Blindsided by a 'devastating' veto, Alaska's university system pleads for a lifeline

Dunleavy, a Republican in his first year as governor, has seized on a hawkish approach to budgeting, in order to fulfill a campaign promise to increase the amount of oil-revenue dividends the state pays each Alaska resident, to about $3,000 a year.

The governor’s slashing of state funding left university leaders blindsided and in turmoil. The university’s supporters have embarked on a desperate scramble to persuade lawmakers to override the governor’s line-item veto, which would reduce the operating funds the university system gets from the state by 41%.

With a special legislative session convening Monday, they have just five days to do so before the cuts become official.

“I think people are actually frightened,” said Maria Williams, a professor who chairs the University of Alaska’s Faculty Alliance. “I’m frightened because I feel that what is happening is a drastic reshaping of the state of Alaska.”

The showdown in Juneau this week comes at a time of economic trouble in the state. While much of the United States has benefited from robust economic growth in recent years, Alaska’s fortunes have been largely tied to those of the state’s declining oil and gas industry. Falling oil revenues have brought on a persistent recession that has forced the state to confront lingering questions about how to best revive its economy.

Faced with looming deficits, political leaders avoided imposing a state sales tax or personal income tax, and chose to balance the budget by reducing payouts from the oil dividend fund instead. But the reductions were unpopular with some voters, and Dunleavy won election last year promising not only to restore the full dividend payments for the future but to fight for catch-up payments to make up for past reductions.

Leaders of the University of Alaska system, which serves more than 26,000 students from Juneau to Fairbanks, expect the governor’s budget cut to result in the shuttering of some satellite campuses, the elimination of hundreds of staff and faculty positions and an unprecedented reduction in the number of students the system is able to serve.

Dunleavy, a former teacher who got a master’s in education from the University of Alaska system, said his cuts to the state budget, including those for the university system, were necessary to lay a better foundation for private-sector job growth. But Jim Johnsen, president of the university, said a strong university system was necessary to develop innovators and training for a workforce that is increasingly dependent on postsecondary education.

“There is really no strong state without a strong university,” Johnsen said. “It just doesn’t exist.”

Paying the dividend

During his campaign last year, Dunleavy vowed to balance the state’s budget while avoiding new taxes, and to provide Alaskans with bigger payouts from the Alaska Permanent Fund, which holds oil revenue for later distribution. Lawmakers gave each Alaskan a $1,600 dividend last year; an old formula for the payouts that the governor hopes to revive would yield payments of about $3,000 a person this year, according to Bryce Edgmon, speaker of the state House.

To raise the dividend while lowering the state’s deficit, Dunleavy proposed a large budget cut for the university system earlier this year. But after the university system worked closely with lawmakers through the budget-writing process, the Legislature settled on a reduction of just $5 million in the $327 million of operating-budget support the state provides.

Johnsen, fearing the governor might not stomach the Legislature’s plan, met with Dunleavy in late May and quietly provided him with a written plan that he regarded as a drastic alternative: A $49 million reduction spread over several years, with significant cuts to personnel and “a reduced capacity to serve our students and our state.” Johnsen said he thought that such a reduction would be a challenge that would force some difficult choices, but one that the university could handle.

“It was an interesting discussion,” Johnsen said in an interview about his talk with the governor. “He nodded his head. He stood up. He shook my hand. He said, ‘We’ll talk.’”

The next time they spoke was the morning of Dunleavy’s veto announcement, he said. Legislative leaders had also been left in the dark.

“I’m shocked by the cuts,” said Edgmon, a political independent who characterized the reductions as “devastating.”

Matt Shuckerow, a spokesman for Dunleavy, said the governor made his intentions clear in his February budget plan and never indicated that he was going to waver from it.

Dunleavy has a tense history with political peers in the state. In 2017, a Republican-led majority ousted him from a committee post in the Legislature after he began breaking with the consensus in his party caucus. Last year, his predecessor as governor, Bill Walker, an independent, dropped his bid for a second term and threw his support behind the Democratic challenger, Mark Begich, in the hope of preventing Dunleavy from winning the governor’s office.

Along with the cuts to the university, Dunleavy also used his veto to push deep spending reductions elsewhere in the state budget. He eliminated funding for the Alaska State Council on the Arts, for public television and radio, and for a benefits program for older people.

He also cut $334,700 from the state’s appellate court system, writing in a veto document that the amount reflected the cost of government-funded abortion services. Dunleavy disliked a state Supreme Court ruling this year that struck down state regulations that would have curtailed abortion coverage under Medicaid.

Despite all the cuts, the governor did not manage to completely close the state’s budget gap, which has grown in recent years as oil prices and revenues have declined and the state’s economy has been in recession. With a gap of hundreds of millions of dollars still remaining, Dunleavy suggested in announcing the veto that more cuts could be coming.

“Next year, it’s our goal to complete this process,” Dunleavy said.

An uncertain vote

Overriding the governor’s veto would require a three-quarters majority of the state’s 60 representatives and senators. More than half are Republicans.

Republican Party officials have celebrated Dunleavy’s actions in recent days, among them the state chairman, Glenn Clary, who said last week that the governor understood that the state must live within its means.

“Alaska’s economic future is in good hands with our governor and his staff,” Clary said.

As the Legislature begins its special session Monday, university leaders plan to mount a demonstration outside the capitol in Juneau.

Edgmon said he was seeing increasing public pressure for lawmakers to restore the university’s funds and avoid cuts that would reshape the institution. He supports overriding the veto, but said it was not clear whether it would be possible.

“We’re close, but we’re down a handful of votes,” Edgmon said.

Anticipating that it will have to implement the budget cuts, the university system has already issued furlough notifications to its staff, which would require employees to take 10 days off without pay. Johnsen has also announced restrictions on hiring, travel and procurement.

University leaders plan later this month to declare financial exigency, a step that would let them expedite the process of eliminating programs and laying off employees, including tenured professors. One challenge in doing so, Johnsen said, is that the university system cannot leave students hanging, and must provide them with a path to finish their degrees.

Williams said that while the university system may need to undergo changes, the extreme nature of the cuts will be detrimental. She said she was concerned that the turmoil would lead to an exodus of key faculty and staff members from the state — and potentially an exodus of prospective students as well.

“Obviously, this governor doesn’t value education,” said Scott Downing, president of the faculty senate at the university’s Anchorage campus. “The scope and size of these cuts is unconscionable.”

In the meantime, university leaders and supporters have been lobbying lawmakers by phone, by email and in person. On Monday, they plan to gather at the Capitol in Juneau and begin a final push for a veto override.

This article originally appeared in The New York Times.

Blindsided by a 'devastating' veto, Alaska's university system pleads for a lifeline

More than a month after Alaska lawmakers settled on a plan to cut $5 million in support for the state’s universities, Gov. Mike J. Dunleavy shocked the state last month by using a veto to cut much deeper, taking away $130 million more from the system that gave him his master’s degree.

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