Legislature(2009 - 2010)UAF Campus
10/14/2009 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| University of Alaska Budget Overview | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
October 14, 2009
9:15 a.m.
9:15:05 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee meeting
to order at 9:15 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Charlie Huggins, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Senator Gary Stevens; Senator Joe Paksvan; Representative
David Guttenberg; Representative Anna Fairclough;
Representative Mike Kelly; Representative Jay Ramras;
Cynthia Henry, Chair, Board of Regents, University of
Alaska; Tim Brady, Board of Regents, University of Alaska,
Anchorage; Fuller Cowell, Board of Regents, University of
Alaska, Anchorage; Wendy Redman, Vice President, University
Relations, University of Alaska; Myron Dosch, Controller,
University of Alaska; Joe Trubacz, Vice President, Finance,
University of Alaska; Brian Rogers, Chancellor, University
of Alaska, Fairbanks; Michelle Rizk, Associate Vice
President, Budget, University of Alaska; Fran Ulmer,
Chancellor, University of Alaska, Anchorage; John Pugh,
Chancellor, University of Alaska, Southeast; Kit Duke, Chief
Facilities Officer, University of Alaska, Anchorage; Mary
Rutherford, President, University Of Alaska Foundation;
Bernice Joseph, Vice President, Rural Communities and Native
Education, University of Alaska; Pat Pitney, University of
Alaska, Fairbanks; Ashton Compton, Student Regent,
University of Alaska, Fairbanks
PRESENT VIA TELECONFERENCE
None
SUMMARY
^UNIVERSITY OF ALASKA BUDGET OVERVIEW
9:18:52 AM
CYNTHIA HENRY, CHAIR, BOARD OF REGENTS, UNIVERSITY OF
ALASKA, read from a document regarding the Board of Regents'
fiduciary responsibilities:
The University of Alaska is identified in the Alaska
Constitution under Article 7 which says, 'The
university is hereby established as the state
university and shall be governed by a board of regents.
The board shall, in accordance with the law, formulate
policy and appoint the president of the university.'
The state constitution established the University of
Alaska as the single post-secondary system governed by
a board of regents appointed by the governor and
confirmed by the legislature. This organization was
specifically designed to establish public
accountability and avoid potential political
intervention with the academic management of the higher
education institution. The board appointments were
even established as staggered eight-year terms to avoid
a situation where a governor could ever appoint the
entire board.
The single system was designed to avoid the competition
for legislative funding that has plagued other states
with separately governed systems and institutions. The
board of regents submits a unified request for
legislative consideration based on a comprehensive
budget development and review process that is guided by
priorities established by the regents.
The board of regents is responsible for establishing
separate campus missions that respond to the needs of
local and regional constituents. Policies have been
developed that promote program alignment and
collaboration between campuses and avoid unnecessary
program duplication. There are never sufficient
resources to provide all the instruction, research, and
outreach Alaskans want. As the legislature knows well,
priorities are very difficult from region to region.
Tension between campuses and between regents is an
inevitable part of the university culture, but the
board of regents manages competing interests into a
statewide mission and strategic plan that is broadly
perceived as fair and balanced.
There is a significant degree of consistency in
missions across the three units: in undergraduate, and
in selected university programs, and in the community
college mission. This mission includes providing
vocational and occupational instruction, the first two
years of undergraduate education, preparatory, and
developmental instruction, and other credit and non-
credit courses, and programs designed to be responsive
to the needs of local communities, and to adult
learners in particular.
Differentiation between the three urban campuses is
important and is realized through the designation of
statewide leadership and centers of excellence in
specific focus areas. The University of Alaska,
Anchorage, (UAA) is a comprehensive university offering
exceptional undergraduate and masters' programs in the
arts and sciences, as well as meeting Alaska's most
pressing professional needs for nurses, social workers,
engineers, and business leaders. The University of
Alaska, Southeast (UAS) provides a liberal arts
curriculum for undergraduates and selected masters'
degrees, including teacher education. The University
of Alaska, Fairbanks, (UAF) is the state's primary
academic research institution. It provides
undergraduate and graduate education, including the
doctoral degree with a focus on science, technology,
math, and engineering.
The university is subject to a myriad of federal and
state laws and regulations in managing its business and
academic enterprise. At the state level the university
is covered by the Executive Budget Act, the provisions
of the State Procurement Code, and the Public Employees
Relations Act (PERA) for all collective bargaining. At
the federal level the university complies with Standard
Government Accounting Principles, including a multitude
of complicated IRS regulations that apply to
universities and their foundations. These requirements
and reporting responsibilities increase each year with
new wrinkles, depending on the politics. For example,
the collapse of several large corporations in the
1990's resulted in the development of stricter auditing
standards. Since 9/11 the institutional requirements
governing accepting foreign students have increased
dramatically.
The regents are a policy board. Our policies and
regulations guide the academic and management decisions
of the system, but the day to day operation is managed
by the president and his staff, including the
chancellors.
9:21:19 AM
Ms. Henry explained that she has been a regent for about 6.5
years and considers it a privilege to serve on the Board of
Regents. She opined that Alaska has a very high quality
university, and her opinion of the university increased as
she became more involved with it.
Ms. Henry described the eleven regents as serving in a
voluntary capacity. The compensation is the gratification
received from participating in the education of students who
attend the university. She described education as a life-
changing experience that provides job skills and
professional training and upgrades a person's confidence.
It benefits the students, their families, and the larger
community.
Ms. Henry listed the occupations of the board members, most
of whom are University of Alaska graduates. She noted that
board members maximize their expertise by assignment to
standing committees. The committees with the biggest
workloads are the Academic and Student Affairs Committee,
which addresses new programs, degrees, and policies, the
Facility and Land Management Committee, which deals with
monitoring facilities and projects, and the Finance
Committee, which deals with budget issues.
Ms. Henry shared that the regents were responsible for all
aspects of the university system from the oversight
perspective. The president's job is to implement the
priorities through the board and delegate responsibilities.
She emphasized the seriousness of board responsibilities.
9:26:01 AM
Co-Chair Hoffman referred to a problem when the president
was opposed to the board's meeting with the co-chair of the
House Finance Committee. Ms. Henry was not familiar with
that incident and noted that the Board of Regents has a very
good working relationship with the university president.
Co-Chair Hoffman asked if it was acceptable for board
members to meet with individual legislators without the
president in attendance. Ms. Henry said it was.
Co-Chair Stedman asked if the president has the ability to
override a request by one of the finance committees to meet
with the board. Ms. Henry did not think the president had
that ability. She pointed out that the president works for
the board. She added that typically the board would want
the president at the meeting because he has a very active
role in the budget.
9:27:41 AM
TIM BRADY, BOARD OF REGENTS, UNIVERSITY OF ALASKA,
ANCHORAGE, spoke of the meeting being referred to when three
regents met with Representative Hawker and Representative
Fairclough. He noted that the meeting was positive and led
to better communication with the board. He pointed out that
the board is reconsidering how it interacts with the
legislature and has set up a specific legislative committee
with the goal of being more accessible.
Co-Chair Stedman asked if it was true that the president
threatened to resign if the board met with the legislature
without him. Mr. Brady replied that it was news to him. He
emphasized that the board was free to meet with the
legislature any time. He defined the structure of the new
committee.
9:31:06 AM
Ms. Henry spoke of Senator Thomas's past membership on the
board. She related that the regents spend considerable time
clarifying the board's priorities. It is the president's
job to implement those priorities. She denied that the
board is a "rubber stamp" for the president. There is
little controversy when the president acts at the board's
recommendations. The board is concerned with maximizing
every public dollar.
Ms. Henry reported on the board's many challenges such as
duplication of programs. There is a strong advocacy for
maintaining rural campuses, in spite of higher costs. She
spoke highly of the rural campuses' abilities to leverage
resources and form partnerships. She gave an example in
Nome.
9:33:07 AM
Co-Chair Hoffman described how rural campuses are left out
of the president's message. Ms. Henry regretted that. She
emphasized that rural campuses are under the umbrella of
each Major Administrative Unit (MAU). Co-Chair Hoffman
thought there was room for improvement. Ms. Henry reported
that the board is in tune to needs; however, there is never
enough funding.
Mr. Brady commented that he has found President Hamilton
supportive of rural campuses. Mr. Brady said, "We cannot
call ourselves the University of Alaska if we don't offer
post-secondary educational opportunities to our fourth,
fifth, sixth, and seventh largest cities in our state." He
maintained that the board has been very supportive of rural
campuses and proud of their staff. He pointed out a basic
premise of the board: the board is not made up of regional
members and must maintain a statewide perspective.
9:36:29 AM
FULLER COWELL, BOARD OF REGENTS, UNIVERSITY OF ALASKA,
ANCHORAGE, voiced concern about providing resources to rural
campuses in poor economic times. Having a unified budget
makes that possible. He maintained that the biggest threat
to rural campuses was the bifurcation of the budget by the
legislature in economically troubled times. Co-Chair
Hoffman reported that he was one that pushed for bifurcation
of the budget in order to determine which campuses were
short-funded. He maintained that the rural campuses were
not receiving adequate funding. Co-Chair Stedman suggested
pursuing this topic at a later time.
9:39:03 AM
Senator Olson asked about the working relationship with UAF
and the Barrow campus. Ms. Henry related that the board
hears very little about that topic because the Barrow campus
is funded by the municipality. Senator Olson asked if any
money from the university helped to fund the campus. Ms.
Henry was not aware of any.
Ms. Henry hoped the chancellors would address that topic at
a later time. The MAU's have considerable autonomy on their
own budgets. She noted that the university welcomes audits
and inquiries by the legislature. She mentioned SB 241
which dealt with teacher education and required a regent's
report to the joint education committees. She said her goal
is to have all needs filled within the state. She mentioned
a recent audit on distance education. Legislative audits
have helped the regents. The regents consider the
legislature as a partner.
9:42:56 AM
Co-Chair Stedman said that the Senate Finance Committee
would work with the Legislative Budget and Audit Committee
to ensure that the board receives copies of the audits in a
timely manner. Ms. Henry spoke of the variety of needs the
legislature can provide, such as receipt authority, funding,
or influence during outreach to private donors.
9:45:01 AM
Ms. Henry spoke of the accreditation process. Each of the
MAU's is separately accredited, as is the Prince William
Sound Community College. Many university programs also have
a separate accreditation. Teams of experts thoroughly
review finances and academic programs. She believed that
regents and legislators can take comfort in knowing that
programs are being thoroughly evaluated.
Ms. Henry addressed the issue of the retirement of President
Hamilton. The university is a big institution with a lot of
diverse stakeholders; therefore the process of hiring a new
president is very important, as is the participation of all
stakeholders. The board has done a RFP, has evaluated
companies that do searches, and has hired Academic Search's
Elaine Hairston, a senior consultant, who has visited the
campuses and is writing a profile for the new president.
Next, she will advertise in higher education publications
and state newspapers. A goal of the regents is to have
people with Alaskan experience apply. Ms. Henry urged the
Committee to also submit names for consideration. The goal
is to have finalists by January.
9:51:02 AM
Ms. Henry offered to discuss the budget process at a later
date. Co-Chair Hoffman wished to hear the presentation of
the capital budget as it related to rural campuses. Co-
Chair Stedman noted that the work session may include
discussion of prickly issues, but the goal is to have a
smoother working relationship with the university.
AT EASE: 9:53:15 AM
RECONVENE: 10:02:13 AM
Co-Chair Stedman turned to the topic of fiscal oversight.
Ms. Henry introduced Ms. Redman who would address the
subject of external and internal university audits.
10:03:45 AM
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY RELATIONS,
UNIVERSITY OF ALASKA, encouraged the legislators to make
requests and the chancellors to contribute to the
discussion.
10:05:16 AM
MYRON DOSCH, CONTROLLER, UNIVERSITY OF ALASKA, provided
background on the university's financial structure. He said
his presentation of financial statements and the application
of Generally Accepted Accounting Principles (GAAP) is meant
to provide the Committee with another fiscal viewpoint.
Mr. Dosch reported that the university is audited
extensively. It has an annual external audit of its books,
which resulted in an "unqualified or a clean opinion" in
2008. He referred to handout 2, the university's financial
statement, which contains the auditor's report. He referred
to pages 17 and 21, which show the balance sheet and income
statements of the university and which are presented
according to GAAP as one whole university system.
Mr. Dosch related the financial concepts embodied in the
financial statements. According to GAAP, public colleges
and universities are required to report their financial
statements in a business-type format. This format is
required when a governmental entity has charges to external
users, such as tuition. The GAAP Board is the standard-
setting body. They want university financial statements to
look more like private sector statements, to be more
comparable to other universities, and to be more useful to
external users. He provided history of the overhaul of
state and university financial reporting.
10:09:41 AM
Mr. Dosch explained that full accrual accounting is
required, which requires the recording of depreciation
expense. University statements are included in the state's
comprehensive annual financial report. The university is a
component unit of the State of Alaska. Other state entities
that fall into the same category are: Alaska Aerospace
Development Corporation, Alaska Energy Authority, Alaska
Housing Finance Corporation, Alaska Industrial Development
Export Authority, Alaska Mental Health Trust Authority,
Municipal Bond Bank, Natural Gas Development Authority,
Alaska Railroad Corporation, Alaska Student Loan
Corporation, and Seafood Marketing Institute.
10:11:33 AM
Mr. Dosch discussed the university's federal financial
assistance audits. He referred to handout 3, "University of
Alaska Audit in Accordance with OMB A-133" (copy on file).
Federal financial assistance amounts to about $200 million
annually for research grants, student financial aid, and
non-research assistance. The audit is conducted by KPMG,
LLP of Anchorage. It checks for regulation compliance.
Mr. Dosch described other audits such as cost accounting
practices.
Mr. Dosch observed that the university is reviewed by other
federal entities. There is also a statewide internal audit
department, which reports to the Board of Regents Audit
Committee.
10:14:51 AM
Mr. Dosch reviewed revenue sources. Co-Chair Stedman
referred to chart handout 5, "Operating Budget Revenue Trend
by Fund Source" (copy on file). Mr. Dosch observed that the
University receives general fund and non-general fund
revenue. General fund are revenues received through the
appropriation process and are known and fixed amounts. Non-
general fund are all other funds such as tuition, indirect
cost recovery, or federal research grants, and are varied.
Mr. Dosch discussed the concept of receipt authority, the
budget amount the legislative approves from non-general fund
sources. He termed it the "not to exceed" amount. He gave
tuition as an example.
10:18:22 AM
Mr. Dosch reviewed the various revenue sources. University
receipts include tuition and fee revenue, investment income,
indirect cost recovery, auxiliary receipts, and university
receipts. He detailed each type of receipt.
Co-Chair Hoffman asked what percentage rates were used. Mr.
Dosch replied that nine different rates were used at the
federal level. The most common rate is the UAF research
rate, which is 45.1 percent. There is also a memorandum
with the state that has reduced indirect rates of 12 percent
for non-research grant awards and 25 percent for research
grant awards.
Co-Chair Stedman requested a status report on the endowment
and its potential revenue generation.
10:22:20 AM
Mr. Dosch listed the following receipts: auxiliary, program,
federal, state interagency, UA Intra-Agency, and capital
improvement project (CIP).
Ms. Redman introduced Joe Trubacz and Brian Rodgers to
clarify the banner system.
10:24:21 AM
JOE TRUBACZ, VICE PRESIDENT, FINANCE, UNIVERSITY OF ALASKA,
requested that Chancellor Rogers provide the history of the
banner system.
BRIAN ROGERS, CHANCELLOR, UNIVERSITY OF ALASKA, FAIRBANKS,
defined the banner system as the university's integrated
financial, human resources, and student records system. The
system conversion to banner began in the late 1980's for
several reasons. One reason was due to the GASB 34 change
in financial standards, and another was because the old
financial accounting system did not produce real time
reports - they were monthly. It was very difficult to
answer specific legislative queries. The advantage of the
banner system is the integration of accounting system with
the student record system and the human resources system.
It allows the university to provide the required reports to
the state and to the federal government to meet audit
requirements. It also provides internal management
information in real time.
Mr. Trubacz related that there are approximately 1600
college systems that use the banner system today. Over 80
percent of the research universities use it. Another
advantage of the system is the reporting aspect. Four
different pieces of software are used to produce reports.
He offered to provide examples.
Mr. Trubacz described the banner system as a live system,
which can be accessed at any time for information.
10:29:10 AM
Mr. Trubacz explained the Q Menu report, a web-based product
that allows an individual to check on a specific project.
The Q Ad Hoc allows the viewer to look at various portions
to arrive at a query. He gave examples.
Co-Chair Hoffman asked who has access to the Q Menu. Mr.
Trubacz replied that anyone who has a password has access.
Co-Chair Hoffman asked if the finance staff could access it.
Mr. Trubacz said they could.
10:31:00 AM
Mr. Trubacz described the second system, the Vista Plus,
which allows for printing reports at a specific time. The
third system, the Data Browser, allows a person to view
various tables at once to generate a report.
Co-Chair Hoffman asked if it was set up to monitor whether
BRU's are being expended as approved. Mr. Dosch said that
was possible.
Chancellor Rogers added that part of the role of the
financial system is to ensure that money cannot be spent
outside of the way the legislature has appropriated it.
Co-Chair Stedman wondered how that might be breached or
modified. Chancellor Rogers did not know. Mr. Dosch
described safeguards in the system.
Co-Chair Stedman asked if Mr. Dosch, as the Controller, had
the ability to modify the system. Mr. Dosch reported that
he has no access to the system. Co-Chair Stedman asked who
did have access. Ms. Redman thought the legislature could
change the appropriation. Co-Chair Stedman noted that the
question relates to the accounting system. Ms. Redman
explained that the accounting system is set up based on the
appropriation and the university cannot breach the system.
Senator Thomas asked if it was possible to add to or delete
the expenditure. He wondered if a record is kept of who has
access when the money is moved in any fashion. Mr. Trubacz
explained that when there is an attempt at an over-
expenditure of an account, the banner system does not allow
it. With the proper authorization, a budget authority can
increase the amount. The exception is the personnel line,
which is reviewed on a regular basis.
10:37:32 AM
Mr. Trubacz offered to provide training in the Banner
System. He emphasized that management decisions are data-
driven.
Co-Chair Stedman requested that Mr. Trubacz differentiate
between the state system and the Banner System. Mr. Trubacz
reiterated that the Banner System integrates the three
programs into one comprehensive system, unlike the state
system.
10:39:33 AM
Mr. Dosch addressed debt capacity, authority, and oversight
from a credit rating agency point of view. He reported that
Alaska Statute 14.40.040 provides the university with the
authority to borrow money and issue debt in its own name.
As of June 30, 2009, the university had approximately $128
million in debt outstanding, which consisted primarily of
revenue bonds. The regents' policy says the maximum annual
debt service may not exceed 5 percent of operating revenues.
On June 30, 2009, the university had a maximum debt service
of 1.7 percent of the operating revenues. Mr. Dosch termed
that amount conservative.
Mr. Dosch explained that the university has established a
bond indenture which allows access to the capital market
through the issuance of general revenue bonds. The
university pledges the following sources of revenue for
those bonds: tuition and fees, indirect cost recovery,
auxiliary receipts, and other university receipts.
Currently, the university is planning on a bond refunding
given current low interest rates. The university has issued
fourteen general revenue bonds since 1990.
Mr. Dosch related that the university is considered an AA-
rated entity; AA3 from Moody's, AA- from Standard & Poor's.
The university was recently upgraded two years ago by
Moody's for the first time. The rating agencies look at the
university on an annual basis. Their interest is from a
business perspective and focuses on student demand,
competitiveness, and market share, reserve, endowment
performance, research competitiveness, management of the
institution, state support, gifts and contributions, and
financial ratios.
Mr. Dosch referred to HB 184 introduced last year which
would have allowed for a debt/cap authorization. Currently,
statutes provide that any time the university issues debt
where the debt service would exceed $1 million, it is
required to get special approval from the legislature. This
provision has been in place since 1990. The proposed
legislation would increase the cap to $2.5 million. It
would essentially adjust for inflation at that level and
reduce some of the administrative burden for the state and
the university.
Co-Chair Stedman asked for an explanation about why the
university received credit rating upgrades and how it might
receive future upgrades.
Mr. Dosch responded that the rating agencies were looking
mainly at state support relative to other colleges and
universities, and found consistent state support in Alaska.
They view the state as being invested in higher education.
The agencies also look at the management of the institution.
The university has grown over the recent years in enrollment
and in research.
Mr. Dosch suggested that a significant amount of debt could
cause a decreased rating.
10:46:24 AM
Mr. Dosch stated that it is not realistic to assume that the
university, given its size and relative comparisons to other
institutions in the AA category, would be upgraded.
Chancellor Rogers added that only none-state appropriations
can be pledged in terms of debt service. In order to pay
debt service those appropriations need to be generated.
Senator Thomas asked for the criteria regarding the
comparison of institutions.
Mr. Dosch answered that it is mostly size.
Co-Chair Stedman stated that the next item after the break
would be the university budget development.
10:47:20 AM AT EASE
11:03:40 AM RECONVENED
Co-Chair Stedman shared the plan for the afternoon session.
Co-Chair Hoffman recalled that it was 20 years ago when he
was chair of the House Finance Committee that he made
changes to address major maintenance issues at the
university. It was in 1990 as a member of the Senate
Finance Committee that he requested the chairs to visit the
Fairbanks campus. This is only the third time that a
finance committee has come to the university to discuss
issues. He suggested meeting more frequently in order to
keep the lines of communication open.
Co-Chair Stedman stated that the next items are UA budget
development, regents' budget directions, and campus process.
Ms. Henry stated that university's budget process begins and
ends with the regents. It begins early in the year when the
regents set priorities, which are often based on the
strategic plan. The goals are ongoing, but are adjusted
based on needs. For example, the regents considered
Alaska's work force needs and have dramatically expanded the
shorter term certificate programs, where, in a year or two,
a person can become skilled in a particular area.
Ms. Henry described the rigorous process which takes place
at the MAU's where the wish lists are evaluated. The
regents are not involved in that process. Then, the
president and his or her staff review the budget before it
returns to the regents. Adjustments are made and then the
regents' budget is presented to the legislature based on
priorities after a thorough evaluation.
11:07:38 AM
Co-Chair Stedman wanted to discuss the budget from the
perspective of the regents' "Red Book budget" versus the
legislature's "Governor's budget".
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, BUDGET, UNIVERSITY
OF ALASKA, presented a brief overview of the university's
budget process, which is a year-round cycle with three
active years at any given time. Currently, it encompasses
FY 09 - for accountability and review, FY 10 - for
operation, and FY 11 - the planning requests for strategic
and budget development. The Board of Regent's Strategic
Plan (handout 1) is what guides the overall budget
development process.
Ms. Rizk explained that the Board of Regents begins with the
strategic plan and then the budget request guidelines
(handouts 13 and 14) are approved at the April board
meeting. Next, the budget request review occurs in
September. Another opportunity to review the budget occurs
in October when the budget is approved. At the June meeting
the board approves the distribution of the funds that are
received from the legislature.
Ms. Rizk reviewed the budget process for the FY 11 budget
request that the Senate Finance Committee will be presented
in January of 2010. The process begins at the department
level the previous January when priorities are discussed.
There is also a cross-MAU meeting with representatives from
all areas. She mentioned the additional meetings addressing
priorities and the expansion of guidelines.
11:11:33 AM
Ms. Rizk discussed the formation of statewide planning
groups who present their priorities to the MAU for
incorporation. The overarching goal of the Board of
Regents' guidelines is to align the university's budget
requests with existing resources to maximize the strategic
goals while maintaining administrative and program
efficiencies. There is a program request level range of
three to four percent program growth included for FY 11.
The overarching goal of the capital budget guidelines is to
ensure the necessary facilities, equipment, and
infrastructure are in place for continued growth, refinement
and improvement of the university. Similar to previous
years, the highest priority is to maintain existing
facilities.
Ms. Rizk noted that main campus needs and community campus
needs are kept separate in the budget to eliminate
competition.
Ms. Rizk reported on a July meeting with the Office of
Budget and Management and with Legislative Finance to
discuss the direction the university is going and to receive
feedback on state priorities. In August all MAU's met
together in Fairbanks for a budget request meeting, followed
by a board meeting where highlights were discussed.
11:14:46 AM
Ms. Rizk related that at a September 24 meeting, the board
had its first budget review followed by an October 30
meeting when the budget was approved. Ms. Rizk explained
that the chancellors were going through a parallel process
in budget development.
Senator Ellis asked whether the regents hear directly from
the chancellors or if the administration reports the
chancellors' wishes. Ms. Rizk answered that the chancellors
do not meet with the regents; the president provides
feedback to the regents. Senator Ellis summarized that the
president and the administration hear from the chancellors
and then decide what to pass on to the regents. He
suggested that some information is received, some is not
received, and some may be packaged.
Ms. Rizk said that was correct. She compared it to the
budget requests submitted by the MAU's to the statewide
office where some priorities and requests are omitted.
Senator Ellis explained that he was trying to determine how
much filter and unfiltered information makes it to the
regents for their budget priorities to be set.
11:17:14 AM
Ms. Rizk clarified that during the regents' meeting there is
communication as to what is not recommended to be included
in the budget. Senator Ellis asked what determines what the
president and the administration passes on to the regents.
Senator Ellis restated the question to ask what factors
determine what the president and administration use to
prioritize information. Ms. Rizk stated that operating
budget request guidelines derived from the strategic plan
are the guiding principles. For the capital budget,
deferred maintenance is the highest priority.
Mr. Brady stated that the university system is blessed with
three outstanding chancellors who are advocates of their
MAU's and who are not afraid to share opinions with the
board. The board is aware of the chancellor's priorities in
operations and in capital improvements.
11:20:15 AM
FRAN ULMER, CHANCELLOR, UNIVERSITY OF ALASKA, ANCHORAGE,
stated that in order to explain the budget process from a
MAU perspective, a one page diagram has been provided. She
wanted all of the members to have a copy of the complex
document entitled, "UAA Planning, Budgeting, and Reporting -
October 2009" (copy on file). She related that all campus
needs are weighed and the chancellors listen to the
community, to advisors, and pay attention to the market, as
well as student enrollment patterns. In addition to the
focusing on the university's strategic plan, the chancellors
take into consideration UAA's strategic plan, which is
called UAA 2017. At the same time, requests from the deans
and directors and program managers are being reviewed, while
keeping in mind the performance measuring system. Every
fall a report to the statewide office is required. It
summarizes how goals are being achieved.
Chancellor Ulmer stressed that the budget calculation is
complex. At UAA there is a Planning and Budget Advisory
Committee (PBAC) which determines budget priorities. From
all of the community campuses and programs there was a $20
million request, which was eventually reduced to $7 million.
After looking at all of the various indicators, the
challenge is to be responsive to the communities served.
The process results in a request that is submitted to
"Statewide", both for fixed costs and for program
increments. Statewide must combine what is heard from all
campuses and make recommendations to the president, who then
reports to the regents. She admitted that disappointment is
inevitable.
Co-Chair Hoffman asked if President Hamilton was aware of
the diagram and adheres to it.
11:25:23 AM
Chancellor Ulmer stated that he is not aware of the diagram,
but he is aware of the general process used at UAA. She
noted that each of the MAU's use a slightly different
approach to get to the UA Statewide step.
Co-Chair Hoffman summarized that communication with the
president about the chart does not exist. He wondered if
the Board of Regents was aware of the diagram.
Chancellor Ulmer responded that the Board of Regents is
aware of UAA's process in general terms. She thought that
the regents did not need to get into the details about each
of chancellor's budget processes. She did not know how it
worked before her tenure.
Co-Chair Hoffman emphasized that the university is a
statewide system. He suggested that all corners of the
state need to be listened to. He requested a revisit of the
diagram later.
11:26:53 AM
Chancellor Rogers stated that the budget process at UAF is
analogous to that of UAA's process in terms of having a
committee led by the provost who works through the requests.
The cabinet then works together to craft a request that goes
forward to the president. It is a balancing act with
competing interests and multiple sources of direction. He
stated that that the budget process changes over time and
priorities shift. He provided an example of how UAF
successfully advocated for its own interests regarding needs
at rural campuses. A balance needs to be met between
meeting the board's priorities and following the president's
guidelines. It must also be politically realistic.
11:29:48 AM
JOHN PUGH, CHANCELLOR, UNIVERSITY OF ALASKA, SOUTHEAST,
stated that UAS's budget process is probably the best it has
ever been. It is similar to that of UAF's process. The
provost council, which is led by the academic side, starts
the budget process and comes up with priorities. The
administration is also looking at its needs, as well as at
facility needs. The ideas are then vetted through to the
top leadership and moved forward.
Chancellor Pugh noted that several years ago a step was
added whereby planning groups for special programs became
involved with the budget process. The nursing and
engineering programs are examples. Not all programs are
covered by planning groups. This year a faculty position
for the Alaska Native Language Restoration did not fit under
the planning groups. It is a give and take between the
planning group's priorities and campus priorities. Final
decisions are then made by the president's cabinet.
Chancellor Pugh thought that the current process is better
than in years past, but there is room for improvement. Core
services should also be looked at through planning groups.
11:34:04 AM AT EASE
11:34:16 AM RECONVENED
Co-Chair Stedman mentioned the diagram previously presented
by Chancellor Ulmer. He opined that during the legislative
budget process there is disregard for the governor's budget
request and the focus is on the university's Redbook. This
leads to complications in the relationship between the
university and the legislature and within the budget process
when determining exact amounts. He expressed curiosity as
to the direction the Board of Regents has given to its
employees.
Ms. Henry admitted that the issue has not been brought to
her attention. Her understanding was that in the past the
university's budget was presented by the governor as written
in the Redbook. She thought the controversy recently
occurred under the Palin administration. She stated that
the university uses the Redbook as its working document, but
she had not made the connection about how it was
communicated to the legislators. She stated that it was
important for the legislature to know what the university's
original request was.
11:38:37 AM
Mr. Cowell stated that he had discussed this change in
procedure with the governor who stated that she did not have
a problem with the mode of communication the university was
proposing. He was hopeful to return to the old method with
the new governor.
Co-Chair Hoffman stated that he did not have a problem with
the university advocating for something different than the
governor's budget. He stated that the legislature is often
accused of short funding the university's budget because it
is being compared to what the Board of Regents is
requesting. He wanted a level playing field in order to
compare the university's request to the governor's request.
He believed in dealing with all departments equally.
11:41:52 AM
Mr. Brady wanted to improve the lines of communication with
the Finance Committee. He stressed that "the buck stops"
with the Board of Regents. Student advocacy groups are a
part of the request process and are encouraged, but they do
not always mirror the requests of the Board of Regents. He
realized that mixed messages are given.
Co-Chair Stedman summarized what he thought Mr. Brady's
position was. The UA statewide action is followed by the
Board of Regents' requests, and the governor becomes
irrelevant and should accept the regent's budget. He
wondered if that was correct.
Mr. Brady answered that before the Redbook goes to the
governor there is a great deal of communication between the
governor's office and university personnel in the hopes that
both budgets would be aligned.
Ms. Redman announced that there are two formal meetings with
the governor's office and OMB prior to finalizing the
budget.
Co-Chair Stedman stated that they are discussions and not
developing of expenditure lines. Ms. Redman commented that
the governor's office and OMB are not shy about laying out
numbers. They share expectations about the amounts to be
funded in the operating and capital budgets.
Co-Chair Hoffman stressed that the starting point needs to
be rectified. When the legislature approves last year's
budget, and compares it to the governor's budget, there is a
question about the starting point and modifications the
committees make.
11:46:09 AM
Ms. Redman agreed to continue working with Legislative
Finance to make it easier for the Committee to see the
differences in funding sources.
Co-Chair Stedman described the process of analyzing the
budget and stated grave concerns about arbitrary numbers
claiming to be budgetary cuts. He believed it put elected
officials in an awkward position with their constituency.
He took issue with President Hamilton's comments after the
budget was done. He was concerned about the regents' budget
being presented to the legislature without the governor
having an opportunity to make changes.
11:51:43 AM
Co-Chair Stedman cautioned that all entities must be treated
equally and the university should be considered another
department. He stressed that all departments have always
had to defend their budget requests. He proposed to modify
or do away with the Redbook.
Mr. Cowell spoke from his perspective and not the board's.
He contended that the Board of Regents and the University
are unique in that they are mentioned in Alaska's
constitution and have a board that is appointed by the
governor and certified by the legislature. He maintained
that the legislature should not consider the university's
budget the same way they consider a department's budget.
11:56:32 AM
Chancellor Rogers observed that the Redbook process has
existed for at least thirty years and was, in part, a
response to an issue raised by the legislature. In the
past, the legislature wanted to know what the university has
asked for that the governor has not funded. The Redbook
also serves as a cap on university requests. He understood
Co-Chair Stedman's point on the difference between the
university's budget and the governor's budget.
Co-Chair Hoffman did not have a problem with the university
advocating for their budget. He took issue with being
accused of not fully funding the budget. He maintained that
"fully funding" means fully funding the governor's request,
not the Redbook.
Ms. Rizk noted that an appendix included in the Redbook
traces the board's prior year distribution decisions and
compares the board's, the governor's, and House and Senate
Finance Committees' requests. The board's budget ends up
being the starting point and the Conference Committee, the
ending point. Co-Chair Hoffman reiterated his reservations
about that process.
Co-Chair Stedman stated his experience in many meetings
regarding the university budget where the comment "but it's
not the Redbook" was heard.
Co-Chair Hoffman emphasized that the governor's budget
request is the document that the legislature works with.
11:59:39 AM AT EASE
1:35:58 PM RECONVENED
Co-Chair Stedman turned to the subject of fixed costs and
hoped to come to an agreement on the definition. He
requested comments.
Ms. Henry appreciated Co-Chair Stedman's and Co-Chair
Hoffman's candor during the discussion, which she believed
was beneficial.
Ms. Rizk stated that the state defines fixed costs
differently than the university, which calls them adjusted
base requirements. Costs related to compensation requests
are based on negotiated contracts for union employees and a
step staff compensation recommendation based on comparable
wages, cost of living, and environmental issues. The MAU's
budget requests contain adjusted base fixed costs. System
wide requests for building facility needs are also a part of
adjusted base requirements.
1:39:29 PM
Co-Chair Stedman requested Ms. Rizk's perception on the
upcoming budget process. Ms. Rizk requested clarification
of the question.
Co-Chair Stedman asked if there would be agreement between
Legislative Finance and the university about budget numbers.
Ms. Rizk answered that there is need for additional
discussions because no agreement has been determined.
Co-Chair Stedman asked for details on areas needing
additional discussion. Ms. Rizk thought there were no areas
of agreement yet, but that would happen before the budget is
presented to the legislature in January.
Co-Chair Stedman summarized the discussion. Ms. Rizk agreed
there would be clarification.
Co-Chair Stedman stated that the fixed cost issue will
require work in order to make the budget process as smooth
as possible.
1:42:24 PM
Co-Chair Stedman remarked that Ms. Henry could choose how to
deal with the subject of the determination of the regents'
operating and capital priorities. Ms. Henry wished to
discuss expectations related to the capital budget. She
said today's discussion is tentative because the board has
not yet finalized the budget. She noted that Mr. Brady is
the chair of the facilities committee and will discuss the
capital budget.
Mr. Brady personally questioned the current "laundry list"
process of presenting the capital budget, when it is obvious
that not everything will be funded. There has been
considerable discussion on modifying that presentation. He
informed the Committee that deferred maintenance would
continue to be a board priority. The new budget will
probably contain requests for "one project to build and one
project to plan." There will also be a request for a
feasibility study for community campuses, which will include
community input.
Co-Chair Stedman recalled that deferred maintenance totaled
about $50 million per year. There was disagreement as to
how that number was determined. He gave an example of
comparing deferred maintenance needs of a new building with
those of an old building. There was also discussion of the
absorption rate. He questioned how much of the $50 million
the university can absorb each year. He spoke of the last
governor and some of her decisions regarding the capital
budget. He reminded the Committee of all of the competing
demands. All communities on the list must prioritize their
requests. He spoke of the expense of some communities'
number one priorities, such as the $400 million bridge
project in Ketchikan. He thought some goals were more
obtainable than others. He understood limiting the budget
request to one project, but pointed out that expense is
still an issue. He suggested that the university consider
less expensive projects as well.
1:49:02 PM
Mr. Brady appreciated that there are competing demands as it
is a reality faced within the university as well as in the
state. He emphasized that the list has been pared down. He
wished that he could control the cost of projects. He
appreciated the comments on deferred maintenance; however,
he believed that $50 million was a realistic number. He
defended the request and spoke of maintenance needs on the
Fairbanks campus where, over the last ten years, an average
of $16 million was spent on deferred maintenance. He
stressed that new facilities must be developed, especially
research facilities.
1:51:55 PM
Co-Chair Hoffman contended that the Board of Regents should
consider the state's entire budget when they develop their
own budget. He spoke of the operating budget's dependence
on the price of oil. He stated that a large capital budget
means taking a substantial amount from the reserves. He
expected to live within the state's means. The amount of
funding is finite and the legislature must be prudent and
practical.
Mr. Brady viewed the university as an investment, not
expenditure, in the state and high on the state's priority
list.
Co-Chair Stedman commented that after the governor submits
the budget it is not reasonable to expect an elected
official to add expensive projects to the budget because
it takes broad support to move such legislation off the
table. It puts elected officials in an awkward position.
1:55:22 PM
Mr. Cowell sympathized with the legislature's having to
prioritize projects. He acknowledged that his only concern
was with the Board of Regents' budget. He stated a concern,
as a fiscal conservative, that because of the legislative
process, the university winds up with sporadic funding which
is sometimes difficult to absorb in a short time. The
fluctuation creates difficult incremental costs. He
requested that the legislature attempt to stabilize the flow
of project funds. He emphasized that the $50 million
capital request is based on engineering studies and
generally accepted practices across the United States based
on facility size. The deferred maintenance projects have
not been addressed for years. He also suggested that the
legislature seriously view the board's priorities and
possibly fund them over a longer period.
Co-Chair Stedman stated that the Committee's challenge is
being able to predict the revenue stream. For example, last
year when oil prices decreased, the legislature responded
faster than the governor's office did and made a collective
decision not to add projects to the capital budget.
Additionally, a lot of time was spent on the pipeline
project. He expressed concern about lag time related to
construction projects.
1:59:41 PM
Chancellor Ulmer asked Co-Chair Stedman to describe the
current process of developing the capital budget, which she
thought might be different than when she served in the
legislature. She explained that the board is also trying to
serve the whole state while balancing different regional
needs. She asked for a breakdown on how the capital budget
is constructed.
2:02:05 PM
Senator Ellis asked why requesting only one capital project
would be a good idea. He thought asking for only one
project made no sense. He supported funding the top capital
priorities and deferred maintenance requests at several
campuses.
Co-Chair Hoffman brought up the ten-year-old Kasayulie Case
which states that the state must spend more money building
rural schools. No governor has requested a rural school to
be constructed, which poses a problem for the legislature.
2:04:12 PM
Co-Chair Stedman gave an overview of the creation of the
capital budget. Upon receipt of the governor's budget, the
Senate Finance Committee looks at the broad numbers and
revenue projections. Capital budget projects are examined
for equal distribution around the state and regional
balance, and then fund sources are considered: federal
monies, general fund, and other state funds. He related
that he individually meets with each senator regarding their
issues and gathers information. He stated that regional
balance is the goal in order to ensure fairness.
2:09:20 PM
Co-Chair Stedman noted conversations with the administration
regarding the capital budget. The revenue stream dictates
much of the expenditures. He listed projects he expected to
come forward: Dalton Mine, port development, railroad
expansion, gas line project, university projects, Seward
Highway.
Co-Chair Hoffman added, "Energy projects."
Co-Chair Stedman admitted that the revenue stream dictates
the number of projects. He stated that local governments'
opinions are also key to the decision-making process.
2:12:48 PM
Mr. Brady reported that the university's list will be drawn
down dramatically, but will be significant in size. Co-
Chair Stedman suggested working hard with the
administration.
Ms. Henry appreciated the explanation regarding the budget
and the legislature's responsibility to their constituents.
She stated that the Board of Regents does not represent the
region in which they live, but the entire state. She
appreciated the board's statewide perspective. She stressed
the difference between her role and that of an elected
official.
Ms. Henry mentioned the lone, large capital request which
would be in the budget again this year, the Life Science
Building project, which has been requested for six years and
has not been funded, regardless of attempts to lessen the
cost. She expected the board to approve the shortened list
because of this number one priority. She explained the
rationale for the request.
2:17:07 PM
Co-Chair Stedman clarified that elected officials represent
an area because they are most familiar with their own
regional issues.
Senator Thomas noted that if stabilization could occur it
would have in 2008. He made suggestions to the board on how
to find success with their funding requests. He thought
difficulty might ensue during local meetings. He agreed
that if the money came in a steady flow, it would be
advantageous. He commented about the capital budget and the
fact that some cities are not in line for projects which
causes problems for the legislature.
2:21:19 PM
Co-Chair Stedman used the Alaska Crime Lab funding as an
example of a high priority request.
Mr. Pugh noted that the deferred maintenance list
encompasses all regions. He stressed the importance of that
piece.
Senator Ellis agreed with Chancellor Pugh that deferred
maintenance requests are long overdue. He suggested looking
at past deferred maintenance lists to see where the funding
went. He expected that the funds of the past went to the
buildings most in need. He supported the Life Sciences
Building and Senator Thomas's efforts to fund it. He
cautioned about bullying tactics or a "hostage situation"
for the Life Sciences Building. He hoped for better
communication with the university. He mentioned the
importance of the project to the state.
2:26:54 PM
Senator Ellis continued to describe the collaboration behind
the funding of the Health Sciences Building and suggested
that the same be done for the Life Sciences Building -
consider it a statewide need.
2:28:22 PM AT EASE
2:45:04 PM RECONVENED
Co-Chair Stedman addressed the issue of deferred
maintenance.
2:46:17 PM
Senator Thomas described his preference for examining
deferred maintenance items. He explained that he used the
previous year's Redbook and took the top project from each
campus for consideration. The projects on the list would be
considered in order until the money runs out. Within three
years, all of the big projects would be completed and the
remaining projects more affordable.
Co-Chair Stedman agreed that such a process was smoother and
more equitable.
Co-Chair Stedman reiterated that with oil at $70 the budget
is at "break even". By June of 2010 there may be a surplus
of $1 billion, but it probably would be consumed by
education funding. For the next budget cycle, based on the
current oil price, a robust capital budget is not expected.
2:50:45 PM
Senator Ellis thought he heard the university say that they
could bond for up to $100 million without negatively
affecting the state's credit rating. He asked how much
unutilized bonding capacity the university has, what the
regents' plan for that is, and whether the regents have met
with AHFC's Dan Fauske regarding state bonding for student
housing.
Mr. Dosch reported that the university is currently at 1.7
percent of a 5 percent debt limit. There is some additional
debt capacity.
2:53:28 PM
Ms. Redman noted that there have been many discussions with
AHFC and more were pending. Financing for student housing
in Anchorage and Fairbanks was assisted by AHFC. Ms. Redman
stressed that for bonding, the revenue must be attached to a
facility. Research revenues cannot pay off a bond for
housing.
Co-Chair Stedman turned to performance measures.
2:55:41 PM
Ms. Rizk spoke of a challenge regarding securing funding for
operating costs for new facilities. She looked forward to
working with the legislature on this issue.
Ms. Rizk addressed the performance evaluation process which
has been in place since FY 2004. The purpose is to
communicate, drive, and measure resource alignment and make
progress toward the Board of Regents' goals stated in the
strategic plan. There are six performance measures and they
are updated yearly. They are a consideration when
developing the budget.
2:57:47 PM
Senator Ellis suggested that the university remind the
governor during the budget process that they have "kept the
flame alive" regarding missions and performance measures.
He recalled that when Governor Parnell was a legislator, he
was a leader in establishing missions and measures.
Ms. Rizk related the emphasis needed on performance
measures. Senator Ellis suggested using them to their
advantage.
Co-Chair Stedman requested information on credit hours and
head count. Ms. Rizk referred to handout 15, "September
2009 Performance Report to OMB/Legislature" (copy on file).
It provides the university's performance status in September
and hasn't been updated. The Redbook will show these
statistics.
3:00:49 PM
Chancellor Ulmer commented that the reviews are done in
great detail. She compared them to taking a final exam and
an oral exam. The reviews show continuity over time. She
urged Committee members to look at the performance review
books. She thought the university could do a better job
communicating the high standards and results of the reviews.
Co-Chair Stedman believed that the head count at a
university increases during a poor economy. Chancellor
Ulmer agreed. Co-Chair Stedman asked for current
statistics. Chancellor Ulmer reported a 3 percent increase
in enrollment at UAA. For first-time, full-time freshman
enrollment is up by 15 percent.
3:04:27 PM
Chancellor Pugh observed that there was a 29.5 percent
increase in new students, especially freshmen, at UAS. He
also reported increases in workforce programs.
Ms. Henry related that the board is very involved in
construction projects. She deferred to Kit Duke to address
facilities.
3:06:11 PM
KIT DUKE, CHIEF FACILITIES OFFICER, UNIVERSITY OF ALASKA,
ANCHORAGE, shared statistics related to facilities. She
spoke about the significance of having older facilities and
the need for maintenance expenses. The asset value of the
buildings is about $1.9 billion, with the replacement value
much higher. About 30 percent of the operating and
maintenance budget goes to utilities, which leads the
university to focus on conservation efforts. The cost of
energy has doubled. She stated that the university looks
for ways to save money. She noted that there is
accountability in the facilities area with annual
assessments. There is a high priority for capital
reinvestment in facilities.
3:09:28 PM
Ms. Duke stated that the university has significant
estimated deferred maintenance and renewal needs of over
$900 million. She hoped to receive adequate funding for
those needs and voiced appreciation for the money the
university has already received for that purpose. It is a
better investment to maintain, rather than reconstruct, the
buildings. Individual campuses must meet maintenance
targets set each year and evaluate if the maintenance work
being done meets the desired objectives. The university
uses maintenance management software, which lessens the need
for emergency repairs. She spoke of prioritizing work and
the benefits of accountability in her department.
3:12:48 PM
Ms. Redman pointed out that handouts 10 and 11 include
performance review documents.
3:14:24 PM
MARY RUTHERFORD, PRESIDENT, UNIVERSITY OF ALASKA FOUNDATION,
reported on the amounts in the consolidated endowment fund,
which contains the university's Land Grant Trust Fund, as
well as the privately donated funds to benefit any of the
campuses or programs within the university. She informed
the Committee that the fund had a loss of around 24 percent
in FY 2009. Previously, the consolidated fund had about
$258 million in it; about $143 million in the Land Grant
Trust Fund, and approximately $116 million in the foundation
endowment fund. By June 30, FY 2009, the total was about
$202 million; $109 million in the Land Grant Trust Fund, and
about $93 million in the foundation fund. She provided a
historic perspective of the fund, which has performed at
around 8 percent over 21 years. The Land Grant Trust Funds
are used to fund the AU Scholars Program. The private
endowment portion represents over 600 individual endowments.
Over 90 percent are designated for specific purposes.
3:17:05 PM
Ms. Rutherford stated that when the market declined an
appeal was made to endowment creators asking for additional
contributions. In FY 2009 over $13 million was donated to
the endowments. Only two endowments were unable to make the
payouts.
Co-Chair Stedman asked about the impact of lower endowment
payouts on the state budget.
3:19:46 PM
Mr. Dosch spoke about two money sources, the endowment
investments and non-endowment investments, which are the
operating investments. The endowment investments, or the
Land Grant Trust Fund, suffered a loss last year. The
primary spending distribution from that Trust Fund goes to
benefit the UA Scholars program, as well as the land
management operations that generate dollars from land sales.
Endowment losses have not had an impact on the Scholars
program or the land management operations, nor is an impact
expected.
3:21:40 PM
Mr. Dosch discussed the non-endowment funds which do
generate investment income. Those investment earnings are
largely kept as a funding source for the budget.
Historically, there have been positive earnings; however,
not much is expected in the near future and reductions in
positions and expenses have been made. In the last year the
portfolio was rebalanced.
3:23:24 PM
Co-Chair Stedman assumed there was a movement toward more
liquid asset classes. He inquired what the payout rate was.
Mr. Dosch answered that the payout rate for the Land Grant
Trust Fund is 4.5 percent of a five-year, December 31,
moving average. The board reduced that rate in April.
Ms. Redman underlined the point that the university has made
a conscious choice to maintain the interest income revenue
supporting statewide administration so that the campuses
were protected from the market drop.
3:25:43 PM
Mr. Trubacz turned to accountability initiatives. He
explained that accountability is the cornerstone of finance
and administration statewide. There are many audits. One
is done by a Japanese agency. He spoke of management
reviews done in October and in March. He referred to
handouts 10 and 11 which show trends and accountability from
the MAU's position. Statewide also goes through the same
process.
Mr. Trubacz related that in 2007, President Hamilton wanted
a better look as to how statewide administration was
performing. Handout 12, "MacTaggart/Rogers Review of SW
Administration" contains that study. There is
accountability by statewide to the MAU's and by the MAU's to
statewide. In 2004 an Ad Hoc Committee on Accountability
and Sustainability was formed, which resulted in many
efficiencies and successful strategies.
3:30:16 PM
Mr. Trubacz concluded that there was also accountability at
the academic level. Each MAU is accredited using an on-
going process. Many of the departments also have their own
accreditation process.
Co-Chair Stedman stated that the topic of the economics of
research would be taken up after a break.
3:32:40 PM AT EASE
3:42:36 PM RECONVENED
Chancellor Rogers stated that the University of Alaska in
Fairbanks is up about 5 to 6 percent in student credit hours
over last year with the largest growth in the rural
campuses. The College of Engineering and Mines is up 20
percent in student credit hours. Rural campus growth is
largely due to the expansion of distance delivery. There
are five rural campuses: Nome, Chukchi, Kotzebue, Kuskokwim,
Bristol Bay, and Interior-Aleutians. The successes in rural
campuses are due largely to the partnerships at the
community level. He shared examples of Nome and Kotzebue
partnerships. He mentioned a contract with the McDowell
Group to review rural campuses.
3:46:51 PM
Co-Chair Hoffman asked how the rural program in Fairbanks is
going. He suggested that Bernice Joseph address the
question. He commented that there are a wide variety of
rural programs.
3:47:19 PM
BERNICE JOSEPH, VICE PRESIDENT, RURAL COMMUNITIES AND NATIVE
EDUCATION, UNIVERSITY OF ALASKA, informed the Committee that
the Rural Services Program at UAF is doing very well. It is
fully staffed and there are a record number of students this
year. The Rural Alaska Honors Institute (RAHI) also has a
record number of participants. A study done by NSF a few
years ago showed that students who participate in RAHI are
twice as likely to graduate with a BA.
Co-Chair Hoffman suggested that the program be represented
highly to the administration. Ms. Joseph agreed.
Co-Chair Stedman pointed out that the Committee was aware of
the University's revenue impact.
3:49:34 PM
PAT PITNEY, UNIVERSITY OF ALASKA, FAIRBANKS, spoke about the
economics of research, which she termed as an industry
heavily funded by the federal government. She referred to
handout 9, "Research as an Economic Enterprise" (copy on
file). In 2004 $43 billion was the amount of revenue
generated from research done at universities. She pointed
out that research is a competitive industry. The
opportunities research provides students are significant.
The faculty is what makes an institution competitive.
3:51:19 PM
Ms. Pitney related that research is prioritized by the
regents' strategic plan and the state's research and
development plan required by SJR 44. The University of
Alaska, Fairbanks' core strengths also help set priorities.
The areas of core strength are the Geophysical Institute,
School of Ocean Science, and Engineering, which are
nationally competitive for research money.
3:53:14 PM
Ms. Pitney addressed earmarks, which account for about $5
million a year. An attempt was made to reduce dependence on
earmarks.
Ms. Pitney related that in additional to federal funding,
there are stimulus funds available, which account for less
than 10 percent. That will increase to 20 percent by the
end of the year. Ms. Pitney explained that the principle
investigators - the faculty that attract research dollars -
build the programs. For every research faculty, five to
eight employees are funded. This makes for a stable
workforce of 2,300 research employees throughout the state.
3:56:07 PM
Ms. Pitney emphasized the quality of the jobs. It is an
industry worth over $100 million. She described the
industry as a "money machine" that requires tending to.
Research provides potential for other businesses, especially
in the biological research area. She requested that
Chancellor Rogers speak about the next level of research
activity.
Chancellor Rogers spoke about the university's role of
translating basic research into other economic development
opportunities. There are several promising areas such as
sudden infant death syndrome, traumatic brain injuries, cell
manufacturing, and antioxidant properties of Alaska
blueberries.
3:59:27 PM
Chancellor Rogers discussed unmanned aerial vehicles and how
they can be used to monitor forest fires, offshore fishing
violations, and homeland security operations. He spoke of
the software security and energy research. The university
is trying to find ways to apply the industry's products and
services and improve Alaska's economy as a whole.
4:01:04 PM
Senator Ellis asked if any professor at any institution
could apply for research grant funding. Ms. Pittney replied
that that was accurate and it was happening statewide.
Senator Ellis asked if the three city campuses are
designated as research centers, as opposed to the rural
campuses. Chancellor Rogers replied that rural campuses
focus on teaching and public service and much less on
research. A rural faculty can apply for grant-funded
research. The University of Alaska, Fairbanks generates 90
percent of competitively funded research proposals system
wide.
4:02:55 PM
ASHTON COMPTON, STUDENT REGENT, UNIVERSITY OF ALASKA,
FAIRBANKS, said she was learning a lot from the experience.
ADJOURNMENT
The meeting was adjourned at 4:04 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| #1 UA Strategic Plan.doc |
SFIN 10/14/2009 9:00:00 AM |
University Work Session |
| #10 Spring Mgmt Report Operating Review.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #2 FY08 Financial Statements-1 (2).pdf |
SFIN 10/14/2009 9:00:00 AM |
University Work Session |
| #3 FINAL FY08 A-133 (2).pdf |
SFIN 10/14/2009 9:00:00 AM |
University Work Session |
| #5 Operating Budget Rev by Source (Chart 3).pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
|
| #6 Operating Budget Trend by NCHEMS-Percent Rev by Source (Chart 4).pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #11 Fall 09 Financial and Performance Final.doc |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #12 UA Research Economics.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #13 FY11 Operating Guidelines.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #14 Approved FY11 Capital Development Guidelines-1.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #15 September 2009 BOR Performance Report.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #4 Appendix A-NCHEMS RevenueDescriptions.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #7 Operating Pie Charts Rev and Exp by Source (Chart 2).pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #8 Auth and Act FY86-11est without % SA (Chart 1).pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| #9 MacTaggart Administrative Review.pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| Attachment Description.docx |
SFIN 10/14/2009 9:00:00 AM |
University Work Session |
| Attachment Description.doc |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University work session |
| Banner System Handout.pdf |
SFIN 10/14/2009 9:00:00 AM |
University Work Session |
| SB241 REPORT FINAL-PRINT (2).pdf |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
|
| SFC Agenda 10.14-15.doc |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University Work Session |
| Ulmer handout.jpg |
SFIN 10/14/2009 9:00:00 AM SFIN 10/15/2009 9:00:00 AM |
University work session |