FY20 Budget Planning Process/Timeline and the Three-Year Budget “Compact”
The FY20 budget planning and development process occurred during a gubernatorial election year and the process from February 2019 through August 2019 became an unprecedented time of budget uncertainty.
Governor Walker released his budget in December 2018 and in February 2019, newly elected Governor Dunleavy submitted a revised FY20 budget request which included a devastating 41 percent UA GF reduction (or $136 million) from FY19 levels. This proposed budget is the largest budget cut in the university’s 100-year history.
In June 2019, the legislature later approved UA’s budget with a much more manageable reduction of $5 million (or 1.5 percent) from FY19 levels; however, the Governor later vetoed this budget and a legislative vote to override the budget failed. As a result of the $136 million UA reduction, in July 2019, the Board of Regents declared financial exigency.
Finally, on August 13, 2019, Governor Dunleavy and the UA BOR entered into a multi-year agreement (“compact”) for FY20-FY22. The compact establishes UA operating budget reductions of $70 million over a three-year period as follows:
- FY20 UA Operating Budget $302 million (-$25 million from FY19)
- FY21 UA Operating Budget $277 million (-$25 million from FY20)
- FY22 UA operating budget $257 million (-$20 million from FY21)
With the compact agreement, UA was no longer facing an impossible $136 million state appropriation cut in a single year, but rather a very difficult $70 million cut over three years. The Board of Regents declaration of financial exigency was terminated in August.
UAF’s estimated GF reduction proportion is roughly half (50 percent) of UA’s total cut, however, unfunded fixed cost increases and internal reallocations directed to specifically defined initiatives increase the total budget reduction target across all universities.
Per the compact, the FY20 capital budget is established as follows:
- FY20 $5 million facility deferred maintenance
- FY21 and FY22: TBD
Other FY20 budget highlights include:
- Dual appropriation structure
UA operates under a dual appropriation structure in FY20, with UA’s community and southeast campuses in one appropriation, and main campuses and system offices in a separate appropriation. The reimbursable services agreement (RSA) process will be used to charge for services between appropriations.
The Board of Regents approved the FY20 operating budget which includes $3.4 million in compensation adjustments related to equity and market. A key element of UA’s compensation philosophy is that University employees are paid at least 90 percent of the market median for their job. The plan for these adjustments is to bring all university employees that are currently below 90 percent of the market median up to 90 percent over the next three years (FY20, FY21 and FY22). Since additional funding was not provided by the legislature, the adjustments are to be funded through reallocation at each university.
For the FY21 proposed budget, the $7.1 million funding reallocation requested includes funding to address specific market increases ($3.2 million) as well as general market increases ($3.9 million).
- Title IX
UA invested a total of $742 thousand in Title IX funding to address areas of acute concern and better positions the university to grow the culture of respect, service, safety and compliance. Of this total, UAF’s share is $310 thousand (41.8 percent). At UAF, this funding supports investigator positions ($295 thousand) and Green Dot bystander intervention training ($15 thousand). Title IX investments are funded through reallocation at each university.
FY20 UA and UAF Strategic Investments: Base and One-Time
In addition to the $25 million GF reduction, UA internally reallocated a total of $9 million for strategic investment goals. Of the $9 million total, $5 million was funded from reallocation of UA GF base and $4 million was funded from one-time system office funding. The one-time funding pool began in FY19 and was originally planned to be a three-year commitment (FY19, FY20 and FY21); however, the difficult budget process and university structural discussions resulted in altered plans where FY20 is the final year of commitment.
Of the $9 million UA system total, UAF received $3.8 million to fund the Board of Regents’ strategic initiatives including: contributing to Alaska’s economic development, providing Alaska’s skilled workforce, growing world class research and increasing degree attainment of students, and increasing cost effectiveness.
- FY20 is the final year of the UA-wide research investment of $1.8 million, of which UAF received $1.4 million.
- UAF also reallocated base funding to support Title IX investments.
- The Strategic Enrollment Planning (SEP) Steering Committee convened in fall 2018 to continue the university wide planning process to recruit and retain students. In October 2019, the Chancellor committed $1 million for FY20 investments via reallocation of base general funds to support initiatives reviewed through the SEP process.
Up to date information from Chancellor White may be viewed on the Chancellor’s Budget Communications website.
For FY20, the UA Board of Regents approved an operating budget request of $358 million,
a 9.6 percent increase over the FY19 UA budget of $327 million. This level of request
supports compensation increases, fixed costs, Title IX and campus safety, and UA strategic
initiatives. UA also put forth a $50 million capital request for DM, $5 million for
sustaining USArray research capabilities in Alaska (for UAF), and $2 million for digital
FY20 UA Operating Budget Request- BOR Approved - November 2018
FY20 UA Capital Budget Request- BOR Approved - November 2018
In July 2018, the State of Alaska Office of Management & Budget provided early budget guidance to all state agencies to be cognizant that budget constraint is the new normal. The overarching expectation is to provide a safer, smarter, and stronger Alaska.
UAF is preparing an initial FY20 budget request in collaboration with UA and the other
universities. The first review with the Board of Regents' is in September 2018, with
final approval in November 2018.
UAF is making every effort to focus its remaining resources on core mission activities, and to communicate to faculty, staff and current and prospective students that UAF continues to be a strong institution with a bright future.
UA is currently also leading a review of some key academic and administrative areas in an effort to streamline operations, known as the UA Strategic Pathways review. For more information on this review please visit the website.