Legislature(2005 - 2006)SENATE FINANCE 532
02/03/2005 09:00 AM Senate FINANCE
| Audio | Topic |
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| Start | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
JOINT
SENATE FINANCE COMMITTEE
HOUSE FINANCE COMMITTEE
February 3, 2005
9:05 a.m.
CALL TO ORDER
Co-Chair Green convened the meeting at approximately 9:05:06 AM.
PRESENT
Senate Finance Committee:
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Lyman Hoffman
House Finance Committee:
Representative Kevin Meyer, Co-Chair
Representative Mike Chenault, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Mike Kelly
Representative Richard Foster
Representative Bruce Weyhrauch
Representative Mike Hawker
Representative Jim Holm
Also Attending: SENATOR GARY STEVENS; SENATOR RALPH SEEKINS;
SENATOR CHARLIE HUGGINS; REPRESENTATIVE DAVID GUTTENBERG;
Attending via Teleconference: There were no teleconference
participants.
SUMMARY INFORMATION
[Note: The first portion of this meeting, in which Co-Chair Green
called the meeting to order and introduced President Hamilton, was
not recorded.]
Presentation on the University of Alaska
MARK HAMILTON, President, University of Alaska, gave the following
testimony.
There is a story about an admiral who got up every morning and
he went to his safe. He went to his safe and he took out a
single card and he read it and put it back into the safe and
went about the business of running the ship. People couldn't
wait for him to get transferred because they just couldn't
wait to see what was in that safe. He did get transferred and
they took out the card and what it said was "Port is left.
Starboard is right." Now the story refers to something.
In this super bowl season you probably prefer something that
Vince Lombardi said. He said, "If you can block and tackle you
can play with anybody." Now we think that's your university.
Lots and lots of exciting things, but nothing that isn't basic
in terms of serving the needs of Alaska.
Our success has come and will continue to come from getting
everyone in the game. But it all starts here. The State is in
the game.
This is the seventh consecutive year that the governor has put
into his budget, the full Board of Regent's request. This
governor brought his entire cabinet up to Fairbanks to see how
the research efforts there might aid and abet the State, and
he's going to bring them back in late spring.
The legislature has funded us every year. Now it's maintenance
level funding, but you've stuck with us. You gave me money
when oil was nine dollars a barrel and you started it here. It
all starts here.
The federal government is in the game. Between '01 and '04,
federal grants went up 36 percent to now well over $100
million. And this is not an accident. My faculty averages
across the system - and obliviously not all of them are in the
research business - but a simple math of all the monies in
divided by faculty, on the average they raise $100,000 in
federal grants. The national average is half of that. In
Fairbanks where research is obviously more intensive, they
average more than $200,000 per professor.
Our students are in the game. We have half of our high school
graduates now going to college. That's up from 44 percent. And
half of those are coming to the University. That's up from 40
percent.
Our retention of baccalaureate-seeking freshmen is up to 72
percent moving into their sophomore year. That's higher than
the national average for open admission universities.
Retention of Alaska Scholars is in excess of 80 percent.
Students are choosing the University of Alaska.
We are up 35 percent in the high-demand job programs that you
directed us to highlight.
Alaska Natives first-time freshmen enrollment is up 53 percent
over the last five years.
And graduates are choosing Alaska. Eighty-six percent of the
Alaska Scholars we have graduated to date, according to the
Department of Labor and Workforce Development, are at work in
Alaska. And I've got 1,550 more in that pipeline coming to
change this state. Our best are staying home and that's the
way it should be. There's nothing too good for the State of
Alaska.
Their attendance has meant a significant increase in tuition
revenue. Forty-eight million in the year 2000; $77 million
today.
And Alaskans, the citizens, are in the game. Between '01 and
'04, private giving to the University is up 115 percent and
corporate giving [is] up 35 percent. Excluded from these
figures are special projects like the museum, the KUAC
promotions. This is just general giving. What that has meant
to us is the UA Foundation, which had about $20 million in
1989. [It] went to $40 million by '96; [it] went to $80
million by the turn of the millennium and today is $130
million, allowing them to distribute nearly $10 million to the
University.
Besides their money, Alaskan citizens serve on our advisory
boards and build programs with scholarships, [and] provide
internships. Alaskans are in the game.
And the University is in the game. We have to be. The five-
percent we've averaged in increased State funding is
maintenance level. We have to generate more.
In addition to tuition and the Foundation funding, the
significant funds from Conoco Phillips and BP compact
agreements have allowed us to establish President's professors
in key areas: fish and ocean sciences, bio informatics, remote
data processing, global climate change, global logistics,
education technology, Alaska Native language and culture. And
coming very soon: President's professor in mining and
engineering.
We have partnerships with K-12 schools, Denali Commission,
tech centers, trade unions, State virology lab, Fairbanks
[North Star] Borough has initiated a tax incentive program
that looks very, very promising. In Bethel, in Nome and
Fairbanks, we're working with communities and schools in the
development of comprehensive job training centers. I remind
people that collaboration doesn't mean talking together,
that's convocation. Collaboration means laboring together.
We've born a program with DEED [Department of Education and
Early Development] called Teacher Mentoring that addresses the
needs of new teachers, especially in rural areas. This year
350 new teachers have been assigned a mentor, chosen by the
districts. Their continued education being taken care of by
the University and that program promises enormous success.
In the military you are enjoined to discover the center of
gravity. It's that on offense; it's that portion of an enemy's
formation, the destruction of which will lead to the collapse
of the whole. And on defense, it says, "If you have something
upon which everything depends, you better defend it." Now for
Senators Dyson and Bunde, I'll give a bit more of a literary
reference. If you were Achilles, and you knew that that's your
heel, you'd buy some armored Nikes.
Well we have such a heel. [Indiscernible] is at least higher
education. I love the University, but they're inefficient.
It's been the cry across this country for decades. Before I
ever saw this group, Senator Wilken gave me a counseling
session. What he said was, "If you can be accountable, then
things will change." And we have been accountable. We are out
front in so many ways.
The Board of Regents has directed that we spend $25 million in
maintenance every year. Now that's not enough to address the
nearly $60 million worth of depreciation that has assessed
against our facilities, but it's way out in front of any
organization except for Alaska Housing and Finance
[Corporation] for being accountable.
We capped our University pension plan at $3,200. The State
currently has a high cap of about $6,000. Now it's a different
workforce, it's a different circumstance. This only for
comparison, but we're saving $3,000 per employee in our
pension fund.
We've developed a health care program called UA Choice, were
individuals get to choose a health care program at lesser
costs that with meet their specific needs because they're
grownups and they can make their own call.
We established an optional retirement program outside of PERS
[Public Employees Retirement System [and TRS [Teachers
Retirement System] [that] doesn't require you to seek tenure
(or vestiture). This works for us because we have a kind of
transient workforce. What that means - and you have to wrestle
with these PERS and TRS bills across the board, you're very
familiar with it - what it means is we have provided by that
program $87 million of state avoidance of an unfunded
liability. In other words, we paid about a third of our PERS
and TRS [indiscernible] that is the rest of the state.
Now you might note that in the governor's budget we're only
funded for half of the PERS and TRS bill for this year. And
frankly, I think in light of our initiatives and efforts to
date, you can be sure I'll be seeking the other half. It
doesn't seem to me that that's quite fair.
You did program reviews, probably referred to by some
pejorative term by the campuses because twice a year, for
about a day and a half, I sit down and simply go over the
books. This is part one of the first of this year's two
sessions just for UAA [indicating a filled binder
approximately three inches thick.]
We began a program called ACAS, Accountability and
Sustainability. This is a program to find ways to save money.
I think my first instinct on this was "let's form a bunch of
committees, I'll give them some wonderful guidance, we'll go
out [and] we'll find the silver bullets. The only thing I did
right was the committees were very inclusive. We had lots and
lots of faculty and lots and lots of staff to look over our
accounts. What happened as you might already presume was we
found no silver bullets. What we found was there were more
than 100 golden BBs: $70,000 by stopping the sending out of a
[indiscernible] that told you we automatically put your
paycheck in the bank - $70,000; $100,000 by consolidating the
need for off-set printing; $250,00 by not subsidizing dial-in
to the Internet, which we designed as a student-friendly
program and found the students weren't using it; $60,000 by
using the Easy Biz airline system, $60,000 worth of avoidance
of tickets. We outsourced teleconferencing from a 20-cents per
hour rate to four cents. We've reduced accounts receivable by
23 percent. And there's a hundred more.
The staff, as it turns out, can do anything. They're not just
great workers, they care. Forty-nine percent of my statewide
staff contributed to the University last year. The national
average is 17 percent. But believe me they're more than three
times as good. Our front line is also our foundation.
In 1862 before we were even a territory, the Morrill Land
Grant Act, signed by President Lincoln, put forth a radical
vision. This would make higher education available to all.
Well, we are an open admission university. He said, "Provide
both liberal and practical education and training." Now
Morrill probably did not have in mind community colleges, but
he clearly referred to what we know and support as workforce
training.
The Morrill Act dealt primarily with rural Alaska, primarily
with agriculture. Sixty percent of America was agriculture in
1862. Today it's about two percent. And universities have
wandered off into different focuses. But we have embraced a
broader agenda addressing economic, social and environmental
issues in our rural areas. In Ketchikan, the marine technology
program; in Kenai, working with local communities, mining
community to make preparations for the job training needs and
the expansion that the industry will demand. We've already had
one internal meeting and have organized a comprehensive mining
summit in March. There are similar programs of cooperation and
collaboration in every community campus in our system.
Morrill says, "Over time develop a research agenda." And we
have developed an agenda that's closely tied to our
geographical location and deals with Alaskan issues:
everything from micro miniaturization to horticultural
products. Infrastructure: working with DOT on roads and
embankments; working with BLM and DNR on tundra ponds and
pumping for ice roads; health and bioscience, hibernation,
biotechnology, infectious diseases, [and] behavioral health.
We have the State seismologist. We have the State
climatologist. We have the earthquake information center [and
the] Alaska volcano observatory and tsunami protection, and so
forth. Research in snow and ice, permafrost, coastal erosion,
Alaska ocean observing system.
Understanding leads to management. Morrill continued,
"Institutions should extend themselves beyond the labs and
classrooms and be engaged in outreach and partnerships with
the citizens in the states they serve." I have already listed
a small portion of our outreach and partnerships, but it goes
on: cooperative extension program, working with Yuut Center in
Bethel, marine advisory program, Kotz. Tech. Center, small
business development center, Hutchison Career Center, business
enterprise institute. All and all they constitute 80 offices
in more than 50 cities and villages in the state.
I believe the University of Alaska is closer to the original
intent of the Morrill Act than any land grant college in this
country.
Now we had challenges. None of them [indiscernible.] Health
care costs rising at a minimum of 15 percent. Facilities cost,
predicted tightness in federal dollars. We are [indiscernible]
enrollment of part-time students. Our student body is changing
to more and more and more and more of kind of classic first-
time freshmen: people coming in for full-time experiences.
It's small, but we're seeing a drop off in the number of
individuals who are taking one course or two. And we're
looking into that. There's a number of factors; you can think
of many of them I'm sure. It deals with economy, it deals with
affordability, we even think higher gas prices [have] stopped
some of our commuting students [from traveling] to our rural
campuses. But we're looking into that. It's a challenge and if
[indiscernible] open admission, multi-purpose, you better be
able to take care of the part-time student.
What we're asking for [is] another maintenance level budget.
But I want you to consider more. I want you to consider an
investment in research. Research is an industry all by itself.
Research eventually will create other industries. As a state,
we invest about one-percent of our gross State product. The
national average is about 2.7 percent. For Alaska to reach
national levels, we'd have to increase our investment by
almost $500 million. That's ridiculous.
But I have a plan for you. I want you to fund phase one of a
five-year plan. Not $500 million, not $100 million. I want you
to look at investing $20 million over the next five years.
With two and a half this year, I believe we can maintain our
average, currently seven to one, at about six to one over that
period of time. If we can do our share of collaboration the
University can expect a [indiscernible] investment to $140
million over five years. And that cuts our gap against the
nation by almost a third.
I have other requests I want you to consider. Funding a
portion of the Alaska Scholars Program. Its success has
outstripped the primary source of funds, which is our natural
resource fund. Remember that 86 percent of our graduates today
are currently at work in this state. There are 1,550 more
coming. Stop the brain drain. That's what you told me to do
and it's happening.
We are doing everything I believe is possible at the
University to reallocate funds, form partnerships, to get
external grants, but it's time to move to a new level. And
like everything else it begins here. The leadership is central
you represent all of Alaska. The University is not just
waiting for your funding. We are waiting for your charge. We
are prepared for you to take us all forward.
For this great State and its future, I believe there are no
silver bullets. I don't think the gas pipeline is a silver
bullet, I don't think ANWR is a silver bullet. It's going to
be engaged Alaskans and it's the thousands of golden BBs
that'll save the day.
At the University, we are a part of you. We admire you and we
will serve you. But it all starts here.
9:27:52 AM
Senator Bunde acknowledged that he and President Hamilton have not
always been in agreement. They have however, agreed that the
University of Alaska is an important State function. Therefore,
Senator Bunde's questions should be taken only as seeking
information. He appreciated President Hamilton's "energy and work
you have brought to your job."
Senator Bunde spoke to President's Hamilton's comments regarding
the land grant status of the University, noting that some
legislators support a more traditional land grant management method
for the University. He asked that status of the efforts to
accomplish this.
President Hamilton reported on efforts to transfer lands to the
University made by former US Senator Frank Murkowski. President
Hamilton emphasized that the land grant awarded to the University
of Alaska is smaller in size than the land grant given to the state
of Rhode Island. He would continue efforts to achieve a land
transfer to the University.
President Hamilton commented on two aspects of the land grant
philosophy, one being that "those who give you land are your
friends. However, the other aspect is that once the land has been
awarded, there is an expectation that no additional funding should
be necessary. The previous land grant awarded to the University of
Alaska Last has been managed well and in 20 years would net $5
million annually. This is not insubstantial and would fund the
Alaska Scholars program, but would not fully fund the University.
Senator Bunde asserted that if "more traditional university people"
would support a land grant system, the acquisition of additional
land could occur. Other funding sources include capital projects
and the earnings reserve account of the Permanent Fund.
Senator Bunde directed attention to a chart the witness posted in
the Committee room [copy not provided] relating to retention rates.
Senator Bunde asked the retention rate of high school graduates. He
understood it is higher than the national average.
President Hamilton informed that 50 percent of Alaskan high school
graduates are attending college and 50 percent of those students
are attending the University of Alaska.
Senator Bunde asked if approximately one-half of those students
graduate from the University of Alaska after four to five years.
President Hamilton answered no, that 72 percent of University of
Alaska students "make it" to their sophomore year. In "embracing"
the community college mission, it must be understood that most
community college students are not seeking a degree, but rather
pursue a certificate or associate degree. It is difficult to
determine which students would have intended to utilize the
University as a community college. This is inherent in an open
admission system.
Senator Bunde shared concerns about funding. Other schools have
instituted higher tuition charges for "professional students,"
those who do not graduate in five years. Tuition only pays a
portion of the cost of education, with the State funding
approximately 60 to 70 percent.
President Hamilton agreed that the State contributes at least 60
percent to the cost of higher education.
Senator Bunde asked if the witness has considered implementing a
similar tuition structure for long-term students.
President Hamilton responded that he would speak with Senator Bunde
on the topic at a later time.
9:34:53 AM
Co-Chair Wilken pointed out that five of the legislators present
have "had the benefit of hearing about the old University." He
thanked President Hamilton and the employees of the University of
Alaska for constructive interaction with the legislature.
Co-Chair Wilken asked for additional information on the teacher-
mentoring program to address problems in securing and retaining K-
12 teachers.
President Hamilton relayed that teachers who leave the profession
reported that they did not have "a comfort in the classroom,
support by my bosses [or] support by my community". Three hundred
fifty new teachers have had the benefit of a mentor through this
program to provide support and on-the-job vocational skills. If
teachers were able to become comfortable more quickly and remain in
the profession, he predicted student achievement would increase.
This would also save money from "people floating back and forth" Of
those 350 teachers, none quit their jobs at the Christmas school
break, compared to the 15 to 25 teachers who quit during this
period in previous years. Two hundred of those teachers are
employed in rural communities. This program in cooperation with the
Department of Education and Early Development would change "that
turnover thing" which costs money and "hurts" students.
Co-Chair Wilken recalled stories from ten to twelve years ago about
the challenges for students to register or check their records. He
asked the witness to speak to on-line class management and
registration.
President Hamilton expressed that implementation of such an
electronic system has been a "remarkable thing to watch". Students
themselves critiqued the system and the majority of students now
apply online. Financial aid applications are also available online
and more applied online last year than applied in any form two
years prior. This addresses the concern that University of Alaska
students do not apply for financial aid and grants to the extent
that students in the Lower 48 do. It is a matter of exposure.
Students can now accomplish every function they used to stand in
line to do.
9:40:20 AM
Representative Stoltze recalled that the chamber of commerce in the
election district he represents expressed interest in participating
in the selection of the chancellor for the University of Alaska,
Anchorage campus. He thanked President Hamilton for facilitating
this.
Representative Stoltze stated that during the special election in
September 1999 to determine whether to appropriation a portion of
the earnings of the Permanent Fund for government services, an
employee of the University provided information to the media in
support of the proposal. Concerns were raised about the propriety
and pragmatism of a research agency being involved in a political
campaign. He asked if this activity would be restricted in the
future.
President Hamilton was unaware of the situation. He stated that the
University of Alaska is prohibited from getting involved in
political campaigns. However, research information prepared by the
University is available for use by others as part of public domain.
The University does not endorse candidates or appear in
advertisements in support of candidates.
Representative Stoltze's recollections of the situation were
different.
Representative Stoltze referenced a speech made by an employee of
another educational institute and asked how the matter would be
addressed if the speaker were an employee of the University of
Alaska. How could Alaskans "up in arms" over such statements
express complaints and affect changes.
President Hamilton replied, "Individuals are not aware of the
unintended association of who they are with the place they work."
The University of Alaska encourages its employees to make the
distinction between their personal opinions and any positions taken
by the institution. He remarked that through his service in the
military he defended the US Constitution. If an employee under his
direction expresses an opinion in public that embarrassed him, he
would defend the right of the individual.
9:44:20 AM
Senator Dyson applauded the presentation. He was surprised at the
results of exit interviews of teachers who left the profession
showing the primary frustrations as an "inability to control the
classroom" and that they "dreamed about being a teacher so they
could make a difference in individual student's lives." The various
factors that prevented these former teachers from accomplishing
these objectives were the reason they resigned. President Hamilton
did not mention this in his comments and Senator Dyson asked the
witness to address this.
President Hamilton surmised the teachers likely ascribed the
failure to make an impact with the lack of support they received.
The former teachers may have found their time was spent performing
other functions rather than focusing on "making a difference."
Senator Dyson recommended this should be reviewed further and an
investigation made to determine whether other functions were
preventing teachers from interacting with students. This could
include faculty meetings.
President Hamilton remarked that after mentors work with student
teachers for two years, feedback should be collected to identify
areas of concern. He pointed out that other professionals, such as
doctors, are mentored in some manner during the first years of
practice. For doctors this occurs in the form of a residency
assignment. He hoped that some mentor teachers would become
instructors or advisors and implement experiences they learned
being teachers and mentor teachers. If this occurred, issues
causing other teachers to leave the profession, could be resolved.
Senator Dyson asked what the standards or goals should be with
regard to achieving diversity of faculty.
President Hamilton commented this is a matter of national debate.
It was apparent that the majority of faculty nationwide are "very
aligned with a single segment of the politics if the country." The
profession is able to deal with this because of a "reminder" that
"the classroom has to be open to all opinions" and that political
correctness, party affiliation or religion beliefs should not be
used as a "bully pulpit". The profession is founded on this premise
and if forgotten, would benefit from the publicity given to the
matter and would subsequently "adjust itself." University
professionals believe that universities should be a place where all
opinions could be expressed.
Senator Dyson directed his comments to the importance that the
backgrounds of teachers in the University of Alaska are similar to
that of students. He spoke to the comfort of students in having
teachers who have also lived and worked in rural areas, etc. The
University of Alaska must attempt to attract as many students and
faculty from small communities as possible. If it is determined
that political correctness toward diverse groups is inadequate,
should the faculty present different philosophical positions.
President Hamilton replied it would be ideal. He told of the risk
of faculties as well as business professions "choosing associates
and choosing successors who are a lot like you". However, due to
the principal of the education profession, there is a greater
likelihood of more diversity in the university setting than in
private business.
9:51:51 AM
Representative Weyhrauch asked how items on the Board of Regents'
priority list change their level of importance from one meeting to
the next. He was unsure how the prioritization process operated. He
also questioned the ratio of administrative and faculty positions.
He asked the reason for the significant number of staff positions,
including provost, vice-provost, chancellors, vice-chancellors,
directors, associate directors, etc.
President Hamilton addressed the second issue, pointing out that
the University of Alaska implements degrees ranging from high
school equivalency diplomas to post-doctorate degrees and operates
on 14 campuses. Therefore, a different ratio of instructors and
administrators is necessary. This ratio is hampered by the need to
have instructors in many locations in the State. However, the
University of Alaska compares favorably to the national average.
President Hamilton furthered that University of Alaska staffing to
student ratio is similar to that of the national average, which
signifies it is understaffed. By embracing the "entire spectrum",
the University of Alaska has more part time students than other
peer institutions. This creates a "huge deficiency challenge". He
compared the administrative efforts required for one full-time
student versus four students enrolled in three classes.
Registration, counseling and other university administration
functions are required for each of the students, regardless of
their class load. Many University of Alaska students work full-time
and therefore the University must maintain offerings in several
locations to be available in the areas of the students' employment.
Representative Weyhrauch asked about prioritization.
President Hamilton explained that the Board of Regents "puts forth
a series of principals upon which to rate all capital projects"
that include such factors as external funding and the number of
students served. Once a list is compiled, the Board reviews and in
some instances determines that the priorities "didn't quite develop
what they had hoped to do for other, frankly, opportunistic
reasons." He exampled a project eligible to receive federal funding
as a project that could become a higher priority.
9:57:16 AM
Senator Bunde understood the difficulties in administering an open
admissions policy; however, "to your great credit, I think you've
embraced that and I that the University of Alaska never changes
that" despite the increased costs. He told of recent graduates with
$40,000 of debt working lower paying jobs. He asked if the
University is continuing its efforts to "work back toward the
community college program." He also expressed concern regarding the
"high level of remediation" the University has been required to
provide for Alaskan high school graduates.
President Hamilton stressed that adult basic education is
fundamental for people to obtain jobs. If Alaska could provide
proficient adult education, more Alaskans would fill the jobs that
would be created with the opening of the Alaska National Wildlife
Refuge (ANWR) for oil development and the construction of a natural
gas pipeline. The problem is larger than that experienced at the
University.
President Hamilton spoke of the missions and measures that are
facilitating the University to tailor programs to train Alaskans
for "high demand jobs". This has provided incentive for some to
seek vocational training.
Co-Chair Green announced that President Hamilton and University of
Alaska staff could answer any additional questions after the
meeting concluded.
ADJOURNMENT
Co-Chair Green adjourned the meeting at 10:01 AM
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