Legislature(2021 - 2022)SENATE FINANCE 532
03/14/2022 01:00 PM Senate FINANCE
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| Audio | Topic |
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| Start | |
| Budget Subcommittee of the Whole: Presentation Fy 23 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 | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 14, 2022
1:01 p.m.
1:01:28 PM
CALL TO ORDER
Senator Hoffman called the Senate Finance Committee meeting
to order at 1:01 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Pat Pitney, President, University of Alaska
SUMMARY
^BUDGET SUBCOMMITTEE OF THE WHOLE: PRESENTATION FY 23
UNIVERSITY OF ALASKA BUDGET OVERVIEW
PAT PITNEY, PRESIDENT, UNIVERSITY OF ALASKA, discussed the
presentation, "University of Alaska; For Alaska; Senate
Finance Subcommittee; UA; March 14, 2022" (copy on file).
1:03:01 PM
President Pitney displayed slide 2, "University of Alaska,
Alaska's System of Higher Education."
President Pitney highlighted slide 3, "Essential to
Alaska's economic recovery, diversity and growth":
?STABILITY
?CONFIDENCE
?TRUST
Strive to:
?Meet Alaska's workforce needs through increased skill
and degree attainment
?Perform world class nationally competitive research
?Operate more cost effectively
President Pitney pointed to slide 4, "Students and
Employees." She lamented that cuts to the system had led to
the loss of 2400 employees and 11,000 students. She said
that one-third of the base funding had been cut over the
last 8 years.
Senator Wilson asked whether numbers could be provided
pertaining to the number of full time and part time
students.
President Pitney agreed to provide that information.
Senator Wielechowski queried the data on the loss of
students and the rationale for the loss.
President Pitney replied that there were many compounding
factors fewer faculty had resulted in fewer course
sections, lower high school graduation numbers in the
state, outmigration of working age adults, the governors
FY20 veto, the initial sweep of the Higher Education
Investment fund, Covid-19, and continued budget reductions.
She said that her goal was to create financial stability.
She appreciated the legislative support of the Higher
Education Investment Fund.
1:08:51 PM
President Pitney addressed slide 5, "Enrollment
Highlights":
?Enrollment fall 2021 semester
?Systemwide enrollment decline of 6 percent,
initial projection given budget and COVID was
down 10 percent
?Students enrolled exclusively at community
campuses up 2.4 percent
?Many academic units saw increases over last
year:
?UAA: Kodiak and Prince William Sound
College
?UAF: College of Liberal Arts, College of
Natural Science and Mathematics, College of
Business and Security Management, Colleg e o
f Fisheries and Ocean
Sciences, Bristol Bay, and Rural College
?UAS: School of Career Education
?Enrollment spring 2022 semester (preliminary)
Applications up 3 percent, Admissions up 1
percent
Overall headcount down 6 percent
?UA Scholars, newly admitted enrolled for spring
up 5 percent
?WUE and Come Home to Alaska program usage up 11
percent and 12 percent, respectively
?Enrollment increases:
?UAA: Prince William Sound College, Fast
Track Programs
?UAF: College of Fisheries and Ocean
Sciences, College of Liberal Arts
?UAS: School of Education, College of Arts
and Sciences
?Graduation rates are at all time high
?Focus on Alaska Native student recruitment and
retention
?Retention of first time indigenous students up 4
percent at UAA, 16 percent at UAS in the last
year.
edX courses focus UAF research strengths:
https://www.edx.org/school/alaskax
?12 courses and two professional certificate
programs
?total enrollment of over 20,000 learners from
over 170 countries
1:11:36 PM
Senator von Imhof queried how much the university system
classes were conducted online versus in-person classes.
President Pitney replied that Fall 2020 the split was 80
percent online and 20 percent in-person. She said that in-
person was slowly returning and that the percentages were
different at the different universities. She shared that
the Fairbanks campus was 45 percent online and 55 percent
in-person, the Anchorage campus was 50 to 60 percent online
and 40 percent in-person, Juneau campus was about 50/50.
More face-to-face classes were expected across all campuses
for fall of 2022.
Senator von Imhof remarked that her constituents did not
like online classes. She asked when more in-person classes
could be expected.
President Pitney replied that those face-to-face classes
were important and expressed her hopes for the return of
vibrant university campuses.
Senator Wilson queried the number of degree programs
currently offered by the university.
1:14:56 PM
President Pitney responded that she would get back to the
committee with the information. She believed it was in the
high 300s.
Co-Chair Bishop wondered whether there were any faculty
hiring issues at play.
President Pitney replied that the current hiring market was
difficult but that the main problem was budget cuts. She
said that the system was in the transition from reduction
mode to stability mode. She said that the system was still
in constraint mode and if lifted out by the current
operating budget request they system would be in a
rebalancing mode. She noted significant issues in
healthcare; the demand for nurses was high and, by
definition, the nursing faculty were nurses. She lamented
that recruitment and retention was an issue.
Senator Olson asked about graduate level enrollment and
whether there had been a reduction in students. He asked
about the WWAMI program specifically.
1:18:04 PM
President Pitney replied that WWAMI applicants had remained
consistent, and that the future of the Higher Education
Investment Fund was a concern. She agreed to provide
further information on all graduate and PHD students.
Senator Hoffman remarked that several years ago the
university had increased funding for teacher training. He
wondered whether part of the stabilization efforts was to
concentrate on jobs that were needed in that state.
President Pitney replied that the board had revamped the
Alaska College of Education Consortium to empower all three
university schools and provide more education pathways. She
spoke of the 13 available educations pathways in Montana.
She said that the board reallocated funds into the
education program even during times of budget reductions.
She reiterated that the funding constraint had been
challenging and regaining stability was a priority.
President Pitney pointed to slide 7, "FY19 FY23 Operating
Revenue and Budget Summary." She relayed that the board was
requesting $280 million in general funds; the governor had
requested $276 million. She stated that the $280 million
represented an $8 million increase, or approximately 3
percent. She pointed to the $72 million reduction, $54
million of general funds and $20 million in tuition and
fees. She focused on the unrestricted revenue line, which
showed a drop for $535 million to $462 million in FY22. She
said that those were the funds available for the day-to-day
running of the university. She noted the federal and
designated restricted funds were specifically allocated and
were not available for general use. She appreciated that
those funds had increased.
1:24:29 PM
Senator Hoffman asked about the amount of unrestricted
revenue appropriated by the legislature in FY21.
President Pitney replied that the FY21 appropriation had
been $277 million.
Senator Hoffman pointed out that $277 million was what had
been in the budget signed by the governor. He recalled that
the legislature had increased the appropriation by $20
million, which had not materialized. He reminded the public
that the legislature recognized the importance of the
university and higher education.
President Pitney addressed slide 8, "UA FY23 Operating
Budget":
FY23: $280.8M UGF
?Up $8.0M (3.0 percent) from FY22 Budget
($272.7M)
?Total fixed costs needs $11.1M
Governor's proposed UGF budget $4.1M (1.5
percent)
?$4.0M UA fixed cost increases
?$0.1M Mental Health Trust recommendation
Union contracts currently in negotiations
additional amounts once negotiations reached
-Economic development projects $36.1M
-Single Appropriation
Ms. Pitney stressed that the single appropriation, for one
year, could help with rebalancing and then move to a
multiple appropriation in an upsizing environment.
1:28:03 PM
Co-Chair Stedman spoke of the coming inflation cycle for
FY23 and increased fuel costs. He wondered about the
university's inflation exposure. He thought that the
potential impacts should be considered as news of inflation
continued to be negative
President Pitney responded that the proposal was modest and
not consistent with high inflation. She lamented that the
workforce at the university had seen a salary increase of 1
percent over the last 5 years. The proposal requested a 2
percent increase. She said that she could return with
additional estimates and that coal and diesel contracts
were significant.
Co-Chair Stedman thought that the fuel trigger could be
considered as inflation expectations were increasing.
Senator Hoffman remarked that the fix costs represented on
the slide were old. He requested up-to-date fixed costs for
the university.
President Pitney pointed to slide 9, "FY23 $11.1M Fixed
Cost Needs":
UA's FY23 operating budget includes a modest
adjustment of $8.0M (3.0 percent) in state funds to
partially fund $11.1M in fixed cost increases common
across the system; plus any additional university
specific operating cost increases. The Governor's
proposed budget provides $4.0M in state funds for UA
FY23 fixed cost increases.
UA fixed cost increases common across the system
($11.1M):
? Compensation increases ($4.7M) for non union staff
and firefighters in the past five years, except for a
market adjustment in FY20, there has only been one
across the board increase of 1 percent for employees.
Union contracts expiring in FY22 are not included in
the FY23 budget, but once a collective bargaining
agreement has been approved a request for funding will
be made through the appropriate legislative process.
? Information technology operating cost increases
($1.0M) necessary to reduce the risk associated with
operating in house hardware systems and increase the
University's capabilities in terms of systems
availability, agility, cybersecurity, disaster
recovery and business continuity.
? The rising cost of insurance is a national issue.
Insurance premiums have doubled for property coverage
and other insurance coverages, such as cybersecurity
coverage, have also seen significant increases
($2.0M).
? Facilities maintenance funding ($3.4M) is necessary
to preserve capital assets critical to UA's mission.
Several years of reduced operating budgets and minimal
capital funds has increased the ongoing risk and
evidence of building closures.
1:32:38 PM
Co-Chair Bishop pointed to the last bullet and surmised
that the number did not include deferred maintenance.
President Pitney agreed.
President Pitney pointed to slide 10, "UA Economic
Development Projects":
?$36.1M for specific programs that help Alaska
?UA Drone Program: $10.0M*
?Critical Minerals and Rare Earth Elements:
$7.8M*
?Heavy Oil Recovery Method: $5.0M*
?Mariculture, North Pacific Fisheries, Arctic and
Pacific North Ocean Sciences $7.0M
?Health $3.75M**
?Alternate Energy $2.5M***
* In Governor's proposed FY23 operating budget
** Added in other body's subcommittee process
*** In the Governor's amended FY23 capital budget
Senator Hoffman asked for more information about the
Alternate Energy and whether it was related to the Micro-
Nuclear Program.
President Pitney replied that half was related to the
program and the other half was related to other alternative
energy projects.
Senator Hoffman spoke of the high cost of energy in the
state and the programs that had been introduced to reduce
energy costs for Alaskans. He spoke of the war in Ukraine
and wondered about how it would affect the cost of energy
for residents. He spoke to the success of the
weatherization program.
1:37:24 PM
President Pitney responded that the Alaska Center for
Energy and Power was taking the lead and had several
avenues that could be pursued. She agreed to provide more
information.
Senator Wilson wondered whether the university expected
additional federal dollars that would be matched by the
state.
President Pitney replied that the federal funds were
proposed on the state discretionary funds and had several
partners involved. She said that the funds could be used to
leverage additional competitive grants. She added that if
there were an amount of available money for research match
there were funds that could be pursued. She stressed that
if there were a pool of matching state funds the state
could compete for more federal funding.
Co-Chair Bishop asked for more information on the $3.75
million for Health listed on slide 10.
President Pitney replied with slide 26, "UAA Health Program
Faculty $3.75 million":
.8M salaries, benefits and costs of the new
faculty hired in FY22
??$1.7M will be used to add faculty in the following
?Medical imaging (diagnostic medical sonography
and radiologic technology)
?Certified nurse aide
?Surgical technology
?Pharmacy technology
?Medical assisting
?Behavioral health (social work and human
services)
?$0.25M upgrade and expand use of manikins and
technology
President Pitney stressed that the faculty funding was not
for now hires but was for the faculty hired to replace
vacancies. She reiterated the competitive nature of hiring
in the nursing field.
1:41:38 PM
Co-Chair Bishop surmised that the request was the
university responding to the growing human resource needs
in the healthcare industry.
President Pitney replied in the affirmative.
President Pitney addressed slide 11, "FY23 Capital Budget
Summary (in millions of)." She pointed to the $50 million
for deferred maintenance and noted that the university had
made the same request since 2008. She stressed that if the
university received $50 million for deferred maintenance on
an annual basis, the deferred maintenance would not
increase. She shared that the annual depreciation on
facilities was approximately $65 million per years and the
$50 million would allow the university to keep up on the
backlog.
President Pitney pointed to slide 12, "Capital Budget
DM/R&R Funding History Unrestricted General Funds and
Backlog (in millions of $)." Which showed a line graph of
the UGF and backlog in millions.
Co-Chair Stedman remarked that the general deferred
maintenance in the state, outside of the university, would
reflect on a graph much the same way. He recalled that in
2006 there had been a revenue increase, which had resulted
in more funding for deferred maintenance. He thought that
it would be wise to address the current deferred
maintenance issue while the state was experiencing a bump
in revenue due to increased oil prices.
1:45:18 PM
Senator Hoffman remarked that the deferred maintenance
funding in FY12 was the result of a finance committee
chaired by Co-Chair Stedman.
President Pitney continued to address slide 11. She
mentioned the student IT system modernization. He said that
Covid-19 had highlighted the need for the update. She said
that the funding required treasury approval and the
university had worked with OMB for that approval.
President Pitney looked at slide 13, "Gov Proposed FY23
Capital Budget":
? UAF Bartlett Hall and Moore Hall Modernization and
Renewal: $18.7M (G.O. Bond funds)
? Student Information Technology Systems: $20.0M (SoA
Coronavirus Capital Projects federal
? Seward Marine Center Research Vessel (Sikuliaq)
Infrastructure: $94.4M (UAF CFOS NSF federal funding
authority)
1:49:51 PM
Co-Chair Bishop remarked that the funding for Bartlett and
Moore Halls had occurred in the year prior and had been
vetoed by the governor.
Senator Wilson wondered whether the university was in
support of the GO bond or advocating for a different
funding source.
President Pitney replied that she would be happy with any
funding source to address deferred maintenance. She
asserted that her advocacy was for sufficient and regular
differed maintenance funding.
Co-Chair Stedman recalled that in the previous budget cycle
the Bartlett and Moore Hall items had been requested by the
administration, approved by the legislature, and then
vetoed by the governor, only to be back as a request this
year. He advocated not using debt to modernize the
buildings but to use general funds while the resources were
currently available.
President Pitney addressed slide 14, "Student Information
Technology Systems: $20M":
State of Alaska Coronavirus Capital Projects federal
funds
? Upgrade student information system to serve the
entire university and compete in a post covid
environment.
? Implement a modern system capable of facilitating
student recruitment, retention, and success.
? Allow autonomy, when possible, where business
practices are differentiated between campuses.
? UA would retain the benefits of a single system and
a common reporting structure, while allowing each
university to innovate and adapt the system more
quickly to their changing requirements.
Co-Chair Bishop queried the process for the item proposal.
President Pitney replied that the item was proposed through
OMB to treasury.
Senator Hoffman asked whether the more remote sites of the
state would be served by the upgrade.
President Pitney clarified that the upgrade would serve all
three universities in the system and their community
campuses.
1:54:09 PM
President Pitney pointed to slide 15, "FY23 Gov Amend $50M
DM/RandR (top 5 $33m)":
1. UAF Fairbanks Campus Building Interior and Systems
Renewal $20,500.0
Modernize both residence halls' (Bartlett and Moore)
restrooms, laundry facilities and associated
sanitation infrastructure by replacing the plumbing
systems and reconfiguring the restrooms to comply with
current building codes, ADA standards and modern
student resident expectations; replace the entire
Bunnell elevator unit with a modern elevator within
the same structural shaft; renovate one to two
restrooms within each Duckering, Elvey, and Bunnell
buildings with new fixtures, finishes, partitions,
lighting, etc.
2. UAA Campus Building Interior and Systems Renewal
$11,171.0
Replace failing piping, inadequate electrical systems,
inefficient lighting, boilers, fans, deficient
variable air volume (vav) boxes and upgrade building
automation system controls. This energy savings
performance project will incorporate mechanical and
electrical system improvements to three critical
facilities, the Professional Studies Building (PSB),
the Wendy Williamson Auditorium (WWA), and the Social
Sciences Building (SSB).
3. UAS Deck Mansards Replacement Paul Building $100.0
Replace the siding/roofing material with a Bermuda
metal material that is more resistant to constant rain
4. UAA Consortium Library and Arcade and Bridge Lounge
Roof Replacement $900.0 This project will demolish the
existing roof system, increase parapet cap height,
upgrade structural components for seismic restraint,
replace roof decking as required and install a new
roofing system.
5. UAF Moore-Bartlett Skarland Residence Exterior
Lighting $325.0
The project will replace inadequate exterior lighting
with new, energy efficient LED fixtures on all four
sides of the building.
President Pitney noted that the top 5 priorities for FY22
had been vetoes by the governor; the slide included the
updated top 5 priorities for FY23.
1:55:40 PM
Senator Wilson asked whether the $20,500.0 for item 1 on
the list was included in the $18.7 million request on slide
13.
President Pitney said that $20,500.0 was the total project
cost and $18.7 million was included in the general
obligation bond. She said that some of the project would
not be eligible for a general obligation bond.
Senator Wilson asked for an additional list of what the
additional $20 million would cover, outside of the $50
million for deferred maintenance.
President Pitney replied that top 5 priorities reflected
$33 million of the $50 million and the list on slide 16
made up the remaining $17 million.
Senator Wilson asked for an additional list that included
priorities for the additional $20 million.
President Pitney understood that Senator Wilson was asking
for the to $70 million in priorities she would provide that
information.
Co-Chair Stedman lamented that Southeast campuses were not
included on the priority list.
President Pitney pointed to slide 18, "UA Goals."
The University of Alaska inspires learning and advances
and disseminates knowledge through teaching, research,
and public service, emphasizing the North and its diverse
peoples.
• Contribute to Alaska's economic development, skilled
workforce, and engaged citizenship
• Foster academic excellence for student success
• Promote diversity, equity and inclusion in students,
faculty and staff
• Grow our world-class research
1:58:50 PM
President Pitney highlighted slide 19, "Priority Focus
Areas.":
• Increase Student Enrollment
• Develop workforce and focused economic development
initiatives
• Promote Arctic policy, research and leadership
• Strengthen Teacher Education through the Alaska
College of Education Consortium
• Advance the Alaska Native Success Initiative
• Increase Fisheries and Ocean Sciences presence in
Southeast Alaska
• Revise business models for efficiency and
modernization
President Pitney spoke of workforce development and the
various focus areas pictured on the slide. She noted that
as the arctic continued to open the future of the state
should be to create leaders in the field. She said that the
state's position in the arctic was strong and should be
fortified through education and leadership.
Co-Chair Bishop commented on the $5 million for heavy oil
research. He mentioned a formation on the North Slope that
contained 22 billion barrels of oil.
President Pitney continued to discuss Slide 19. She said
that building finance capacity in the state was important.
She shared that various finance workforce employee were
needed across all specialties.
2:04:47 PM
President Pitney discussed the final area pictured on the
slide.
President Pitney pointed to slide 20, "Contribute to
Alaska's Economic Development, Skilled Workforce and
Engaged Citizenship." The remaining slide discussed
financial targets for the system over the next 5 years.
President Pitney looked at slide 21, "Foster Academic
Excellence for Student Success."
Senator Wilson asked about the dual enrollment program and
whether there had been a decrease in the number of college
freshman taking remedial classes.
2:07:15 PM
President Pitney said that remedial classes were on the
decline because the way students progressed successfully
was by taking normal classes with additional support. She
added that there could be financial aid impacts for
enrolling in remedial classes.
Senator von Imhof wondered whether the university targeted
large conventions in and out of state for student
enrollment.
President Pitney replied that the university had targeted
some markets. She said that the university was more focused
on instate students. She thought that outdoor recreation
could be a key market for out of state students.
2:11:01 PM
Co-Chair Stedman asked whether President Pitney had
graduated for high school in Alaska.
President Pitney responded that she had graduated from high
school in Montana.
Co-Chair Stedman noted that 5 members of the committee had
graduated from high schools in Alaska. He stressed that
opportunities were available for graduates in state and
higher education was important. He believed that getting
that message out to young people in Alaska, especially in
rural areas, was important.
President Pitney pointed to slide 22, "Operate Cost
Effectively." She said that philanthropy was a target as
well as student debt. She said that student debt was low
and that it should be consciously monitored.
President Pitney looked at slide 23, "Promote Diversity,
Equity and Inclusion in Students, Faculty and Staff."
Senator Wilson requested a definition of Indigenous
Heritage versus Other Underrepresented Heritage.
2:14:03 PM
President Pitney replied that it was Alaska Natives versus
all other minority groups. She said that the Alaska Native
Success initiative led to aggressive targets for FY27. The
focus was to raise the enrollment numbers of both groups.
Senator Wilson asked about the data pertaining to students
in the underrepresented heritage group.
President Pitney agreed to provide the data.
President Pitney discussed slide 24, "FY19 FY32 Operating
Revenue Baseline (in millions of $)." She noted that in
FY19, general funds made up 43.6 percent of the operating
revenue, which had fallen to 38.4 percent in FY22. She said
that under a stable fiscal environment the university could
maintain the 38 percent while growing other revenue areas.
She pointed to the green line representing tuition and
fees. She said that budget cuts had impacted tuition, which
impacted enrollment; research had not bee as impacted and
had absorbed more to the total. She hoped to regain
enrollment. She stressed that the universities focus
remained on the highest demand jobs in the state.
2:18:19 PM
Co-Chair Bishop aske for the slide to be redone to include
deferred maintenance.
President Pitney replied that she would provide the
information. She reiterated that the stability scenario
should be $50 million per year.
Senator Hoffman understood that the $50 million was for
deferred maintenance.
President Pitney replied in the affirmative; $50 million
for deferred maintenance annually in the Capital Budget.
Senator Olson remarked that the old IT system was troubling
and hoped that the IT upgrade could be approved. He asked
whether President Pitney was optimistic that the upgrade
would be funded.
President Pitney replied that the current federal fund
source was in question, and it would be better to secure a
more reliable fund source. Having contingency language that
the upgrade would be funded with general fund if necessary
was a high priority.
Senator Wilson remarked that Future Farmers grant was an
important issue in his district. He wondered whether the
university would work with the Department of Natural
Resources (DNR) to transfer funding a assure that the
program continued.
2:21:57 PM
President Pitney replied that the Future Farmers of America
program was slated to transfer over the Division of
Agriculture. The budget reductions at the university had
prompted the movement of the program to DNR and the
university had put forth funding to aid with the transfer.
Co-Chair Stedman noted that the largest operating budget
reductions in FY22 were for the Alaska Marine Highway
System and the University of Alaska. He said that the
reductions had netted out with increased in other
departments- resulting in zero savings. He expressed the
desire that the university regain financial stability and
look forward to the information related to the impact of
inflation on the system. He asked whether there was
anything in the red book that President Pitney thought
that the public should be aware of.
2:24:48 PM
President Pitney clarified that the red book was the
University of Alaska Board of Regents budget request to the
legislature. It included the boards request, and provided
information on programs, capital funding requests, and
historical information about prior years requests. She
added that much of what was in the book had been included
in the presentation.
Senator Hoffman remarked that red meant deficit and
suggested that the book should be green to reflect growth.
President Pitney said she would consider the idea. She
thanks the committee for their support of the university.
She stressed that getting Alaskans to pursue higher two-
and four-year degrees would have economic benefits for the
state overall into the future.
Senator Hoffman requested more specifics on the growth of
jobs in the fields of health and education.
ADJOURNMENT
2:28:57 PM
The meeting was adjourned at 2:28 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 031422 Senate Finance Overview Presentation with 10 year Plan FINAL 3 14 2022 PDF.pdf |
SFIN 3/14/2022 1:00:00 PM |