areas to streamline.  He appreciated the position                                                                    
of Co-Chair.                                                                                                                    
                                                                                                                                
Co-Chair  Hoffman stated  that  the legislature's  challenge                                                                    
was  to assure  the  people of  Alaska  that services  would                                                                    
continue. He  emphasized the need  to look at  the long-term                                                                    
fiscal  health of  the state.  He commented  on the  drastic                                                                    
reduction  in  state  savings.  He  feared  there  would  be                                                                    
substantial reductions if  a solution was not  found. He did                                                                    
not  think   an  additional   5  percent   reduction  seemed                                                                    
substantial in light of the potential consequences.                                                                             
                                                                                                                                
10:27:50 AM                                                                                                                   
                                                                                                                                
President  Johnsen stated  that he  was pleased  to continue                                                                    
working with Senator von Imhof on the issue.                                                                                    
                                                                                                                                
Co-Chair   MacKinnon  requested   the  Legislative   Finance                                                                    
Division  to   produce  a  graph   that  would   depict  the                                                                    
reductions.  She had  seen graphs  of  spending, and  stated                                                                    
that  different  agencies  had taken  different  amounts  of                                                                    
cuts.  She  discussed  the small  percentage  of  the  state                                                                    
budget comprised of the  Legislative and Judiciary branches.                                                                    
She  wanted  the  graph  to  include  all  the  branches  of                                                                    
government, to reflect  the cuts that had been  made from FY                                                                    
15  to present.  She remarked  that while  UA had  been cut,                                                                    
there  were other  agencies  that  had been  cut  to a  much                                                                    
greater degree. She supported  Co-Chair Hoffman in asserting                                                                    
that 5 percent  was a small cut. She  acknowledged that some                                                                    
funds accessed federal funds.                                                                                                   
                                                                                                                                
10:31:02 AM                                                                                                                   
                                                                                                                                
Senator  Micciche thought  slide 12  was very  important. He                                                                    
thought  that 200  percent of  the national  mean on  a per-                                                                    
student  FTE basis  was an  extreme  outlying condition.  He                                                                    
requested  the  data set  that  produced  the graph  on  the                                                                    
slide. He  wanted to  understand the  funding makeup  of the                                                                    
Western states.                                                                                                                 
                                                                                                                                
President Johnsen  stated that UA  was happy to  provide the                                                                    
requested information. He specified  that the university had                                                                    
some data  from the Great  Recession, when some  states were                                                                    
ratcheting  down  contributions  and increasing  tuition  to                                                                    
address  fiscal  challenges.  He discussed  various  revenue                                                                    
tools; such as online  education, stronger partnerships with                                                                    
K-12  education,  dual  enrollment  programs,  and  stronger                                                                    
community colleges.                                                                                                             
                                                                                                                                
President  Johnsen  reviewed   slide  13,  "FY18  Governor's                                                                    
Budget Highlights":                                                                                                             
                                                                                                                                
        · Level funding over last year: $325 M UGF                                                                              
        · Reduction in Receipt Authority: $17 M -                                                                               
          University $10 M, Fed $7 M                                                                                            
        · Tuition rate increase (~5%): ~$5 M in revenue                                                                         
        · Reduction in PCNs: 225 positions                                                                                      
                                                                                                                                
President  Johnsen   detailed  that  a  1   percent  tuition                                                                    
increase  was equivalent  to $1  million. He  furthered that                                                                    
the reduction in PCNs was mostly clean-up.                                                                                      
                                                                                                                                
President  Johnsen  displayed  slide  14,  "Program  Areas,"                                                                    
which showed a table. He pointed  out that 71 percent of the                                                                    
UA  budget  went  to  student  instruction,  21  percent  to                                                                    
research, and  8 percent  to service.  He thought  the ratio                                                                    
gave  an  idea of  the  priorities  of  the UA  mission.  He                                                                    
indicated  that the  number of  employees followed  the same                                                                    
ratio; with  75 percent  of full  time employees  focused on                                                                    
student instruction,  17 percent on research,  and 7 percent                                                                    
on service. He  noted that 16 percent  of total expenditures                                                                    
came  from   tuition  and  fees  charged   to  students.  He                                                                    
reiterated that  research generated more than  $4 in revenue                                                                    
for every $1 invested.                                                                                                          
                                                                                                                                
10:35:08 AM                                                                                                                   
                                                                                                                                
Vice-Chair Bishop  asked how much  of the total on  slide 14                                                                    
was comprised of administration.                                                                                                
                                                                                                                                
President Johnsen  relayed that UA tracked  the information,                                                                    
and agreed to provide the number at a later time.                                                                               
                                                                                                                                
Co-Chair MacKinnon asked if students  were informed that the                                                                    
state paid for over 50  percent of instructional costs every                                                                    
year.                                                                                                                           
                                                                                                                                
President Johnsen was confident  that student leadership was                                                                    
aware of the  fact, and ventured to say the  student body as                                                                    
a whole was not aware.                                                                                                          
                                                                                                                                
Co-Chair MacKinnon  wondered if  perhaps there should  be an                                                                    
informational  line   on  student  tuition   documents  that                                                                    
reflected  the   state  contribution.  She   discussed  past                                                                    
student opposition  to hydrocarbon development,  an indistry                                                                    
which  had  generated  all  of the  income  that  was  being                                                                    
invested  in  their  education. Additionally,  she  recalled                                                                    
that students had  not been supportive of  income taxes, nor                                                                    
a  state  sales  tax.  She  thought  there  was  a  lack  of                                                                    
understanding of how the state was funding the university.                                                                      
                                                                                                                                
President   Johnson   indicated   he   understood   Co-Chair                                                                    
MacKinnon's point.                                                                                                              
                                                                                                                                
President Johnsen  showed slide 15, "Education  Imperative -                                                                    
65% by 2025":                                                                                                                   
                                                                                                                                
     By 2025, 65% of Alaska jobs are expected to require                                                                        
     some postsecondary education; current attainment is                                                                        
     37%.                                                                                                                       
                                                                                                                                
     UA's long-term goal is to support Alaska's evolving                                                                        
     workforce needs by producing more graduates and                                                                            
     developing a stronger culture of education.                                                                                
                                                                                                                                
President Johnson  qualified that  UA would not  account for                                                                    
all of  the 65 percent of  Alaska jobs listed on  the slide,                                                                    
as  there  were  other  postsecondary  and  career/technical                                                                    
institutions  across the  state.  He continued  that UA  was                                                                    
devoting  itself  to  meeting   the  goal  for  the  state's                                                                    
economy.  He discussed  the benefits  of a  higher level  of                                                                    
education.                                                                                                                      
                                                                                                                                
Co-Chair Hoffman  asked if President Johnson  had considered                                                                    
growth areas  in the  state; including  healthcare services,                                                                    
which was  particularly important in  the area of  the state                                                                    
he represented.                                                                                                                 
                                                                                                                                
President Johnsen  answered in the affirmative.  He referred                                                                    
to  projections  that  indicated increased  demand  for  the                                                                    
healthcare workforce.                                                                                                           
                                                                                                                                
Co-Chair Hoffman asked  if UA was trying to get  more of its                                                                    
budget towards helping pay for  the education of students to                                                                    
aid them  in achieving degrees. He  mentioned higher tuition                                                                    
costs at  institutions such as the  University of Washington                                                                    
and others in the Lower 48.                                                                                                     
                                                                                                                                
President Johnson  thought there should be  more capacity in                                                                    
helping students afford degrees,  and stated that funding it                                                                    
by  the  budget   request  was  one  of   the  regent's  top                                                                    
priorities.  He relayed  that  UA was  looking  to put  more                                                                    
funds toward needs-based financial  aid. He informed that UA                                                                    
was  reviewing its  health  programs  through the  Strategic                                                                    
Pathways process, which  he would elaborate on  later in the                                                                    
presentation. He  continued that  the process  examined what                                                                    
steps needed  to be taken  to increase production  of people                                                                    
in the health  industry across the state.  He mentioned that                                                                    
Roald  Helgeson,  CEO of  the  Alaska  Native Tribal  Health                                                                    
Consortium,  was part  of the  Strategic Pathways  group. He                                                                    
detailed  his recent  attendance at  a graduation  in Bethel                                                                    
the  previous spring,  at which  the  majority of  graduates                                                                    
were receiving certificates as community health aids.                                                                           
                                                                                                                                
10:40:57 AM                                                                                                                   
                                                                                                                                
President  Johnsen turned  to slide  16,  "Percent of  25-64                                                                    
Year  Olds  with College  Degrees  -  Associate and  Higher,                                                                    
2013," which showed  a bar graph. He described  the graph as                                                                    
an array of the percentage  (by state) of 25 to 64-year-olds                                                                    
with  an  associate's  degree  or  higher.  He  pointed  out                                                                    
Alaska's position at 37 percent.  He relayed that there were                                                                    
no  states (as  of 2013)  at  Alaska's goal  of 65  percent.                                                                    
Based  on his  meetings with  other state  system presidents                                                                    
across  the country,  increasing degree  attainment was  the                                                                    
top priority  for all.  He was  confident that  if committee                                                                    
members   attended   an   National   Conference   of   State                                                                    
Legislatures (NCSL) meeting, that the  issue would also be a                                                                    
top priority.                                                                                                                   
                                                                                                                                
Senator  Micciche  asked  about   the  definition  of  "some                                                                    
postsecondary education"  and wondered if it  was equivalent                                                                    
to an associate's degree.                                                                                                       
                                                                                                                                
President  Johnsen answered  in the  negative. He  furthered                                                                    
that there would be many  valuable certificates and licenses                                                                    
that would be counted in the 65 percent goal.                                                                                   
                                                                                                                                
Senator Micciche was confused by  the fact that the graph on                                                                    
slide  16  measured  the   percentage  of  individuals  with                                                                    
college  degrees  of  the  associate  level  or  higher.  He                                                                    
wondered what  the percentage would be  if certificates were                                                                    
included.                                                                                                                       
                                                                                                                                
President Johnsen  did not have  a figure available  but was                                                                    
confident that  the percentage for  Alaska would  be greater                                                                    
than the 37  percent represented on the  slide. He clarified                                                                    
that  the  percentage would  include  education  such as  an                                                                    
electrician's license, which UA  would not have provided. He                                                                    
cited collaboration  with DEED  and the Department  of Labor                                                                    
and Workforce Development.                                                                                                      
                                                                                                                                
President  Johnsen   discussed  slide  17,   "Education  and                                                                    
Income," which showed a scatter  graph. He thought the slide                                                                    
showed two  views of Alaska, and  showed that it was  a low-                                                                    
education, high-wage  state. He drew attention  to the lower                                                                    
right quadrant  on the  graph, where  Alaska was  shown near                                                                    
the  State of  Wyoming; which  was another  natural resource                                                                    
state   where  citizens   had  high   personal  income   and                                                                    
relatively low college attainment.                                                                                              
                                                                                                                                
President Johnsen  viewed slide 18, "Education  and Income,"                                                                    
which  showed a  graph similar  to the  previous slide,  but                                                                    
with the  axes flipped. He  pointed out that Alaska  was not                                                                    
on  the correlation  line, in  terms of  higher income  than                                                                    
would  be expected  given the  state's education  attainment                                                                    
level. He noted that a  regression analysis was not merely a                                                                    
visual tool; but according to  statisticians, was also a law                                                                    
that dictated  over time one  would regress to the  mean. He                                                                    
was  concerned  that  if  the state  did  not  increase  its                                                                    
education  attainment, then  it  could  safely be  predicted                                                                    
that Alaska would move towards  the mean, where incomes were                                                                    
considerably lower than  they were today. He  thought it was                                                                    
a  challenge   to  increase  Alaska's  level   of  education                                                                    
attainment in the current fiscal climate.                                                                                       
                                                                                                                                
Vice-Chair  Bishop commented  that the  state would  have to                                                                    
advance to expand its economy  to increase opportunities for                                                                    
Alaskan's.  He   mentioned  the  state's  reliance   on  one                                                                    
industry, while other states had diversified economies.                                                                         
                                                                                                                                
President Johnsen agreed with Vice-Chair Bishop.                                                                                
                                                                                                                                
10:45:52 AM                                                                                                                   
                                                                                                                                
President  Johnsen  spoke  to   slide  19,  "Alaska's  Brain                                                                    
Drain,"  and noted  that the  graphic  emphasized the  point                                                                    
that UA needed  to do a better job in  partnership with K-12                                                                    
education  and  other  partners  to  drive  up  high  school                                                                    
graduation and  college-going rates. He also  thought it was                                                                    
important to reach  out to employers, to create  a funnel of                                                                    
education and employment for the state.                                                                                         
                                                                                                                                
Senator  Dunleavy  referred  to   slide  19,  and  asked  if                                                                    
President Johnson was satisfied  with recruitment efforts of                                                                    
in-state students.                                                                                                              
                                                                                                                                
President Johnson  answered in the negative,  and noted that                                                                    
there was  a privately-funded campaign (including  radio and                                                                    
television)  to advertise  the  university.  He stated  that                                                                    
there  was increased  funding for  recruiting in  the FY  18                                                                    
budget, including  traditional high-school students  as well                                                                    
as Alaskans that had some  college and no degree. He pointed                                                                    
out that UA would not meet  its goal by relying only on high                                                                    
school  graduates,  but  rather  must  reach  out  to  other                                                                    
Alaskans   with   high-quality   convenient   programs.   He                                                                    
emphasized  that it  was not  possible to  expect people  to                                                                    
quit jobs or move to complete college work.                                                                                     
                                                                                                                                
Senator Dunleavy asked how it  was determined that a student                                                                    
would need a  developmental course. He asked if  UA used the                                                                    
Accuplacer assessment.                                                                                                          
                                                                                                                                
President Johnsen answered in the affirmative.                                                                                  
                                                                                                                                
Senator  Dunleavy  wondered how  many  of  those who  needed                                                                    
developmental  coursework  were  non-resident  students.  He                                                                    
asked   about  the   total  cost   per  year   dedicated  to                                                                    
developmental education  in the university system.  He asked                                                                    
how many  students taking  developmental coursework  were UA                                                                    
scholars. He  asked how  many students  taking developmental                                                                    
coursework   were  receiving   the  Governor's   Performance                                                                    
Scholarship.                                                                                                                    
                                                                                                                                
President Johnsen agreed to provide the information.                                                                            
                                                                                                                                
10:49:45 AM                                                                                                                   
                                                                                                                                
Senator von Imhof  spoke to slide 19, and  found the numbers                                                                    
alarming.  She referred  to a  study by  Northern Economics,                                                                    
which  had  tried  to  provide causation  for  some  of  the                                                                    
numbers displayed on the slide.  She thought DEED would give                                                                    
a  presentation later  in  the day,  and  she would  inquire                                                                    
about  whether  anyone  from the  department  had  seen  the                                                                    
study.                                                                                                                          
                                                                                                                                
Co-Chair MacKinnon asked if  President Johnson could discuss                                                                    
how   online   degree-seeking   might   be   affecting   the                                                                    
university. She wondered how  effective the instructors were                                                                    
at  engaging students.  She  considered hypothetically  that                                                                    
had  slide  19  reflected  a business,  it  would  be  under                                                                    
consideration  for a  cut  if  there was  only  a 5  percent                                                                    
success rate.  She acknowledged that there  were individuals                                                                    
attending  college for  other  reason  than graduation.  She                                                                    
wanted  to  know  how  to   measure  what  happened  in  the                                                                    
classroom.                                                                                                                      
                                                                                                                                
President Johnson thought  Co-Chair MacKinnon's question was                                                                    
important  and  complex.  He  noted   that  the  slide  only                                                                    
addressed baccalaureate degrees, while  there were also many                                                                    
trades programs  that that would make  the outcome increase.                                                                    
Additionally, many  students retained jobs  (particularly in                                                                    
trades) after not  completing a degree program.  He spoke to                                                                    
the quality  of UA programs  and courses, and  informed that                                                                    
faculty were peer-reviewed regularly.                                                                                           
                                                                                                                                
President   Johnson   continued   to   speak   to   Co-Chair                                                                    
MacKinnon's question.  He informed that all  UA classes were                                                                    
reviewed  by  students,  and programs  were  institutionally                                                                    
accredited.   Accreditation  included   a  rigorous   review                                                                    
programs by an external  organization to ensure that student                                                                    
learning  outcomes  were  met.  He continued  that  many  UA                                                                    
programs had  specialized accreditations in  specific fields                                                                    
such  as  education,  engineering,  business,  and  nursing;                                                                    
whereby  quality  control  was  the top  criterion.  He  had                                                                    
learned from  K-12 education literature  that 30  percent of                                                                    
the  variance in  school performance  was  due to  in-school                                                                    
variables;  and  70  percent  of the  variance  was  due  to                                                                    
external factors.  He thought if  the statistics  applied to                                                                    
UA, there  would be a  great deal of  work to do  outside of                                                                    
the university to prepare Alaska's students for success.                                                                        
                                                                                                                                
10:54:22 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon thought  maybe  the budget  subcommittee                                                                    
for  UA   could  ascertain  what  was   being  done  towards                                                                    
increased  recruitment and  retention  of students  pursuing                                                                    
advanced degrees.                                                                                                               
                                                                                                                                
Vice-Chair Bishop thought there  was much information in the                                                                    
slide  that needed  to be  discussed in  greater detail.  He                                                                    
stated  he would  address the  matter with  the subcommittee                                                                    
chair.                                                                                                                          
                                                                                                                                
Senator Micciche thought it was fair  to say that UA was not                                                                    
responsible for the 70 percent  of high-school students that                                                                    
did  not attend  college.  He considered  the proportion  of                                                                    
students that ended up attending  UA, and graduated within 6                                                                    
years; which signified  a 50 percent success  rate. He noted                                                                    
that  many Alaskan  students  attended  college longer  than                                                                    
many states in  the Lower 48. He thought the  graphic on the                                                                    
slide was confusing. He thought  UA could be more successful                                                                    
by capturing  the 16  percent of  high school  graduates who                                                                    
left the state for college.                                                                                                     
                                                                                                                                
Mr. Johnsen thanked Senator Micciche  for his comment on the                                                                    
slide, and  suggested that UA  did have a  responsibility to                                                                    
the 70  percent that did  not attend college.  He referenced                                                                    
studies  that showed  the  single  most important  in-school                                                                    
factor  for K-12  student  success was  the  quality of  the                                                                    
teacher. He  mentioned UA's  work towards  strengthening its                                                                    
College of Education, and helping to build the K-12 system.                                                                     
                                                                                                                                
Co-Chair  Hoffman thought  there  had  been robust  dialogue                                                                    
with  the  members, and  the  members  fully understood  the                                                                    
importance  of  the  university and  what  it  provided.  He                                                                    
thanked UA  for its  persistence in generating  dollars with                                                                    
funds they were  given. He shared that he was  a graduate of                                                                    
UAF. He  asked if  Mr. Johnsen had  closing remarks  to make                                                                    
regarding the university and its importance.                                                                                    
                                                                                                                                
10:58:46 AM                                                                                                                   
                                                                                                                                
President  Johnsen  congratulated  Co-Chair Hoffman  on  the                                                                    
Alumni  Achievement  Award  for  Business  and  Professional                                                                    
Excellence that he had received  from UAF the previous year.                                                                    
He  summarized  that  there  was  more  information  in  the                                                                    
presentation regarding  the consolidations that  the regents                                                                    
had  decided upon,  as well  as more  about plan  that would                                                                    
enable UA to have a  legally defensible land grant. He noted                                                                    
that later in  the day he would be speaking  about the state                                                                    
of  UA  to  the  State  Chamber of  Commerce.  He  would  be                                                                    
discussing  three points:  the strength  of the  university,                                                                    
the  challenges that  were  facing UA,  and  a statement  of                                                                    
confidence and optimism about addressing the challenges.                                                                        
                                                                                                                                
President  Johnsen  acknowledged  that the  state's  current                                                                    
fiscal challenges could  also be present in  the future, and                                                                    
emphasized the  importance of commitment  and values  of the                                                                    
state.  He was  enthusiastic about  continued work  with the                                                                    
university budget subcommittee to address any issues.                                                                           
                                                                                                                                
Co-Chair  Hoffman reminded  that the  committee was  hearing                                                                    
from the  four major  cost-driver entities  in the  state to                                                                    
gain  deeper understanding,  and  asked if  any members  had                                                                    
additional comments.                                                                                                            
                                                                                                                                
11:01:08 AM                                                                                                                   
                                                                                                                                
Co-Chair  MacKinnon  asserted  that she  had  confidence  in                                                                    
President  Johnsen  and the  Board  of  Regents of  UA.  She                                                                    
expressed   appreciation   for   the  fact   that   he   had                                                                    
acknowledged the  state's financial position.  She expressed                                                                    
appreciation  for   all  his  hard  work   and  outreach  to                                                                    
individual legislators.  She referred to information  in the                                                                    
newspaper  that  was  unflattering to  the  university.  She                                                                    
thought  President   Johnsen  had  done  an   admirable  job                                                                    
considering the  challenges that  the state was  facing, and                                                                    
the huge 14 percent cut the university had to accommodate.                                                                      
                                                                                                                                
Vice-Chair Bishop  concurred with  the comments  of Co-Chair                                                                    
MacKinnon.  He discussed  the importance  of morale  and its                                                                    
connection to optimum performance at UA. He expressed                                                                           
confidence in the employees of the university system.                                                                           
                                                                                                                                
Senator Micciche agreed with the comments of Vice-Chair                                                                         
Bishop. He commented that he was also a proud graduate of                                                                       
the UA system.                                                                                                                  
                                                                                                                                
Senator Olson praised President Johnsen's presentation.                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
11:05:17 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 11:05 a.m.                                                                                         
                                                                                                                                

Document Name Date/Time Subjects
021617 UA FY18 Overview SenFin.pdf SFIN 2/16/2017 9:30:00 AM
Operating Budget FY18