University of Alaska Declares a Rare Emergency After Budget Was Slashed
University of Alaska Declares a Rare Emergency as Budget Slashed
(Bloomberg) -- The University of Alaska’s regents voted Monday to declare financial exigency, a rare step that will allow it to quickly lay off employees and cut programs after the state made an unprecedented cut in funding for the system of 26,600 students.
The vote came in response to Republican Governor Michael Dunleavy’s veto of $130 million in funding for the system as part of the fiscal 2020 budget, driving a nearly 41% cut in state support. The regents last week delayed the decision to declare the exigency, a type of financial emergency that will allow it to usher in extraordinary cutbacks.
The University of Alaska, which has three universities, estimates it will need to lay off more than 1,300 faculty and staff as a result of the state funding cut, a nearly 18% reduction, according to the motion the regents reviewed on Monday. It’s already withstood years of state budget cuts after the drop in oil prices pressured a major source of tax revenue for Alaska.
The University of Alaska had its credit rating slashed by Moody’s Investors Service over the pullback in state funding. Cutting programs and staff could end up reducing enrollment, which could hurt the university system’s financial situation further.
John Davies, chair of the board of regents, said declaring exigency was a tool for the university in the face of “draconian” budget cuts. Exigency could be restricted in its scope or withdrawn if the situation in Alaska changes, he said.
“Unfortunately, right now we are grappling with survival,” he said.
It’s rare for universities, especially large systems, to declare exigency. Tulane University took that step in 2005 after its city of New Orleans was devastated by Hurricane Katrina, allowing the private college to fire faculty members with tenure, according to the American Association of University Professors. Chicago State University also did so in 2016 after its funding was affected by a long-running impasse over the Illinois budget.
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