Between a smaller chunk of change from the state and an anticipated decrease in tuition revenue, the University of Alaska Southeast was faced with difficult decisions — what to do with almost $2 million less in fiscal year 2015.
Of the $8.3 million state funding cut from the University of Alaska system budget this year, the Juneau, Ketchikan and Sitka campuses lost $1.4 million, UAS Chancellor John Pugh said. That amount is a little more than a million dollars for the Juneau campus alone, budget director Barbara Hyde said. Those cuts came out of money allocated for salaries and benefits, as well as travel. In FY 2014, the state funded UAS at about $23 million.
Despite rate increases, UAS anticipates a 2 percent reduction in tuition revenue due to declining enrollment. That is equal to about $205,000, Pugh wrote in a letter to UAS faculty and staff this month. Employee salary and benefit increases “added another $750,200 burden” partially funded by the state.
“The net effect was $1.93 million in reduced revenues and increased fixed costs for FY15,” he wrote.
The university took several approaches to combat the cuts, including eliminating four positions, Pugh said. That will save the school $300,000 in salaries and benefits. Two of those four were retirements that will not be refilled, he said: the assistant to the vice chancellor for academic affairs and the bookstore manager.
The other two positions were a plumber and a janitor who worked primarily at the Bill Ray Center. UAS sold the center last fall to Anchorage-based First National Bank of Alaska for $3.1 million. The sale was finalized in January, and proceeds went directly toward construction of the new 120-bed, on-campus freshman residence hall set to open this August, in time for the new school year, Pugh said.
Closing the Bill Ray Center, which housed the University of Alaska Anchorage nursing program and UAS’ vocational training program, will save the school $71,000 in utilities and operating costs, Pugh said. The programs it housed have been relocated onto the Juneau campus and into the building across Egan Drive from Juneau-Douglas High School.
Another facility closure, which will come in January, is that of the Auke Bay bookstore. The store was built to stand alone, funding itself through sales. But the school has been “subsudizing” it by $100,000 to $150,000 each year “because it’s been losing money,” Pugh said.
“A lot of students have been buying their books online,” causing a drop in the store’s revenue, Pugh said. “We had hoped that the cost of soft goods would make up for that.”
In January, the store will move on campus and become fully electronic to “stop the bleeding and be more efficient in that area,” he said. Students will be able to purchase books online at a kiosk, probably at the Juneau campus’ registration desk, through national textbook company MBS. The Ketchikan and Sitka campuses already do things this way, Pugh said.
Students will be able to “go in, register, pay their fees, and purchase their books right there,” he said. UAS logo wear, pens and pencils and other school supplies will still be available for sale, probably at a booth in the cafeteria, Pugh said.
Between the loss of the bookstore manager position and saving money on the bookstore operation, the university will probably recoup about $100,000.
Twelve retirements at the end of the 2013-2014 school year will also help UAS’ bottom line in the long run, Pugh said. The only two positions that will not be refilled are the bookstore manager and the assistant to the vice chancellor for academic affairs. Waiting a couple months over the summer to fill the other 10 positions, as well as hiring younger educators and staff at lower rates, will save the university about $150,000, Pugh said.
All of the retirees had been with the university 25 years or longer, including geology professor Cathy Connor, who taught for 30 years at UAS.
Tighter budgets across the university system have caused all three campuses to eliminate positions for FY 2015. UAA, with an enrollment of about 20,000 students, eliminated 18 positions, Pugh said. With UAS’ approximately 4,000 students, its four eliminations are about the same proportion as UAA’s.
UAF cut about 40 positions. The school has an enrollment of about 10,000.
“That’s quite a bit higher than the rest of us,” Pugh said. He said he didn’t know why UAF had to cut that many jobs.
A bonus for the president
The system’s budget situation was brought into the spotlight after the UA Board of Regents in June signed off on another three-year contract for President Pat Gamble that included a $320,000 bonus, equivalent to one year of his salary. He has headed the university system since 2010 and will receive the bonus if he stays until 2016.
Board chairwoman Pat Jacobson called the bonus a “retention incentive” and said the board was almost unanimous that Gamble deserved the perk. The board voted 10-1 to approve Gamble’s new contract.
Jacobson said numerous initiatives and improvements have marked Gamble’s years at the helm, including higher graduation rates, mandatory student advising and improved distance learning and credit transfer.
“When he was one of the candidates for the new president, one of the things he said right then was that he saw what was coming down the pike,” she said. “There were going to be needs for streamlining and consolidating ... We’re making huge strides in the right direction. (Gamble) has the correct approach with facing the challenges.”
When asked if Gamble would not have stayed on board if the bonus had not been included, Jacobson said “the board felt it was an important thing that we do.”
“President Gamble has been there from the get-go and the board believes that he’s doing an excellent job,” she said. “It’s the feeling of the board quite frankly that we need consistent, strong and steady leadership.”
The board has given out six-figure retention bonuses to past presidents, she said.
“We did it with careful deliberation,” Jacobson said. “It was not just on the fly.”
A changing system
The system as a whole received $376.6 million from the state in 2014 and generated $535.7 million itself, for a total budget of $912.3 million.
Although the state cut UA’s funding by about $16 million for FY 2015, it added some money for other items, including 50 percent of a requested staff salary increase, UA spokeswoman Kate Ripley said. The net reduction was $8.3 million, a 2.2 percent reduction in state dollars compared to FY 2014, she said. University-generated revenue for 2015 is $549 million system-wide, for a total budget of $924.8 million, Ripley said.
“So the overall bottom line number is increasing, but because of increased costs overall, there’s a real need for changing the way we’ve always done things,” she said in an email. “Plus, there’s also a lot of pressure on colleges and universities nationally and by our state legislature to show results, so all of our campuses are going through a change process, looking at how they do thing currently and how can they can improve.”
“I want to emphasize that we receive very strong support from the governor and Legislature, even considering the budget reduction,” Ripley said.
On top of the cost-saving measures implemented so far, Pugh said UAS is working toward partnerships with the City and Borough of Juneau and the Juneau Police Department that will further streamline how the campus functions.
Pugh wrote in his letter to UAS staff that the university system began realizing in December that cuts would be needed. What followed was a lot of problem solving and “an articulate and accountable financial plan,” he wrote. UAS’ full financial plan will be made available in early August.
“We’ve worked hard all year knowing this was coming up,” he said.
• Contact reporter Katie Moritz at 523-2294 or at firstname.lastname@example.org. Follow her on Twitter @katecmoritz.