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Budget update: April 15, 2020

April 15, 2020

Tori Tragis

— by Dan White, chancellor

The Board of Regents (BoR) held a special audit committee meeting yesterday to discuss the financial status of the university along with the estimated impacts of COVID-19. The goals I have established in my reports to the President outline a strategy of base cuts as well as using our debt reserve and one time sources (e.g., building sales) to cover ����Ӱ��’s cuts during FY20-22 (; ). The bridging strategy allows for some repositioning to take place as we look to reduce our footprint and services, as well as get some new sources of revenue online (e.g., power sales and leases). 

In the Board of Regents Audit Committee meeting I emphasized that we are doing everything we can to preserve academic programs so that we retain our sources of revenue (tuition and research) for now and into the future. The estimated savings from ����Ӱ��’s proposed elimination of academic programs is between $1 and $3 million dollars. Although impactful, the number is small in comparison to the overall loss in state appropriation of close to $35M for ����Ӱ�� over the FY20-22 period. That said, all cuts have impacts and as we position to be a smaller more nimble university we want to preserve our opportunities for generating revenue. 

There was much discussion among the Audit Committee about not being everything to everyone. Further emphasis was placed on retaining our core academic and research mission. I emphasized that many things we have been asked to provide to the state and our communities over the years are being looked at, including elimination, or developing new rate structures for moving some community support and training onto a community/industry funded model. An example of this transition in FY20 was the transition of KUAC off of state appropriation this year. It has been a difficult move and Interim Director Gretchen Gordon has worked exceptionally hard to make it happen (kudos to her for this effort!).

I have also asked Mining and Petroleum Training Service Director Bill Bieber for a plan to transition the MAPTS program to a higher rate structure so that the University is spending less on short course training for the mining and petroleum industry. These are important training programs for the industry that we plan to continue, but the state, through the University, will need to subsidize them at a lower rate. Director Bieber already took the steps necessary to make this transition (kudos to him for this effort!). Other areas fall into a similar category as we seek to fit into the budget we have been provided (and can generate). I have encouraged Provost Prakash and Vice Chancellor for Rural, Community and Native Education Peter to look at rate structure analyses, where appropriate, for other areas such as training programs provided by Cooperative Extension, Marine Advisory Program, K-12 and our community campuses.

As we continue to work through COVID-19, ����Ӱ�� and the UA system are working on how revenue losses will affect our budget. Initial estimates for the costs of COVID-19 (i.e., both lost revenue and added expenses) are up to $5M for this year and as high as $13M for next. These are just estimates for total costs and do not account for mitigating factors such as federal aid, lower costs, and emergency relief funds that the University will receive. At this time, we don’t know what that final cost will be, but we have set up account codes to track expenses as they occur. Tracking will allow us to work within the changing environment and project our financial position relative to the pandemic. Please continue to monitor these costs as it will be influential to financial assistance received through the federal and the . The following on the CARES Act was provided by Dustin Bryant, UA Director of Federal Relations:

“On April 9th, the U.S. Department of Education published the  for the distribution of these funds to eligible Institutions of Higher Education in the country. ����Ӱ��’s nine eligible institutions will be receiving a total of $9,432,430 from the fund. The Department also published  and made available the first 50% of those funds which must be used for emergency financial aid grants to students. The remaining 50% is expected to be made available within the next two weeks. Additional guidance on eligible uses of that balance of those funds is expected at that time. Yesterday, April 14th, the U.S. Department  of Education  the availability of funds from the Governor's Emergency Education Relief (GEER) Fund - one of the three funding sources authorized from the Education Stabilization Fund in the CARES Act. GEER funds are flexible discretionary funds governors can use to meet the needs of students, schools (including charter schools and non-public schools), postsecondary institutions, and other education-related organizations.”

With the expedited administrative review complete and public comments collected, I am working with the provost and vice chancellors to explore recommendations made and potential position mergers, along with savings that can be generated from thoughtful and strategic changes. Ideas are being generated around the recommendations and reductions that make sense in units. This could mean consolidation, savings through attrition, and other potential actions that are planned or just ideas currently being discussed.  The shared services proposals are moving to the next stage of model development and will likely be available for review in the next couple weeks.

On Monday I sent a memo to the Provost and Vice Chancellors regarding COVID-19 furloughs. The memo requested that each of their divisions begin the process of COVID-19-related furlough evaluations and identifying employees in the following categories:

1. 100% furlough reduction – job function is not required during COVID-19 due to duties performed. For example, if the job is a salesperson in a store that is closed, the job cannot be performed. 


2. Partial furlough reduction – job function is needed but not at current percent of effort. 
   
   
   
   1. Job function is only partially needed as some of the functions can be performed remotely but in-person functions cannot be performed during COVID-19. 
   
   
   2. Job function timeframe is shortened due to COVID-19. For example, the entire contract period does not need to be performed in the summer because summer programs will not be in person. 
   
   
   
   

I also asked that if and when possible, in lieu of furlough, a person’s job may be shifted to other work that is in high demand during COVID-19. I’m hopeful that this will be possible for some positions but recognize that not all positions will fit into this category. I encourage you to work with your supervisor to explore this option. Please also note that given the rapidly changing COVID-19 environment, furloughs can be lifted at any point in time as work becomes available. 

My thanks to the ����Ӱ�� community for being nimble and attentive to student, faculty and staff needs during this time of change. I continue to be optimistic about our ability to grow enrollment and other revenues. Our university is changing, but I see bright spots all around that reassure me that out of our realignment, good things await.

Thank you for choosing ����Ӱ��. Be well.