UA cites heating cost as one reason for requested increase

School also concerned with rising costs of employee health and retirement benefits

Posted: Monday, September 12, 2005

FAIRBANKS - The University of Alaska system is expected to ask the state Legislature for a $47 million increase next year to cover increases in operating costs including the cost of heating fuel.

The statewide university system has been wrestling since the start of the July 1 fiscal year with how to cope with the rising costs of employee health and retirement benefits and recent surges in the price of oil.

The university system received $248 million from the state for the current fiscal year, bringing the university's total operating budget to $714 million. That was a $17 million increase over last year, but the Legislature failed to fully fund the university's contribution to the public employee and teacher retirement systems, said UA spokeswoman Kate Ripley.

Since the start of the July 1 fiscal year, the university also has seen heating costs go through the roof. The utility bill for University of Alaska Fairbanks' Butrovich Building alone is expected to increase by $100,000 next year.

The Fairbanks campus budgeted $1.45 per gallon for diesel oil last year. It ended up paying nearly $2 a gallon for the 1.6 million gallons of diesel oil it consumes annually. UAF now is paying $2.75 a gallon.

"The university isn't alone in dealing with this," said Pat Pitney, associate vice president for planning and budget development for the University of Alaska. "This is going to be a problem across the state."

The cost of health insurance and retirement benefits for university employees is expected to increase by $26 million next year. The university also expects to pay $11 million more in wages in 2007.

The university system needs $33 million to cover increases in wages, benefits and other operating costs, Pitney said.

Joseph Trubacz, associate vice chancellor of finance and business operations at the University of Alaska Fairbanks, said the university has been taking money from unfilled positions to fill the growing holes in the budget.

"This year, we'll be able to use a short-term fix, but if oil prices stay high we'll have to reallocate those funds on a permanent basis," he said.

Trubacz said that could mean reductions in staff and programs if additional funding isn't found.

While the Fairbanks campus is partially powered by coal, the use of diesel oil is growing.

"We're burning as much coal as we can, but we also burn a lot of oil," Trubacz said.

Fairbanks is worse off than its sister campuses in Anchorage and Juneau, because they are powered primarily by natural gas. But the high energy costs will hit the university's 15 rural campuses hard, eating up a large percentage of their operating budgets, Trubacz said.

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