The University of Alaska will soon start the process of staff and faculty layoffs, including closure of various programs to resolve the financial crisis resulting from drastic budget cuts by the state, according to a Reuters report.
On Monday morning, Board of Regents voted 10-1 to declare financial exigency to operate in line with the $130 million budget cut by Alaska Governor Mike Dunleavy.
The meeting was announced last week after Moody’s Investors Service downgraded the credit rating of the university from its previous A1 rating to Baa1, and the Series 2012 Lease Revenue Bonds rating from A2 to Baa3.
“With this unprecedented single year cut in state appropriations, there is a high likelihood of a material reduction in the university’s liquidity over the next year as it uses cash to fund programs pending restructuring of operations, and for the associate costs of that restructuring,” Moody’s said in a release.
While calling the budget cuts more of a political crisis, board chair John Davies said, “It’s some choices that have been made by the governor and by a minority of the legislature, and in our system that’s the budget that’s going to be handed to us.”
“We have a fiduciary responsibility to make sure that the institution survives, and I think unfortunately right now we are grappling with survival,” he added.
To restructure the university system, President Jim Johnsen recommended three options to the board, which include closure of one or more university campuses and even creating a new University of Alaska.
On June 28, Dunleavy vetoed $130 million in the university’s operating budget. Following a $5 million cut previously approved by the state legislature, this $135 million slash represented 41 percent of UA’s current state funding level of $327 million. The university currently owes for several of its buildings, including the UAF Engineering Building, the UAA University Center and the UAF Power Plant.
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