University regents consider controversial merger of UAS as solution to ‘immediate and significant financial headwinds’

University of Alaska Southeast's Juneau campus on Tuesday, Nov. 15, 2016. (Photo by Quinton Chandler/KTOO)
University of Alaska Southeast’s Juneau campus on Tuesday, Nov. 15, 2016. (Photo by Quinton Chandler/KTOO)

The University of Alaska Board of Regents will meet next week to consider how to close a gaping budget hole driven by cuts to state funding, declining student enrollment and the coronavirus pandemic.

Options on the table include deploying savings to fill part of the gap, and deleting or reducing about 50 degree and certificate programs. Plus, there’s a controversial proposal to merge the University of Alaska Southeast into one, or both, of the system’s other two universities.

“The university is facing immediate and significant financial headwinds,” UA President Jim Johnsen said in a call with reporters Thursday.

For years, UA has grappled with reduced state funding and lost tuition dollars as enrollment declines. Then came the coronavirus pandemic. It cut into the finances of the already-strained university system.

Across the country, universities are wrestling with plunging revenues and rising expenses linked to the pandemic. The virus forced campuses to quickly move classes online. Events were canceled, and housing and dining fees returned. In some cases, universities helped pay for students to move home.

At UA, the coronavirus is projected to cause a nearly $25 million budget shortfall in the fiscal year that starts July 1, Johnsen said. He’s proposing that regents use one-time funds to fill it.

“These are funds that have been saved through belt-tightening over the last year,” he said.

Apart from the pandemic, UA was already preparing for a $25 million cut to its state funding in the upcoming fiscal year. It’s restructuring its debt, planning for furloughs, laying off staff, suspending pay increases and cutting administrative costs, Johnsen said. There’s also the proposal to reduce or eliminate the dozens of academic programs to save about $4.5 million.

Still, Johnsen said, that’s not enough to eliminate mounting budget issues.

UA is expecting another budget shortfall in the fiscal year that starts in July 2021. The budget gap could range from about $11 million to about $36 million, Johnsen said. The total depends, in part, on enrollment and what costs are eliminated this year.

That’s where the proposed merger comes in.

It’s the largest of the cost-cutting options for regents to consider next week.

“We’ve exhausted the little stuff,” Johnsen said. “We need to start looking at larger reductions.”

It would mean merging UAS into the University of Alaska Anchorage or the University of Alaska Fairbanks or both. UAS includes campuses in Juneau, Ketchikan and Sitka. It’s the smallest of the three universities. And, about about half of the credits from UAS are delivered online, Johnsen said.

“They’re already not on the campus every day, so they’ve made the transition,” he said.

Johnsen said a merger could potentially save $15 million or more. He said it would not mean closing campuses.

But the proposal faces opposition.

Heather Batchelder is a professor at UAS and the chair of the system-wide Faculty Alliance. She said faculty members were blindsided by the proposed merger, and the alliance does not support it.

“In order to meet the diverse needs of our state, we need to keep our university in our capital city,” she said.

Batchelder said talk of a merger has created another layer of instability for students and employees, some who are still reeling from last summer’s chaotic budget battle.

Facing an unprecedented, $135 million veto from Gov. Mike Dunleavy last year, regents considered consolidating the entire university system. The faculty alliance and others opposed the proposal, and it was later tabled after regents entered into a compact with Dunleavy, reducing the veto to a $70 million cut over three years.

Batchelder said it feels like “déjà vu” to confront another proposal to move away from a three-university system.

“There’s been so much uncertainty, and then the pandemic on top of that. So we are exhausted,” she said. “But we are not defeated. And we will not give up and we will never stop fighting for our three separately-accredited universities.”

Other cost-cutting options up for review next week include increasing coordination between programs across UA and consolidating general education requirements.

UA regents are taking public comment on the options by email at ua-bor@alaska.edu. Starting at 4 p.m. next Tuesday, June 2, people can also call in to provide comment. The regents will meet the following Thursday and Friday. They’re expected to approve a budget for the upcoming fiscal year, deciding whether to cut the academic programs and tap reserve funds to cover this year’s deficit. They’re also expected to weigh-in on the proposed merger.

Editor’s note: An earlier version of this story said that public comments would be taken by phone starting at 3 p.m. on June 2. The correct time is 4 p.m. The last paragraph of this story has been corrected.