Budget update: Jan. 27, 2021
January 27, 2021
— by Dan White, chancellor
Across the university we continue to work through the FY21 budget and prepare for
FY22. FY22 will mark the third and final year of the compact agreement that the Board
of Regents signed with Gov. Dunleavy. UAF’s FY22 budget plans were set in motion a
year ago, then approved by the BOR in September 2020 and then submitted to the governor
in December 2020.
As part of the compact agreement, UAF’s state general fund budget reduction shares
amounted to $12.5 million, $12.3 million and $9.9 million for FY20, FY21 and FY22
respectively, for a total of $34.7 million over the three-year period. Since the budget
did not get settled until midway through the first year of the compact, some reductions
from FY20 were bridged to FY21 and FY22.
Since the start of the compact, UAF’s budget has been impacted by a number of challenges
and opportunities, and some additional changes are in the works. In FY21, we refinanced
debt ($2.9 million savings) and applied reductions to central facilities maintenance
($1.5 million savings) for a total reduction of $4.4 million. This left $12.2 million
to be addressed in FY22 through further general fund reductions and new revenues.
COVID-19, of course, added to the challenges, but also opportunities. While revenues
were lost and some costs higher, we saw more interest in our eºÚÁϳԹÏÍø programs from
outside Alaska as our outstanding academic programs offered through eºÚÁϳԹÏÍø drew in
new students. This had a significant impact on new enrollment at the Troth Yeddha’
campus. In the end, units appear to be on target to meet reductions, and some areas
of new revenues have been realized.
To meet the FY22 target of $9.9 million plus the remaining $2.3 million balance from
previous years, we strive to generate roughly $3 million in new revenues or vertical
reductions followed by a 10% reduction to each of the areas overseen by the vice chancellors.
In the FY22 guidance, the vice chancellors are afforded the discretion to apply reductions
to their individual units accordingly, or to use a mix of across-the-board or vertical
reductions. To meet the $3 million in new revenues or vertical reductions for UAF,
we are working on a power purchase agreement for excess power from our new heat and
power plant, monetization of land and facility assets, and new initiatives aimed at
increasing enrollment.
Additionally, we have several committees working on ideas around reductions and revenue
generation. Active groups are the Expedited Administrative Review Committee, Budget
Options Task Force, the Child Care and Early Childhood Development Services Task Force,
Strategic Planning Committee, Strategic Enrollment Planning Steering Committee, and
the Tuition and Fee Committee. With so many of our faculty and staff committed to
generating new ideas and revising earlier strategies, I am looking forward to reviewing
final reports and considering the options presented.
One revenue change we are certain of is UAF’s approved differentiated tuition structure
for FY22. Starting in fall 2021, the Board of Regents approved differentiated tuition
that will increase upper-division tuition by 2.5% and graduate-level tuition by 5%,
holding lower-division tuition flat. This is an important step to keep Community and
Technical ºÚÁϳԹÏÍø tuition rates affordable, maintain academic excellence, and bring
UAF’s research university tuition closer to our peers. We will continue to shape our
tuition approach in future years through guidance from the Strategic Planning Committee,
Strategic Enrollment Planning Steering Committee, and the Tuition and Fee Committee.
Last week I sent out a note in collaboration with the UAA and UAS chancellors seeking
a joint, positive message. President Pitney will be working on three important capital
budget items in Juneau that could have a significant impact on our FY22 budget picture.
They are debt service relief for UAF, deferred maintenance funds and a general obligation
bond. Although UAF pays about $19 million out of our operating budget each year for
debt service (significantly constraining our ability to reduce budgets), roughly $7
million per year was originally intended to be paid by the Legislature.
At the time of construction of the heat and power plant, $7 million was added to our
base budget to pay this annual cost. However, that same amount and then some has been
subsequently cut from our budget. Restoring just this $7 million for a period of time
through the capital budget would, in the president’s perspective, be consistent with
the compact and meet the original intent of the Legislature. Although we are not budgeting
for it at this time, it would have a significant impact on our FY22 plans and would
allow UAF to continue to focus on revenue generating and enrollment efforts. Furthermore,
the deferred maintenance and general obligation bond would allow UAF to make many
repairs and refurbishments on campus that would reduce operating costs. Having a positive
message with our counterparts in Anchorage and Juneau will support President Pitney’s
efforts.
To wrap up, in FY22 I continue my commitment to preserving programs and people to
the greatest extent possible while finding savings from reducing our footprint, utility
costs and deferred maintenance costs. On the revenue side, it is clear that our steadfast
focus on enrollment growth is a key part of our effort to strengthen UAF’s financial
resilience, maintain and grow our academic and research vitality, meet our strategic
goals, refresh and renew our facilities, and embrace our future.
Thank you for choosing UAF.