University budget and the imaginary plan to cut $50 million in administration

Sen. Lora Reinbold thought she heard a University of Alaska Anchorage professor describe an easy way to cut $50 million in administrative expenses from the UA budget. It was what she wanted to hear.

“I believe you’ve only made one suggestion of a $50 million cut basically for the statewide services,” she said to Forrest Nabors, who teaches political science.

No one, including Nabors, challenged Reinbold on her assertion that he had identified $50 million to be cut. Neither she nor anyone else asked the most important question during that hearing Sept. 20—What is that money being spent on?

Had Reinbold done any research, she would have discovered that the services paid for with that $50 million have to be provided by someone, somewhere, at some cost.

During his testimony, Nabors never exactly said that the state could save $50 million, but he suggested that money spent on statewide administration is a waste.

“By decentralizing the system, the expensive statewide office may be cut. But the cost of that office to the whole system is more than what we can measure by their annual, direct expenditures, which have amounted to more than $50 million per year,” he said.

That was a central tenet of the hearing at which various UAA faculty members and others argued that UAA should be independent, more money should be spent in Anchorage, while no money should be spent on the UA statewide administration in Fairbanks. There should be separate boards of trustees for each campus and they should compete for funding from state government.

With a system like that, UAA would be bound to get more money because the Anchorage area has a majority of the Legislature.

“Many of us believe that the best path forward would be to break UAF, UAA and UAS out of the UA system for the good of all three. Sentiment for the independence of UAA as Alaska State University is strong and growing,” said Nabors.

“I would say right now that statewide is the biggest drag on the system,” Nabors said. He said that “tens of millions of dollars” that should be going to UAA, UAF and UAS is going to the statewide administration.

“In my college of arts and science at UAA, we receive several million dollars of UGF, of state appropriation. We educate the largest share of students in the state of Alaska. The UA statewide receives four times that amount. They don’t teach any students. There is something very wrong with that picture,” he said.

“There are programs that ought to be cut. And by exposing them more to market forces it will cut the programs that are inefficient,” he said. He didn’t identify any programs to cut.

On Monday, Paul Dunscomb, the UAA faculty member who set up the “Save the Seawolf” campaign, wrote a column in the Anchorage Daily News calling for abolishing the statewide administration.

“Let the zombie University of Alaska die! Let the universities of Alaska, UAF, UAA and UAS, thrive!” he wrote.

“Just how much of a statewide administrative entity Alaska actually needs for its three universities to deliver higher education to Alaskans is debatable,” Dunscomb said.

A legislative town hall meeting in Anchorage Monday touched on some of this as well. Joel Potter, a UAA philosophy professor, said that centralized administrative costs are higher at UA than at other “peer” institutions and that decentralized administration should be cheaper.

Missing from his presentation was any allowance for the relatively high number of centralized services at the University of Alaska and the higher level of grants and contracts, two factors that make a direct comparison impossible with the 36 other institutions he included.

The political forces unleashed by Gov. Mike Dunleavy’s attack on the university have led to a sharp increase in University of Alaska infighting, which is helping the governor in his fight against higher education. The Anchorage combatants say there is no infighting, just a campaign against a wasteful statewide office in Fairbanks that should be eliminated altogether.

The debate about administrative costs should start with facts, not generalizations.

Here is a breakdown of statewide administrative costs, provided by the UA finance office, about $55.7 million this fiscal year. About one-third of that amount is from state general funds. The rest is from charges for services to the three universities, a student fee for network services, and a few other sources.

I think that everyone at UAA would support the consolidation of all statewide services in Anchorage. Or moving $30 million or more in operations to the state’s largest city. Perhaps that would save a few million. And it’s clear that every service can be made more efficient.

But if the university has to have three land management offices, three legal offices. three risk management programs and three separate information technology programs, it would be unwise to just guess that costs would drop.

Under the UAA independence plan, the $744,000 for the UA president’s office could be cut, as the chancellors would assume presidential powers in Anchorage, Fairbanks and Juneau. That would still leave about $55 million in other expenses to deal with.

Most everything on the list is self-explanatory except for the $5.7 million for “strategic investment funding for university initiatives (e.g. enrollment and on-line courses.) Cut that and the total is about $50 million.

The largest portion of what remains is the $15.3 million on information technology, for the computer systems and communications facilities that are essential at each campus.

Next on the list is the $7.7 million for risk services, including insurance premiums and the cost of claims.

Human resources—payroll, benefit management, union negotiations, hiring—costs $5.7 million. Land management has a $6 million budget, but that includes revenue that supports other programs. Financial services cost $3 million and $2 million goes to planning and budget research. The budget includes $1.7 million for academic affairs.

The point of all this is not that $55 million is the appropriate amount to spend on statewide services, but that no one has identified how to cut $50 million from the state budget.

Dermot Cole5 Comments