Budget cuts and COVID-19 deal university a double hit

In the midst of pandemic, life goes on. The University of Alaska has started accepting applications for its fall semester.

What the enrollment will look like is unknown as well as whether classes will be in-person or distance-delivered, as the university is doing now in finishing out the spring semester.

“Obviously our preference is in-person,” UA President Jim Johnsen told legislative committees in a briefing last week, but the decision has not yet been made on either option.

Johnsen spoke to a joint meeting of the education committees of the state House and Senate. With the Legislature in recess, for now, most legislators participated electronically in the meeting with the cochairs, Sen. Gary Stevens, R-Kodiak, and Rep. Harriett Drummond, D-Anch., in the Legislative Information Office in Anchorage.

Johnsen laid out a grim picture of the COVID-19 impact on the university’s finances, however. The institution is being dealt a double-whammy in its budget, with a $25 million cut in its current year spending in a deal brokered with Gov. Mike Dunleavy with another $35 million to $40 million in revenues estimated to be lost this year due to COVID-19 and the closure of UA’s campuses since March.

Next year the university will be cut another $20 million under the three-year agreement with the governor.

In direct effects, since March the university has had to spend $3 million to help students with housing and to help low-income and homeless students with meals, to set up technology for distant-delivery of classes and to pay for cleaning, remediation and security, Johnsen told the legislators.

The foregone revenues estimated at $35 million to $40 million include student tuition for spring and summer classes that will not be received and revenues from rentals, catering, cancelled conferences and other events hosted by the university that are not happening.

To soften this a little, the university will receive $7.5 million under the federal CARES act but $3.5 million of this, which has now been received, is designated for the support of students to sustain enrollment. The remaining $3.94 million was due to be released April 24 and is to be used to offset COVID-19 costs to the university itself.

Other Alaska institutions will share in the federal funds for higher education: Alaska Pacific University will receive $254,628; Alaska Christian College will receive $201,678; Alaska Career College will receive $941,040, and Alaska Vocational and Technical Center, or AVTEC, will receive $71,437. In each case 50 percent must go in direct aid to students.

There is another $6.5 million in federal funds for “education relief” that can be spent by the governor at his discretion, and the university is hoping to get some of this, Johnsen said.

Meanwhile, in the new phase of federal relief funding the UA hopes to secure low-cost or no-cost loans to refinance about $300 million in university debt. This would reduce annual debt service by about $28 million a year.

Meanwhile, UA has been harnessing its research and technical capabilities in the fight against COVID-19. Laboratory facilities and UA staffs are making hand-sanitizer chemicals as an example.

Johnsen told the legislators that state Health and Social services Commissioner Adam Crum had approved the first batch of this to be released to communities.

Also, the university is ready to help deliver education and training to workers that have been recently laid off. Typically in recessions university enrollments go up because people take advantage of the opportunities to obtain or improve skills that will help them when they go back to work.