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University of Alaska Reaches Deal With Governor on Budget Cuts

Bringing a sigh of relief for the University of Alaska System administrators, Governor Michael J. Dunleavy cut a deal with the school officials that would ensure smaller budget cuts than the originally proposed.

On Tuesday, Board of Regent Chair John Davies and Governor Dunleavy signed a multi-year compact agreement that would cut $70 million in state funding instead of the one-time $135 million slash.

During the current fiscal year, the university budget will be reduced by $25 million, while the next two fiscal years will see additional reductions of up to $45 million.

“This agreement, which comes after extensive conversations and work with the university, is an honest attempt at balancing both realities,” Dunleavy said.

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.

This was followed by the invoking of financial exigency to resolve the financial crisis resulting from drastic budget cuts by the state. School administrators moved to consolidate the entire university system into a single accredited university with oversight from a newly formed subcommittee of the board.

“This agreement, worked out following a number of budget discussions by the Board of Regents, provides a clear, gradual multiyear year funding glide path,” Davies said in a press release.

“Most importantly, the supplemental operating budget provides much more certainty and confidence for our students, staff, faculty, and the communities we serve.”

University President Jim Johnsen anticipates the revised reduction could affect the administrative structure, academic programs, and services.

“But by restoring the legislature’s appropriated funding for this fiscal year, and by spreading reductions out over the next two years, the required restructuring can be done more methodically, with less impact on students,” he said.

Currently, the university is rated Baa1 for its credit and Baa3 for its Series 2012 Lease Revenue Bonds rating and 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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