The University of Alaska was rocked last Friday — and observers of American higher education taken aback — when the state’s governor announced a 41 percent cut to its budget, a move that would not only devastate the institution but greatly hurt the state’s economy. The University of Alaska System’s president, James R. Johnsen, was grim in his reaction: “If not overridden, today’s veto will strike an institutional and reputational blow from which we may likely never recover.”
Other state universities have found themselves in the crosshairs of budget cutters, most famously the University of Wisconsin, but the cuts in Alaska take the attacks on public higher education to an entirely new level.
The cuts are shortsighted and economically unwise, but what makes the decision even more inexcusable is that they are being justified by a contrived budgetary “crisis.”
The state legislature had proposed a $5 million reduction to the university budget, but Alaska Gov. Mike Dunleavy, a Republican, vetoed that proposal and added a cut of $130 million. Although the university reduction is the largest, the governor’s $444 million in overall cuts also touch programs and services such as Medicaid, school-bond debt reimbursement and a state senior-benefits plan, which will simply end. All the cuts will go into effect unless three-fourths of the state’s legislators, 45 of 60, vote by July 12 to overturn the governor’s line-item vetoes — an unlikely proposition.
This blow comes on top of steadily decreasing support for the university, where we teach. We have been cutting programs, shedding staff, and tightening belts since 2014. The annual state appropriation to the university decreased by 13 percent from 2014 to 2019. The university system has also cut its workforce by 1,283 over the past four years; statewide, the number of administrators is down almost 40 percent. These cuts aren’t hitting a bloated system; they’re a blow falling on an ailing patient.
The University of Alaska System generated $1.1 billion in economic activity in 2015, according to a report by the McDowell Group, an Anchorage-based research and consulting firm. There was a $370 million state appropriation in 2015, meaning the state got a return on its investment of more than 3-to-1. It may walk away from much of that.
Alaska will suffer in all sorts of ways from these cuts. The state has a big problem with keeping talented young people from leaving, and the university plays a role in combating it. When students leave the state to attend college, only about a third return after graduation; when they attend in-state, almost 80 percent stick around, at least for a while. The cuts will accelerate the brain drain as bright high school students find fewer programs they like. Many high school students will give up on higher education, as the public in-state option shrinks and as tuition rises, in a futile attempt to make up for the appropriations cuts.
Dunleavy’s stated rationale for these cuts — and he’s suggested he will seek a reduction of a similar scale next year — is to balance the state’s budget. But the facts don’t bear that out. This is a policy decision driven by an extreme ideological commitment to cut government, and the public goods it supports, as much as possible.
Alaska, after all, has a “permanent fund,” established in 1976, now valued at more than $65 billion, built up through a combination of oil revenue and prudent investment. Last year the fund had a return of 10.74 percent, with earnings that well exceed the 2019 projected budget deficit of $1.6 billion. The state pays out a dividend to each of its residents annually. Last year, each eligible resident got $1,600. Dunleavy is insistent on increasing the dividend to $3,000 in 2019, at a projected cost of $2 billion.
Alaska does not have a state sales tax, personal income tax or property tax. So the priorities on display are clear: Taxes must remain at their current low rate (zero in some cases), the dividend should be increased, and public services, including the university, sacrificed to achieve the first two goals.
The governor presents himself as someone making hardheaded economic decisions. But ignoring the impact of a university on state economic growth is the opposite of a sensible financial calculation. Direct economic effects of the university aside, there’s a well-established link between postsecondary education and gross domestic product growth per capita. Gutting a university is a sure way to decrease student enrollment and attainment of degrees.
If the legislature does not override the veto, the Board of Regents has given the university administration the power to immediately suspend programs, furlough employees, fire tenured faculty and even close campuses. (The system has three accredited universities on 19 campuses.)
The state stands to lose research and training in areas such as business, fisheries, oceanography, education, rural community development, mining, agriculture, wildlife, natural-resource management, and petroleum — all of which are essential to Alaska’s economy. Projects devoted to studying climate change may be hobbled. And, of course, there’s the intangible loss that comes from reducing the education level of a state’s citizenry.
Before it ratifies these cuts, legislators should weigh the long-term benefits the state will sacrifice by undermining public higher education. Because what’s being proposed is the opposite of fiscal prudence.